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A company sets up a plant using a government grant but the grant has a strict local employment condition. Which political effect does this show?

Answer and explanation

Correct answer: Benefit with policy-based obligation

The government grant is a financial benefit for the company, but the requirement to employ local people is an obligation created by government policy. Thus, it shows how the political environment can combine incentives with conditions designed to achieve social or regional objectives. A change in customer preferences belongs to the market environment, not to a condition attached to a government grant. Exam tip: Link government rules, grants, tax policies, and licensing conditions with the political/legal environment.

Related tags

Business EnvironmentPolitical EnvironmentGovernment PolicyLocal EmploymentGovernment GrantsClass 12 Business StudiesBusiness StudiesClass 12 Mcq

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