Lecture 6 - Politics And Capitalism

Question 1

What is capitalism?

Answer 1

An economic system characterised by private ownership of businesses and production, driven by profit and competition. In this context, businesses operate within markets to allocate resources, relying heavily on supply and demand dynamics.

Question 2

What is politics?

Answer 2

The processes that govern decision-making within a state, focusing on power, authority, and governance. In internal business context, political decisions shape regulatory frameworks, market conditions, and business opportunities.

Question 3

How are politics and capitalism connected?

Answer 3

Political systems influence market environments through regulation,
taxation, and trade policies, while businesses under capitalism
shape political discourse through lobbying and economic
influence.
* The U.S tech industry’s growth is influenced by both capitalist
competition and political policies such as data protection
laws and trade regulations with foreign markets.

Question 4

Political influence on internal business environments 1/2

Answer 4

Regulation and Deregulation:
- Regulation shapes the internal environment by imposing rules on labor, environmental practices, and product safety.
- Environmental regulations require businesses to adopt eco-friendly practices, which impacts internal operations and costs.

• Deregulation can create opportunities for businesses to
  innovate but may lead to market volatility.
• The financial deregulation of the 1980s allowed rapid growth in financial markets, but also contributed to the instability leading up to the 2008 financial crisis.

Question 5

Political influence on internal business environments 2/2

Answer 5

Political Stability and Business Growth:
- Tax policies influence internal business decisions on hiring, investments, and expansion. Political ideologies shape whether businesses face higher corporate taxes or benefit
from incentives.
- A progressive tax system may require businesses to contribute more to social programs, whereas tax cuts may incentivise increased corporate investment and expansion

Question 6

The Impact of Capitalism on Internal Business Strategies 1/2

Answer 6

Corporate Influence on Politics:
- Corporations engage in political lobbying to shape policies that benefit their business models, such as trade agreements, industry regulations, and tax laws.
- Pharmaceutical companies lobby for patent protections, which directly
affect their pricing strategies and product development cycles.

Question 7

The Impact of Capitalism on Internal Business Strategies 2/2

Answer 7

Capitalism and Corporate Governance:
- The principles of capitalist competition influence internal governance structures. Businesses focus on shareholder value and profitability, often influencing decision- making around risk-taking, innovation, and cost-cutting measures.
- In many multinational corporations, executive compensation is tied to
stock performance, encouraging strategies aimed at maximizing short-term profits.

Question 8

Contemporary Issues Shaping Internal Business
Environment 1/3

Answer 8

Inequality and Business Practices:
- The growing wealth gap in capitalist societies impacts internal business strategies, particularly in terms
of wages, corporate social responsibility (CSR), and public perception.
- Businesses in the tech sector, like Amazon, have faced public and political pressure to address
employee wages and working conditions in light of growing income inequality.

Question 9

Contemporary Issues Shaping Internal Business
Environment 2/3

Answer 9

Capitalism and Climate Change:
- Businesses face challenges balancing profitability with sustainability in capitalist economies. Government regulations on emissions and corporate social responsibility influence long-term business strategies.
- Automotive companies are adapting their production lines to manufacture electric vehicles in response to environmental regulations and shifting market demands for green products

Question 10

Contemporary Issues Shaping Internal Business
Environment 3/3

Answer 10

Digital Capitalism and Business Transformation:
- The rise of the digital economy and automation is transforming internal business environments. Companies are investing in digital technologies, influencing job structures, workforce requirements, and operational efficiency.
- Businesses like Tesla are leveraging automation and AI to streamline operations and remain competitive in global markets.