Business Environment Chapter in Nepalese Perspective.

1. Chapter 2
Political Environment

2. Political System
• Democratic system
Features/ nature
- Governed by the elected representatives
- Protection of human rights
- Fundamental rights: right to freedom,
equality, justice, property, privacy
- Private sector is indispensible part

3. • Totalitarian
Features/ nature
- Centralized power
- No consideration of differing opinion
- Dictatorial control
- Economy is controlled by govt.
- No environment to flourish private sector

4. Political System of Nepal
• Democratic federal republic
• Ensures the democratic rights like local
autonomy, decentralization, preserving
property, equality and liberty of the people

5. Significance of politics for business
• Political system- social values- governs decision
making system and allocation of resources
• Creation of political uncertainty- lack of proper
study creates political risks
• Govt. policies
• Provides environment to business
• Control
• Freedom
• Affect economic system
• Affects socio-cultural environment
• Acceptance of new technologies

6. Political philosophy
• Anarchism: Rejects compulsory rules and follows
voluntary cooperation & free association
• Capitalism: Economic social system in which means
of production are privately owned for profit
• Communism: Socio-economic structure that
promotes the establishment of a
classless, stateless society based on common
ownership of the means of production.
• Egalitarianism: political doctrine that holds that all
people should be treated equals from birth, usually
meaning held equal under the law and in society at
large.

7. • Fascism: an authoritarian National political
ideology that exalts nation (and often race) above
the individual, and that stands for a centralized
autocratic government headed by a dictatorial
leader, severe economic and social regimentation,
and forcible suppression of opposition.
• Liberalism includes a broad spectrum of political
philosophies that consider individual liberty to be
the most important political goal, and
emphasize individual rights and equality of
opportunity. Although most Liberals would claim
that a government is necessary to protect rights,
freedom, limitation of power of govt.

8. • Marxism: It asserts that the Capitalist mode of
production enables the bourgeoisie (or owners of
capital) to exploit the proletariat (or workers) and
that class struggle by the proletariat must be the
central element in social and historical change.
According to Marx, a socialist revolution must occur,
in order to establish a "dictatorship of the
proletariat" with the ultimate goal of public
ownership of the means of production, distribution,
and exchange.

9. • Socialism: A socio-economic system in
which property and the distribution of wealth are
subject to control by the workers,
either directly through popular collectives such as
workers' councils, or indirectly exercised on behalf of
the people by the state, and in
which Egalitarianism or equality is an important goal.
Thus, under Socialism, the means of production are
owned by the state, community or the workers (as
opposed to privately owned as under Capitalism).

10. Govt. – Business Relationship
• Role of Govt. towards business
• Infrastructure and Manpower development
• Enactment of regulations & policies
• Provide a stable environment
• Source of information
• Subsidy
• Security
• Promotion of business

11. • Role of business towards govt.
- Tax payment
- Execution of contracts
- Rendering advice
- Source of information
- No black marketing

12. Political Structure - Constitution
• Directive principles
- Political objective of the state is to establish Federal
democratic republican system
- The socio-cultural objective is to end all sorts of
discrimination and exploitation based on religion ,
culture, tradition etc.
- The economic objective is to develop sustainably
through equitable distribution of resources in
participation of public, cooperative & private sector
- The international relation are directed towards
enhancing the dignity of the nation.

13. • Fundamental rights
- Freedom , equality, communication, justice, against
torture, exploitation, clean environment, education,
language & culture, labour, health, food, housing, right
of women, child, dalits, senior citizens, social security
etc.
• State policies
Related economy and commerce
- Partnership with private, public and cooperative,
optimum utilization of resources, promote cooperative
sector, equitable distribution of resources expanding
industry upon identifying areas, Protect the interest of
consumers, protect domestic industries, encourage
foreign technology and capital

14. • Related to labour and employment
- Make competent and professional labour force
- Guarantee social security
- Abolish labour exploitations
- Encourage participation in management
- Encourage to utilize the capital, skill, technology
and experience gained from foreign employment.

15. Political Parties
• Nepal Communist Party
• Nepali Congress
• Rastriya Prajatantra Party
• Rastriya Janata Party
• Samajbadi Jana adhikaar Forum

16. Govt. Structure
• Legislative
• Executive: Federal Govt., State Govt. and Local Govt.
• Judiciary: Supreme court, High court, District court and
specialized courts
• Other constitutional bodies: Commission for the
Investigation of Abuse of Authority, Auditor General,
Public service Commission, Election Commission,
National Human Rights Commission and National
Natural Resource and Fiscal Commission
• Other Commissions: National Women Commission,
National Dalit Commission, National Inclusion
Commission,Indigenous nationalities, Madhesi, Tharu
and Muslim Commission.

17. Political risk factors
• Political instability: irregular political events like
change in govt. frequently, enactment of new laws,
increase in taxes
• Economic Factors: inflation, imbalance of payment,
growth rate, per capita income etc.
• Traditional Hostilities and terrorism: Nepal band,
chakka jam, dharna ( hostilities) & Kidnapping,
killing, vandalisms ( Terrorism)
• Labour conditions: Availability of skill, attitude,
women working and labour organizations, acting as
political force

18. • Subjective factors: perception of govt.
towards public and private sector, foreign
investment, JVs, technology
• Other political risks
- Intellectual property rights: copy rights, trade
marks, patents & industrial design
- Boycotts: Some products
- Inflation, taxation and currency devaluation

19. Political Risk Analysis - Techniques
• Observational data: destabilizing events and
economic deprivation
• Expert hands : expert opinion
• Delphi technique
• Quantitative methods: multivariate analysis

20. Procedures
• Assessing issues of relevance to the firm
• Assessing potential political events
• Assessing probable impacts and responses