Product transportation, profit margins and the viability of certain markets are examples of legal factors that can be affected. The list of legal factors that should be considered includes current and future legislation that may impact the industry in areas such as employment, competition, health and safety. Likely changes in legislation in major trading partner countries should also be examined. The following table lists some of the laws that could be considered when analyzing legal factors: 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). 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.
The Waste Electrical and Electronic Equipment (WEEE) Directive is a European Union directive that, together with the RoHS Directive, sets legally binding collection, recycling and recovery targets for all types of electrical equipment sold in the EU. 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 laws, which we see as a legal factor. 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. That`s all there is about legal factors in PESTLE analysis! These are simply the factors that affect businesses due to or directly related to government laws. They play a huge role in deciding how businesses operate, how much money they make, and how customers behave. Examples include the legality of pyramid schemes and import-export laws.
Finally, they can be seen as affecting companies of all sizes such as Tesco and Anthropologie. When considering legal factors in your PESTEL analysis, it`s important to remember that laws are generally not meant to restrict your business. Instead, they are there to help. According to Businesslawbasics.com, the purpose of laws is to set standards, maintain order, resolve disputes, and protect freedoms and rights. As a business owner, you don`t have to like all laws. However, it is imperative that you are aware of the laws that apply to your business and how they affect it today and tomorrow. As used in this article, the term “government” can refer to a national, state, municipal, provincial or other body that has the capacity to enact 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.
This is why legal factors must play an essential role in the preparation of your PESTEL analysis. Insurance and banking institutions must demonstrate their legal compliance to the supervisory authority, which has an impact on the way they operate. Legal factors include: laws and legal frameworks that affect the organization`s environment, such as health and safety laws, labor law, consumer law, and antitrust laws. Apart from these laws/rules, companies maintain their own rules and regulations that an employee must abide by. Legal analysis therefore takes into account both perspectives and the forms of strategies that take them into account. It doesn`t matter if you consider the factor legal or political. It is important that you consider these factors in your PESTEL analyses and, if necessary and appropriate, consult a lawyer. It`s also important to remember that these legal (and political) factors vary from country to country, state to state, and even city to city. Take legal factors, for example: A rating agency looks at the creditworthiness of a tech company that has significant growth prospects in emerging markets. The analyst must balance this growth trajectory with the inherent risk of intellectual property theft in some countries with weak legal infrastructure. Intellectual property theft can seriously compromise a company`s competitive advantage.
The legal and regulatory environment can influence an industry`s policies and procedures, controlling employment, safety and regulation.
