Answer to Question #319284 in Management for Gert

Question

Deregulation within the airline industry was introduced in South Africa in 1991. Before deregulation, South African Airways (SAA) was the only service provider.

There are several factors in the business world that apply pressure to a modern-day organisation such as SAA. Which one of these factors is depicted in the mini-case study above?

Answer 1

Political environment

This is because the political environment of any country influences the business to a larger extent. This political environment is influenced by the political organization, philosophy, government ideology, nature and extent of bureaucracy, the country’s political stability, its foreign policy, defense and military policy, the country’s image and that of its leaders both locally and internationally (Shaikh 2010). For example a country’s policy that restricts the growth of multinationals in the market will automatically limit the business operations of the company hence its growth. Similarly, government policy that allows licensing that is liberal, liberal exportation and importation, inflow of foreign capital and technology, affects the business operation. Globalization as government policy too has influence on the business. Burberry was able to establish its first foreign outlets in Paris, United States and South America, and export its first shipment of raincoats to Japan because of the government’s globalization policy.