Example of Legal in Pestle
The following table lists only a few of the laws that can be considered when analyzing legal factors: In the context of a PESTEL analysis, there is often uncertainty about the difference between political and legal factors. Legal factors refer to all the legal forces that define what a company can and cannot do. Political factors influence the relationship between business and government. Political and legal factors can overlap when government agencies introduce laws and policies that affect the way businesses work. As used in this post, the term “government” can refer to a national, state, municipal, provincial or other body that has the capacity to make laws, rules and regulations. If your business operates from one or more locations and sells its products to buyers in other locations, your business is subject to the laws of more than one government. And that`s why legal factors should play a critical role in creating your PESTEL analysis. While these factors may have some overlap with political factors, they include more specific laws such as discrimination laws, antitrust laws, labor laws, consumer protection laws, copyright and patent laws, and health and safety laws. It is clear that companies need to know what is legal and what is not to act successfully and ethically.
When an organization acts globally, it becomes particularly difficult because each country has its own rules and regulations. In addition, you want to know about possible changes in legislation and their impact on your business in the future. It is recommended to have a legal advisor or lawyer to help you with such matters. That`s why we`re writing this series of articles on each of the categories, including their definitions, importance, and many examples. If you haven`t already, you should learn about political, economic, social, technological, and environmental factors before proceeding. Political factors tend to be overarching issues such as tax policy, trade policy, or foreign trade policy, while legal factors tend to be more specific and relate to issues such as discrimination laws, antitrust laws, or intellectual property laws. However, they overlap. Take, for example, labour law, which we see as a political factor, and occupational health and safety law, which we see as a legal factor. For example, an increase in an economy`s inflation rate would affect how firms value their products and services. It would also affect a consumer`s purchasing power and could lead to a change in supply and demand patterns for that economy. Not only do internal affairs decide the fate of a company, but many external factors also have the same effect. A country`s political situation, technological developments, environmental factors, legality of actions, economic and social factors all play an important role.
Companies are aware of this fact, so they use an economic tool – PESTLE analysis. A government`s rules and regulations – its laws – will always have a macroeconomic impact on a company`s success. And for companies operating under the jurisdiction of multiple governments, executives need to be aware of the legal factors in each location. At the time of writing, the U.S. and China are negotiating a new trade deal. One of the key factors in the deal is the violation of U.S. intellectual property laws by the Chinese, who do not recognize U.S. patent laws. This considerable disagreement affects both political factors (trade policy) and legal factors (copyright and patent law). This law is the primary law for any business that may arise. Organizational law regulates the creation, operation and dissolution of a company.
Whether someone decides to start a sole proprietorship, partnership, or business, he/she must go through certain constitutional activations to register the corporation as a legal entity. There are different types of organizational laws for each type of business that determine the activities, customs, management and taxation of each of them. Your PESTLE analysis should consider the impact of your own national laws as well as those of other countries that could impact you, such as global accounting regulations, security compliance, etc. This analysis should include laws that affect labour relations with other organizations that are part of your overall operation. Examples of this type of legislation include: Consumer law – Consumer law (also known as consumer protection) is designed to protect consumers from fraudulent businesses or practices and to protect their rights in the marketplace. “How does this affect businesses?” you may ask. For example, consumer law means that large companies must devote a significant portion of their resources to publishing detailed information about their products and policies. On the other hand, consumer law itself makes a case for some private surveillance companies. In this series on the importance of creating a PESTEL analysis, we have repeatedly mentioned that political, economic, social, technological, environmental and legal factors often overlap.
Overlap is good because it ensures that leaders do not lack anything when considering critical strategic decisions. Most notable is the overlap between legal and political factors that we discussed earlier. A PESTLE analysis is a powerful tool to understand the context of change and focus on areas where change is successful. In this situation, PESTLE analysis works best with a SWOT analysis. This helps a company identify opportunities and potential threats associated with career change, such as skills shortages and workforce capacity. That`s all there is about legal factors in PESTLE analysis! These are simply the factors that affect businesses as a result of or in direct relation to state laws. They play a huge role in deciding how businesses operate, the profits they make, and how customers behave. Examples include the legality of Ponzi schemes and import and export laws. Finally, they can be seen as affecting companies of all sizes such as Tesco and anthropology. Legal factors include organizational law, labor law, consumer law, advertising law, product and service standards law, banking law, antitrust law, and intellectual property law.
This article covers just a few examples of common external factors that businesses should consider. There are probably many more factors that could affect a particular business. In addition, the importance of certain factors varies greatly from industry to industry and from country to country. The software industry, for example, may have less to do with environmental and environmental factors than the oil or automotive industries. A lot of data on the above factors can be found on websites such as tradingeconomics.com, theglobaleconomy.com, data.oecd.org, and data.worldbank.org. For example, we recently prepared an information presentation for a successful restaurant client, for whom we have completed several mandates in recent years.
