What is Legal Factor in PESTLE Analysis?
Business is considered as a legal entity, and to maintain that entity; businesses have to follow some laws that are imposed by a state and its government. Laws are made to protect a nation and its people from unfairness and anarchy. And as businesses work by and with people, there’re separate laws for businesses as well, so that no one can use that for personal benefits.
How do Legal Factors in PESTLE Analysis Affects Businesses?
The legal factors consist of organizational law, employment law, consumers law, advertisement law, product and service standard law,banking law, Anti-trust law and intellectual properties law.
Organizational Law
This law is the primary law for every business to come into existence. Organizational law manages the creation, operation, and termination of a business. Whether someone decides to start a sole proprietorship, partnership, or company business, he/she has to go through some constitutional activates to register the business as a legal corporation. There’re different types of organizational laws for each business type, which determines the activities, customs, management, taxation of each of them.
Employment Law
Employment law or labor law determines the wages, working hours, work environment, relationships, etc. of employees working on a business. This law protects the employees or workers’ rights so that they get the increments they actually deserve and how they should be treated. Employment law also ensures that no minor is made to work, or there aren’t any cases of discrimination based on color, gender, race, etc. A business can’t just fire or dismiss a worker or employee without any proper justification. That’s why companies must learn about employment law to avoid unnecessary legal issues.
Consumer Law
Every business has one common goal that is selling or providing consumers with their necessities in forms of goods and services. But there’re numerous cases of how companies have taken advantage of consumer’s needs and served them with low-quality products and services. That’s why consumer law has been made to ensure the consumer’s right to know, right to be heard, right to choose, right to say, right to be informed, and right to safety. Businesses always have to put their customer as a top priority, and no act that may violate any of the consumer’s rights should be taken.
“In an age of social media and open review sites, it’s never been easier for consumers to let the wider public know what they really think of a business,” comments Ruban Selvanayagam of Manchester auction business in the UK, Property Solvers.
Advertisement Law
Advertisements are created to make people engaged with a business and its products/services. It helps to reach as many people as possible, both nationally and internationally. But some businesses use advertisements to misguide consumers. Also, in many countries, there are some restrictions for specific product ads, such as cigarettes. A tobacco manufacturer can’t advertise its products publicly. Violation or inappropriate activities or messages are also forbidden to use in advertisements. A business must remember these rules before starting any promotional campaigns.
Product/Services Standard Law
The products and services a business’s provides must be checked on a standard that is suitable for the target market. There’re many origination to measure the standard of products based on the ingredients, manufacturing process, quality, etc. Businesses need to meet those standards to launch their products in the market. Each country has its own institution for this kind of testing. ISO or International Organization for Standardization is an international authority which provides this service as well. Legally it’s mandatory for every company.
Intellectual Properties Law
Products or services that are created thorough human mind and unique than everything else such as books, music, painting, machine, etc. are protected by the intellectual laws so that no one else can take the benefit from it without the permission of the creator. It gives a person or a business the right of the sole owner. Although someone else can use it with the consent of the owner and that person’s permission will also be protected under the law.
Banking Law
Banking laws are, especially for banks. As banks have a significant contribution to the money market and help the government to control the money flow and interest rates of the economy, this business has to go through some distinct laws. There’re special rules and regulations for banks, such as how much loan can be provided, what’ll be the interest rate, what kind of services it can provide, etc. Banks also have to put a certain amount of deposit to the government before starting their business.
Antitrust Law
There’s always remains a competition between businesses in an industry. But this competition sometimes gets really dirty and unequal. As a result, businesses practices unfair and unethical actions to win the completion of each other. To stop this unhealthy rivalry, antitrust law or competition law has been developed to ensure fair and equal competition. Antitrust law mainly regulates activities such as bid-rigging, price-fixing, artificial shortage, unfair monopoly, etc.
Other Examples of Legal Factors Affecting Business Organization Consist
- Discrimination law
- Import/Export law
- Copyright law
- Fraud law
- Health and Safety law
- Employment law
Bottom Line
Businesses must follow legal laws no matter what the situation is. Because the more someone tries to break the rules through cunning tricks and tactics, the more laws get stricter. Because today the laws we have, people didn’t have these in the past. Laws get changed, and businesses have to cope-up with that. Also, laws are different in each country, so if you’re operating to want to start a business internationally, you must first know their laws to avoid unnecessary legal suits.
Related
- Economic Factors of PESTLE Analysis Affecting Business Organization
- Political Factors of PESTLE Analysis Affecting Businesses
- Social Factors of PESTLE Affecting Businesses
- Technological Factors of PESTLE Affecting Businesses
- Types of Calculators and Popular Brands
References
- https://downtowninbusiness.com/eight-legal-changes-that-will-affect-your-business-in-2020/
- https://www.premiumessays.net/sample-essay-on-legal-and-regulatory-factors-affecting-business/
- https://www.startuploans.co.uk/business-advice/legal-factors-affecting-business/
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