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Political & Legal Environment

The political and legal environment of a country consists of the government's involvement in promoting, restricting, or regulating corporate processes through various acts, regulations, and analysis of business projects. The main branches of government that impact businesses are the legislature, executive/government, and judiciary. A stable, honest, efficient political system that ensures public participation and security promotes business growth, while an inefficient system can discourage investment as seen in India between 1972-1976. Businesses and governments have reciprocal responsibilities to each other regarding taxes, contracts, political activity, and economic growth.

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Prerna Jha
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197 views13 pages

Political & Legal Environment

The political and legal environment of a country consists of the government's involvement in promoting, restricting, or regulating corporate processes through various acts, regulations, and analysis of business projects. The main branches of government that impact businesses are the legislature, executive/government, and judiciary. A stable, honest, efficient political system that ensures public participation and security promotes business growth, while an inefficient system can discourage investment as seen in India between 1972-1976. Businesses and governments have reciprocal responsibilities to each other regarding taxes, contracts, political activity, and economic growth.

Uploaded by

Prerna Jha
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Political & Legal

Environment

Presented By:

Santosh Ambwani
&
Prerna
What is Political Environment
Political & Legal Environment of a
Country consists of political & regulatory
involvement & influence to promote, restrict, or
handle corporate processes.

The tools are :


Various Corporate Acts,
Annual Regulatory Decisions,
Analysis of business projects by Govt. officials
Political Structure / System

•LEGISLATURE

•EXECUTIVE OR GOVERNMENT

•JUDICIARY
LEGISLATURE :
Most powerful as it does,
decision making, policy making, law making, budget
approving and above all mirror of public opinion.
EXECUTIVE or GOVERNMENT :
It is centre
of political authority having the power to govern
those it serves. Functions & controls the society &
business as well.
JUDICIARY :
It ensures legal execution of the
work & projects according to the rules laid down by
legislation. ( K. G. basin dispute )
IMPORTANCE. .

Promotes Subsidiaries to industries


Encourages Govt. agencies to promote

Directs

Controls Companies Act 1956


Decision Making MRTP Act 1969, FEMA
How should a political environment be:

• Stable (Bengal v/s Gujarat)


• Honest ( Bihar )
• Efficient ( North-East India )
• Ensuring Public
Participation

• Ensuring Personal
Security
If The System is Poor. .
• Foe Eg.
From 1972 – 1976, J.R.D. Tata proposed
478 business proposals, While only 18 got the
approval.
Birla Group stopped their expansion in
India after 1972, and shifted his 18 new projects
to Malaysia, Indonesia, Thailand. . .

Coca Cola left India in 1977, bcoz of a


provision of FERA. That none of foreign
companies can have more than 51% stake in
India.
AFTER 1990’s
All the tables turned around as LPG was
brought into India in 1990. Suddenly there were
drastic changes in indian corporates as the
consequences of changes in political environment

• Coca Cola came back in Indian market in 1993.


• Birla group started their expansions again after
1990.
• Regulations for MNC’s became too liberalised
comparatively as it increased the flow of foreign
investment in the country.
Responsibilities. .

Taxes

Information

BUSINESS Contracts GOVT.

Political Activity

Voluntary Programmes
Responsibilities. .
Law & Order

Competition

GOVT. Orderly Growth BUSINESS

Infrastructure

Technology

Small Industries

Tariffs & Quotas


Types of influences. . .

There are two kinds of political influences on


industries:

1. Pre-Determined 2. Spontaneous

(Financial Budget) (Tata Singur Case)


Conclusion. . .

After all the discussion over political


environment we can conclude that:

A healthy, efficient, comfortable &


promoting political environment favours the
substantial growth of business in any country,
specially when we talk about the largest
democracy of the world.

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