Government and Legal Environment

Submitted to: Name : Abhinav

Dr. Jasbir Singh  Enr. No. : 00614905011

Class : BBA(TTM)

4th

 Sem 

 

Government in every country creates laws and regulations to ensure proper

functioning of the economy. These formal rules and procedures together with

informal rules (customs, traditions, norms, etc.) regulate and guide business

activities. When the government regulatory and legal environment is positive,

business and industry prosper. But if these environment are negative, business

suffers. For example, laws or their improper enforcement may discourage

creation of wealth. Frequent changes in Government policies and laws create

uncertainty and risk for businessmen.

Changes in Government policies create opportunities for some and threats for

others. For example, reduction in controls over foreign investment has created

tremendous opportunity for multinationals. But this has created serious threat to

many Indian companies by way of cut throat competition.

Many countries today law to regulate competition in the public intrest.

Elimination of unfair competition and dilution of monopoly power are the

important objective of these regulation.

Certain changes in government policies such as the industrial policy, fiscal policy,

tariff plan etc. may have profound impact on business. Some policy developments

create opportunities as well as threats.

In other words, a development which brightens the prospects of some

enterprises may pose a threat to some others. For example, the industrial policy

liberalizations In India have opened up new opportunities and threats.

They have provided a lot of opportunities to a large no. of enterprises to diversify

and to make their product mix better. But they have also given rise to serious

threat to many existing products by way of increased competition; many seller’s

markets have given way to buyers market. Even product which are seldom

advertised have come to be promoted very heavily.

This battle for the market has provided a splendid opportunity for the advertising

industry.

 

Some of the major laws affecting business in India are given below:

1.  The Industries (Development and Regulation) Act, 1951 which seeks to

regulate industrial pattern and prices. The Act empowers the Government

to order investigation (a) if there is an unjustifiable increase in the price of

products of an industry, (b) when there is a marked deterioration in the

quality or (c) if there is unjustifiable fall in the volume of production.

2.  The Essential Commodities Act, 1955 which empowers the Government to

declare any commodity as essential in the public interest and exercise

control over it.

3.  The Companies Act, 1956 which regulates the promotion and management

of the corporate sector in India.

4.  Pollution Controls Laws which seek to protect the environment against air,

water and noise pollution and to preserve the ecological balance.

5.  Laws which specifies standards for the product and packaging and even

prohibit the marketing of certain products.

6.  Controls on advertising of alcoholic liquor and tobacco products.

7.  The Consumer Protection Act, 1986 which seeks to protect the right of

consumers.

8.  Laws regulating monopolistic, unfair trade and restrictive trade practices.

9.  The Competition Act which seeks to regulate competition in the public

interest.

10. Labour Laws designed to protect and promote the interests of the working

class.