Political-Legal Environment:

Political-Legal Environment:

 Economic environment within a nation is closely linked with its political and legal systems. For example, the Socialist countries had a Centrally Planned economic system. In most countries, there are number of laws that regulate the conduct of a business. These laws invariably are explicitly or implicitly build on ideologies and values, which relate to both economic and social goals. Political-legal environment is the background of laws and regulations within which business conducts its affairs. This environment is made up of government agencies, laws and pressure groups that influence and constrain various organisations and individualism society. This environment provides opportunities, posses challenges and create problems for businesspersons. For example, in many countries with a view to protect consumers Consumer Protection Acts have been passed with stronger provisions. Some governments specify certain standards for the product. Regulations to protect the purity of environment and preserve the ecological balance have assumed great importance in many countries. Government Acts are at three levels: Local, State and the Centre and exert varying amounts of influence over business. In many countries, rules and regulations change with the change in government. Hence political and legal environment go together and it is difficult to draw any demarcation line between them.

The Government plays at least the following roles in business:

a.       Government as a Regulator

b.      Government as a Supplier

c.       Government as a Competitor

d.      Government as a Consumer

As a regulator, the government performs both supportive and restrictive function, by enacting legislation to regulate the conduct of business. There are a host of statutory control on business in India. The main reasons for enforcing regulatory laws are:

a.       to protect firms from each other from unfair trade practices, to protect consumers from unfair trade practices, and

b.            to protect larger interest of   society against unfair business behaviour.

Many countries regulate business competition in the larger public interest. Government has enacted the following laws to protect consumers, workers, shareholders, society, and industry.

·         The negotiable Instruments Act 1881

·          Workmen’s Competition Act 1923

·         The Trade Union Act 1926 

·         Sale of Goods Act1930

·         The Partnership Act1932

·         Industrial Dispute Act 1947

·         Imports exports Control Act 1947

·         Minimum Wages Act 1948

·         The Factories Act 1948

·         The Employees State Insurance Act 1948

·         Industries (development and Regulation) act 1951

·         Industrial Licensing Act, 1951

·         Mines Act 1952

·         The Forward Contracts (Regulation) act1952

·         The Employees Provident Fund Act 1952

·         Indian Companioes Act 1956

·         The Securities Contracts Regulation Act 1957

·         The Income Tax Act 1961

·         The Bonus Act 1965

·         The MRTP Act 1969The foreign exchange Regulator Act 1973 

 For Consumers \

·         Dangerous Drugs act 1930

·         Agricultural Product Trademark and Grading Act 1937

·         Drugs and cosmetics act 1940

·         Essential commodities act 1955

·         Weight and Measures Act 1958

·         Trade and Mercandise Act 1958

·         Prevention Food adulteration Act 1954

·         Consumer Protection Act 1986

All these acts and many more than listed above are in operation and it becomes difficult for the businessperson to meet all these provisions. This makes the role of government and regulator much more complex and challenging. The business major executive needs a good working knowledge of major laws protecting competition, consumers, and the larger interest of the society. Businessperson should also understand the working of the political system because a political change means changes in relationship between government and business. Some firms gain from the new government while some others may suffer. There are two opinions whether or not business should have relationship with politics. The traditional view was that the businesspersons should   not align themselves with any political party. However, the modern view is that business should actively participate and should affect policies in favour of business.

(5) Social and Cultural Environments:

Business is an economic activity and decision making by business firms is an economic process. Nevertheless, it is also true there is an interaction between economic and non-economic factors. We have already discussed that business environment is quite complex with heterogeneous elements interacting with each other. Of all the environments, Social and Cultural environment has the greatest impact. Social environment may be described as the environment of the society as a whole. Business must have a social purpose to enjoy social sanction. The host of factors like social values, culture, beliefs, traditions and conventions, social attitudes social institutions, class structure, pressure groups altogether constitute social environment. There are three kinds of social environments: 

                    i.            changes in our life styles and social values

                  ii.            major social problems

                iii.            growing consumerism

Changes in our life style and social values, such as attitude towards women employment- especially from house wife to that of a working women; attitude towards education, skill, training etc. emphasis on quality of goods than on quantity, preference for work or leisure, change in taste, business ethics, business morality and organisational culture come under this category.

Major social problems include the externalities or social cost of business such as air, water ,noise, atomic pollution demand for safety, social welfare, child welfare, health care, socially responsible marketing, frictional unemployment etc.

Growing consumerism indicating consumer’s dissatisfaction on a larger scale with consumer awareness for unfair trade practices is becoming increasingly important to the marketing decision process.

The nature of social objectives and priorities along with a set of social constraints give form and content to several social movements. Business has attempted to fulfil its social role in several ways, some accepted it voluntarily and some by compulsion through legislation.

Cultural environment relates to cultural forces. According to Taylor, “ That complex whole which includes knowledge, belief, art, morels, law, custom, and other capabilities and habits acquired by mass as member of society”. People grow-up under a particular culture, in which a given society holds many beliefs and values. These have high degree of persistence and are passed on from parents to children, and are reinforced by society. These values are deep rooted. They change slowly. As is said, “Traditions and values die hard.” For example, in India, the religious traditions are deep rooted and every new act or work is undertaken only after consulting priest or the astrologer and only after an offering to God has been made. Successful businessperson will always show respect and belief in the cultural environment and social value system of the area and the people.