How Legal Factors affect Business Environment

The business legal environment plays a very important role in determining the success of any businesses around the globe. The government taxes that are being imposed among other regulatory measures help to promote economic growth and to protect consumers from exploitation and other illegal factors. Prior to establishing or when in the process of running a business, accordingly,

it is imperative to understand the role of regional tax measures, legal factors affecting business and regulatory measures in the determination of how your business is affected.  Another measure to help your business adapt to legal issues in its environment is the understanding of regulatory measures and to account for all your regional economic analysis.

Business Legal Environment Definition

In the legal environment of a business, we are looking the key areas, particularly where law changes and how legal aspects affect businesses. All these legal factors are contained in the legal environment of a business.

Legal Factors Affecting Business Environment

Organizational Law

The organizational law is the first type of business law that we will talk about here. Any business that is organized as a legal entity is subject to the state law that governs its operation and conduct. There are different types of business entities. For example, corporations, limited partnerships, partnerships, limited liability partnerships, limited liability limited partnerships and limited liability companies all of which have different legal status and issues.

Securities Law

If a business is seeking to obtain financing through different types of investors, it may be subject to legal issues such as security law. For instance, a decision to offer promissory notes, a type of loan to your investors, will subject the legal factor affecting business to state and federal regulations and security laws.

Every company issues securities and a growing body of law suggests that non-manager interest in a limited liability company is also considered to be securities legal factors. As it is, most small businesses should not worry about business legal factors like federal and state security laws affecting them negatively. But if such a business has plans to raise capital through platforms such as public offerings or online funding.

Contract Law

If the intention is to enter an agreement with another person or entity, then contract law is binding. This also has a special area that is involved directly with factors affecting business, for example, government contracts, which is also known as government procurement laws.

Consumer Protection Laws

Some businesses act unfairly towards their consumers. For this reason, most countries have consumer protection laws that are aimed at ensuring that consumers are protected. Here are examples;

  • Weight and Measures Act: These laws ensure that the goods sold are weighed on Standard weighting equipment.
  • Trade Description Act: This law ensures that it is illegal to deliberately give misleading impression about products.
  • Consumer Credit Act: According to this Act, consumers should be given information of the credit agreement and should be made aware of the interest rates, length of loan while taking a loan.
  • Sale of Goods Act: This Act declares that It is illegal to sell products with flaws or problems and that any goods sold conforms to standards.

Employees Protection laws

Different governments have passed laws to protect the interest of employees. These laws protect them against unfair discrimination at work and when applying for jobs. It ensures that no one is discriminated against on the basis of such things as race, religion, sex, age, or colour.

Laws regarding health and safety at workplaces

Below are a few laws in regards to employees’ working conditions

  • Employees receive protection from dangerous machines.
  • At the workplace, employees should be given clothing and equipment that meet the highest safety standards.
  • Employees should have a reasonable temperature at their workplaces.
  • The highest hygienic standards at the workplace and washing facilities should be met for the sake of employees.
  • Employees to have enough breaking periods while working.

Security against haphazard termination of employees

It is illegal now for businesses to dismiss the employees for joining trade unions or for expecting a baby unless you choose to ignore the new legal factors in business which will have repercussions on your business. Before dismissal of any worker, there has to be warning with proper reasons, otherwise, the case may be treated as an unfair dismissal.

Immigration Laws

After a pestle analysis research, economists concluded on findings that aspects of immigration positively contribute to a society. For instance, lately, American societies have shifted to a more educated, high tech lifestyle.  Therefore, only a few of these well-educated citizens are willing to work at low paying jobs such as janitors and farm workers (The Immigration Debate). 

The immigrants that come to the United States are usually willing to work at these low wage jobs that most Americans would not be comfortable doing. So, if it happened that the United States did not have the immigrants willing to work these jobs, businesses would be limited to two options; close their business or raise wages. 

In this case, the immigrants provide a ready source of relatively affordable labour that keeps the cost of business low and elevating profits. More labour leads to more output thereby leading to consumers buying more products. All these legal factors affecting businesses contribute greatly to the gross domestic product of the United States.

Government Procurement Laws

The government, through its contracting rules regulations and procedures, dictates the way businesses work with it. It not only actively encourages small businesses to participate in expressing interest when it purchases products and services, but it also goes to great lengths and spends lots of money in outreach programs to find good, qualified small businesses to be its suppliers in order to avoid legal factors that would affect their business. Normally, it provides information that helps small businesses to bid with minimal risk, thereby managing the legal factors in the business.

Just for the noting; you can find out how much the government bought the last 5 to 10 times, who they bought from, and how much they paid. If you tried looking for such information elsewhere as legal factors in business, it will be very hectic for you to get.

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