The business environment comprises both the traditional market and non-market. The traditional market includes economic resources, competition and consumers, while the non-market represents the interest of government agencies and special interest groups. The government can have a strong influence on businesses.
Government agencies -- whether European, national or local -- set various policies or regulations on the business environment. These protect the natural environment, consumer safety and prices of goods or services. Business owners and managers must develop business strategies that comply with these regulations.
Business location can play a role in the government’s influence. Companies must be aware of different local laws regarding their business or industry to ensure their business practices are compatible. While major economic policies occur at the national level, local councils and devolved national government in Wales, Northern Ireland and Scotland can create laws that influence how businesses operate.
While government agencies attempt to promote good behaviour in the business environment, they can also levy penalties or fees to ensure companies act ethically or properly respond to consumer issues in the business environment.