Legal and Regulatory Factors Affecting Business
The legal environment has a significant impact on the success of every business venture. Government regulations may create an atmosphere for businesses to grow or crumble. Because of this, it is important to understand regulations in place when entering a new market and see to it that you adhere to the legal guidelines of the authorities. However, in most cases, countries adopt laws to enhance fairness and predictability in the market. For example, every company operating in the United States is subject to the country’s laws and the legal system. In the same way, Americans doing business in other countries are also subject to the legal system of those foreign countries. They also respect international treaties, which define things like trade and tariffs. Read on to learn more about legal and regulatory factors affecting business.
Important legal and regulatory factors affecting business today
Different laws have varying significance to the business environment. The first type of business law that will affect your business is organizational law. The organization of your business will determine the law that controls it. If it is a legal entity, then it will be subject to the state law. Examples of legal business entities are corporations, different partnerships and limited companies among others. For a business that needs financing through investors, it may be subject to securities laws.
Additionally, businesses, which employ people to offer labor, are subject to employment law. This contains a wide range of state and federal laws such as anti-discriminatory laws, which aim at promoting the rights of employees and equality regardless of their gender, race, age and social class. Occupational health and safety laws seek to foster the safety and overall well being of employees in a company. Workers laws determine the compensation of workers who sustain injuries while on duty. Thus, an understanding of legal and regulatory factors affecting business is crucial to avoid conflicts with the state, which always result into fines, bad brand image, and closure of business in the end.
How the government regulates businesses
Governments have the power and mandate to regulate businesses in different ways. These approaches could be directly or indirectly. For example, the government can control what people produce. For the government to safeguard its interests, it may choose to ban or limit the production of different products in the market. Common products that are under strict production are explosives, guns, and harmful drugs. Besides these, many countries also ban products that pollute the environment to preserve natural ecosystem.
Other legal and regulatory factors affecting business revolve around the rights of and interests of employees. If left unchecked, workers stand the risk of being manhandled. For instance, most governments encourage equality by criminalizing any form of discrimination, be it during job application and interviews. This creates a good working environment, giving everyone equal chances to exploit their abilities towards achieving the company’s goals and objectives.
Major Legal and regulatory factors affecting business activities
Many governments around the world have laws, which guarantee the safety and good health of workers at all times. For example, they protect employees from working on dangerous machinery, which endanger their lives. In addition, the law requires that employees be in their safety gear as long as they are at work. This largely depends on the nature of the work they undertake. Safety equipment and clothing are commonly advised to avoid preventable injuries and accidents at work.
Besides employee protection laws, countries further address the needs of customers by having regulations that serve the interests of customers. This is crucial to avoid cases of exploitation by manufacturers, suppliers and other players in the market. Weight and Measures Act is a common law, which ensures that sellers do not supply underweight products to customers. To do this, they must use standard weighing scales to measure goods without alteration.
On the other hand, Trade Description Act prohibits giving falls information about products with the intention of luring customers into making a purchase. Other laws are Consumer Credit Act, and Sale of Goods Act. Thus, entrepreneurs ought to understand legal and regulatory factors affecting business in order to penalties that may threaten the investment.
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