Government of the country have great impact on business. The change in any government may changes in rules and regulation, economic policies and so on. Government has a strong bearing on the conduct of business as it leads to significant changes in the economic policies and the regulatory framework. The government’s policy of promoting select sectors further impacts the functioning of business organizations.

Businesses are affected by the factors such as political stability, the political ideology and practices of the ruling party, the purposefulness and efficiency of governmental agencies, the extent and nature of governmental intervention in the economy and the industry, Government policies, specific legal enactments and framework and so on.