Businesses are the products of both their internal and external environments. The internal is often within the control of a business. It is easier to take charge of what goes on inside of a business, such as its people, products, and services. Unfortunately, businesses have little or no control over what happens in their external environment.
One of the key influencers of the external environment is the government. When determining the strategic direction, businesses take into consideration what is happening in these two environments.
Externally, businesses focus on areas such as the social-economic, political, and regulatory environments. All of these are directly influenced by what goes on in the government.
When planning their strategies for this year, many businesses took into account the fact that it would be an election year. In previous years, financial service providers had to deal with the Central Bank, their regulatory body, capping interest rates.
The petroleum industry has had fuel prices determined by the Energy and Petroleum Regulatory Authority every month. Businesses rely on the government for some of the most critical services. Business registration services are offered by the government. Issuance of trading permits and many other licences is by the government.
Basic public services
It is the government that makes laws relating to the tax rates for businesses. Basic public services such as roads, water, and sewerage are provided by government bodies. Government agencies enforce compliance. The government is in charge of maintaining law and order. Small enterprises in Kenya can get grants and loans from the government. All of these serve as evidence of the strong relationship between businesses and the government. Therefore, the government must be aware of both its actions and inactions as well as its decisions and how they influence businesses.
The impending general election serves as a timely reminder that politics significantly affect business decisions. Running a business is still very difficult in a typical year. Many people in business are hoping for a seamless transition to the next administration.
Many are also hoping that the new administration will foster an environment that is favourable to businesses of all sizes. Have you thought about what the manifestos of the candidates say about the business environment as you decide who merits your vote in three weeks?
To successfully operate a business in this nation, more effort will be needed if the government does not create the right environment.
Will our new administration create more opportunities or become a threat to businesses? Time will tell!
Dr Kiruthu is a Management Consultant and Trainer. Connect via Twitter: @KiruthuLucy