Legal factors affecting business

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Legal factors affecting business
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Legal factors affecting business include all regulatory and law determinants that can negatively or positively affect results of market actions and decisions of management of company functioning in particular country. International companies must analyze and identify those factors (legal environment) independently for every state they function. Legal factors analysis is integral part of every strategic analysis method including PEST analysis, STEEP analysis, PESTEL, PESTLE and other derivatives of strategic business environment analysis. It should be noted, that legal environment is constantly changing, laws are not set in stone and may change according to political and international climate. Legal factors are closely associated with ethical factors affecting business.

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Legal factors connected to tax and customs regulations

  • country tax code (may be different in every country served by business),
  • tax restrictions for particular types of business,
  • export and import restrictions,
  • tax relief for some types of products or businesses promoting development,
  • taxes and customs imposed on consumed goods may influence demand,
  • individual income tax, corporate income tax,
  • overall tax and fiscal policy (excise duties),

General economic policy

  • monetary policy,
  • trade policy regulating trade in particular region (trading quotas, restrictions),
  • individual and corporate property rights,
  • government control on business activity (approval, licenses, concessions),
  • promoting specific businesses and products (environmentally friendly goods, healthy products, housing, etc.)
  • banning or limiting specific businesses and products (guns, explosives, drugs, products harming for environment, etc.),
  • laws involving environmental protection (emissions, waste disposal, recycling, etc.)
  • unfair competition laws, antitrust laws,
  • specific regulations of finance, banking and insurance companies,
  • reporting laws for companies operating in the stock market,
  • public accounting standards
  • copyright and patent protection regulations (intellectual property laws, etc.)
  • privacy and data security laws (cyber fraud protection, impersonation protection, etc.),

Laws and regulations connected to employees protection

  • anti discrimination laws (race, religion, sex, age, harassment, etc.),
  • health and safety as work (work breaks, work time and shifts, safety equipment, clothing, etc.),
  • work environment regulations (temperature, hygiene, facilities)
  • protection against dismissal,
  • trade unions regulations,
  • fair and minimal wages regulations (welfare, etc.),
  • minimum contract requirements and mandatory contract elements,
  • mandatory health and social insurance requirements,
  • laws involving employment of foreign workers and managers,
  • anti immigration laws,
  • health care laws and mandatory health care insurance,
  • retirement laws, retirement plans and mandatory insurance,

Legal factors involving consumer protection legislations

  • weight and measures laws (standard weighting equipments, norms, attestations),
  • product description laws (to avoid misleading and fraudulent advertising),
  • consumer credit regulations (protecting against unfair financing activities, loans, interest rates),
  • age restrictions for buying particular goods.

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Author: Krzysztof Wozniak