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Government and Legal Environment

Submitted to: Dr. Jasbir Singh

Name Enr. No. Class

: : :

Abhinav 00614905011 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 sellers 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.