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European businesses 
in: 

Product 
standards 

Environmental 
protection 

Monetary policy (a European Central Bank might set interest rates) 

Research 
and 
development 

Regional 
policy 

Labour costs (wages, pensions) 
In addition, an EU-Africa Business Forum has been set up to improve investment and the business 
climate in Africa.
2.4 Political risk and political change 
Changes in UK law are often predictable. A government will publish a 
green paper
 
discussing a 
proposed change in the law, before issuing a 
white paper
and passing a bill through Parliament. Plans 
should be formulated about what to do if the change takes place. 
However, it is 
political change 
which complicates the planning activities of many firms. Many economic 
forecasts ignore the implications of a change in government policy. 
(a) At 
national level
, political influence is significant and includes legislation on trading, pricing, 
dividends, tax and employment as well as health and safety (to list but a few). 
(b) Politics 
at 
international level
 
also has a direct bearing on organisations. EU directives affect all 
countries in the EU. 
The 
political risk 
in a decision is the risk that political factors will invalidate the strategy and perhaps 
severely damage the firm. Examples are wars, political chaos, corruption and nationalisation. 
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CHAPTER 2
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THE BUSINESS ENVIRONMENT 
 
27 
2.5 International trade 
The political environment is of particular importance in