Unit 2 Political Legal Environment

7/27/2019 Unit 2 Political Legal Environment

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POLITICAL-LEGALENVIRONMENT

Presented By:

Sujaya Thapa

KVC, IV Sem


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POLITICAL ENVIRONMENT

Stable political situation encourages

business investment & growth and vice

versa.

Eg: Norway, Finland

Business firm confront numbers of tensions

like ideological conflict, terrorism,

government interventions, labor activism etc.

So, political forces poses number of risks to

a business form.


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CONTD

Political system is concerned with

i. State: system of laws, defined territories

ii. Government: implementing and making

laws iii. Social relationship: national harmony,

peace & well-being, human rights


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IMPACT OF POLITICAL ENVIRONMENT ON

BUSINESS STRUCTURE OF NEPALESE

POLITICAL SYSTEM i. Political system reflects social values & philosophies It governs decision making process & allocation of resources

ii. Political environment generates degree of instability &

uncertainty Generates both opportunity & threats

Eg. American Life Insurance Company (ALIC)

iii. Business firm not only react but also influence political

figures

Eg. UTL

iv. Business firm also affected by international political

events

Eg. Commodity market


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POLITICAL STRUCTURES

Constitution It is a legal document, a blueprint for the

governance of the state.

It lays down fundamental principles, policies etc.

Political Parties They have different ideologies, philosophies,

norms & values.

Government Refers to Center of political authority having the

power to govern it serves.

Represents executive systems


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POLITICAL SYSTEM

Legislature

Enacts rules, regulations & laws.

Executives/Government

Implement rules, regulations & laws.

Judiciary

Ensures rules, regulation & laws are effectively

implemented.


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POLITICAL RISK FACTOR

Business firms encountered political risksare: Ownership risk: risk exposes property & life of a firm

Operating risk: risk refers to interference with ongoingoperations of a firm

Transfer risk: risk encountered when attempts madeto shift funds from country to country

Political risk analysis from 2 perspectives Macro-political risks: affects all the firms

operating in a country Eg. Civil wars, terrorism

Micro-political risks: affects only specific within aspecific industry

Eg. Protests against products, campaign against

foreign goods


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POLITICAL RISK FACTORS

1. Political Instability Unfavorable & unsuitable political situations.

2. Economic Factors Inflation, Balance of payments deficit/surplus etc

3. Traditional Hostilities and Terrorism Nepal bandh, bomb blasts, strike

4. Labor Conditions Industrial unrest, unnecessary demands

5. Subjective Factors Based on general perceptions of countrys attitude

towards private & public enterprises


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POLITICAL RISK FACTORS

Expropriation

transfer of ownership by government todomestic entity

Intellectual Property Rights (IPR)

Boycotts

Inflation, Taxation & currency Devaluations

Embargoes & sanctions


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POLITICAL RISK ANALYSIS (TECHNIQUE)

Grand Tours

Team of executives visit for preliminary marketresearch

Expert Hands

Expert opinion from diplomats, journalist,consultants.

Delphi Technique

Check list is made & sent to expert for their opinion

& the process continues till the check list is finalized.

Quantitative Methods

Includes various mathematical tools.

Observational data


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PROCEDURES

Assessing Issues of Relevance to the firm 1st: Identifying critical political issues.

2nd: Effects in a business firm.

3rd

: Government control ownership of business.Assessing Potential Political Events

What political events will occur in future?

What will be their cause & effects?

Assessing Probable Impacts and Responses Managers should analyze the impact & response

accordingly to sustain in the market.


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INTERRELATIONSHIPS BETWEEN POLITICS,

GOVERNMENT AND BUSINESS

Facilitating Role Government grants different facilities to a business

like finance, subsidiary, provision of essential publicservices.

Regulating Role Government provides constitutional & legal

framework for a business.

It further prescribes the limits & freedom to business.

Entrepreneurial Role Government promotes business enterprises like

public enterprise, public utilities for economic growth.


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CONTD

Public policies instruments that shape

government, business relationships are:

Distributive policies

Such as tariffs, government contracts

Redistributive policies

Such as progressive taxation & welfare policies

Regulatory policiesSuch as imposition of rules by government concerning

pollution, deforestation, urbanization etc.


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LEGISLATION

Legislation is the act of making or enacting

laws by an authoritative bodies.

Features of Business Legislation

Preserve social order & specify penalties for

violation of such order

It establish nature of property & other rights in

the society It acts as a compromiser, by mediating the views

of differential segments of the society.


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FEATURES/CATEGORIES OF BUSINESS

LEGISLATION

Criminal Versus Civil Law Criminal law deal with wrongs done to society while

Civil law deal with wrong done to individuals in asociety

Substantive Versus Procedural Law Substantive law deals with content of law while

Procedural law deals with how the content of law isimplemented

Public Versus Private Law Public law is enacted by the state, while Private law

is set of rules agreed upon by any two or moreprivate individuals or groups.


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BUSINESS LEGISLATION IN NEPAL

General Business Legislation

includes laws relating to the registration,organization & management of a business.

Mines & Natural Resources Legislation Includes laws relating to mines, minerals & other

natural resources.

Labour Legislation

Includes laws relating to, wages, hours of work,payment of bonus, dispute settlement.


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BUSINESS LEGISLATION IN NEPAL

Financial & Investment Legislation

Includes laws relating to investment, taxation,foreign exchange, subsidies, stock exchange.

Social Legislation Includes laws relating to trademark, copyright,

consumer rights, environment protection.

Sectoral Legislation

Includes laws relating to sectoral managementlike tourism, railways, forest, electricity,transportation.


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THANK YOU!!!

Unit 2 Political Legal Environment

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