Entrepreneurs look for favorable markets to set up their businesses. The location factor cannot be taken for granted because no geographical area is the same. Each location has different characteristics which the business owner will have to conduct research on and make analyses.
The fact that a politically stable market is needed for favorable business operations to take place should not be arguable. Here are 10 reasons to buttress the point:
- To Maintain Investor Confidence
Investors from within and outside a country will consider the state of the polity before putting their money in a business that operates there. It would not be a smart move if they were to invest during unstable times.
- To Increase Capital Inflow
When there is a significant improvement in the political stability of a country and its business environment, there will be increased foreign investment.
- To Keep Consumers Interested
Shoppers and traders from outside a location would be willing to place orders for goods produced there. They would not have to worry about a high probability of something going wrong with their purchases.
- To Foster Partnerships
Why would a company from outside the country want to make a deal with yours if the political situation is not favorable? It would definitely not seem like a rational decision.
- To Ensure the Formulation of New Policies
When there is instability, it would be impossible for the government to think about creating new policies that will be favorable to the business environment.
- To Organize Development Programs That Aid Business Operations
Some businesses can only operate in a country that has attained a certain level of development. Political instability will hinder the execution of development programs and the acceptance of new technologies.
- To Create an Enabling Environment
Companies, especially small ones, can only thrive in an environment where risks are minimized and well-managed. Startups will have a better chance of surviving in such conditions.
- To Prevent the Forced Relocation of Businesses
Entrepreneurs would consider moving their companies elsewhere if their present location is not conducive. They may be compelled to relocate their businesses to places they consider to be better.
- To Enable Free Trade Agreements
A politically unstable country will not be able to enter into free trade agreements with other countries. No nation would want to make such a deal with that country as it would be considered unwise.
- To Build a Favorable International Image
Ranking low in the World Bank’s Political Stability and Absence of Violence Index is detrimental to a country’s image in the international scene. EMEs (Emerging Market Economies) need to aim for higher positions in such rankings for a better chance at getting deals from other countries.
Entrepreneurs would be able to choose the best location to do business with the aid of professional business plan writers who will help them in business planning. Changes in the polity of a location always poses important implications for the business environment. Economic growth can only be ensured when the country is politically stable, and the future seems to be promising for the business environment.