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. In this series on the importance of producing 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 the legal and policy factors we discussed earlier. Q: Only international companies should conduct a social environment study before entering the market. True or false? Political stability, peace in the country, the specific attitudes of an elected official, etc.
are the factors that influence the political environment. The legal environment includes the courts as well as the government agencies responsible for issuing regulations. Companies, especially international companies, always study the cultural and social environment of a country before entering the market. It is important that your goods and services correspond to the social environment of the country. Otherwise, the company could face backlash and losses. The following table lists only some of the laws that can be considered when analyzing legal factors: In a country, a company can be established, regulated, controlled, developed within the legal framework of a country, determines the legal environment. 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. The political stability of a country is essential to the stability of the economy and the stability of the stock market. Various political groups also have great influence on business and trade unions. The political environment of a country is therefore an essential factor for the success of a company. Federal agencies play an important role in business operations.
If Pfizer wants to bring a new heart disease drug to market, it must follow the testing and clinical trial procedures established by the Food and Drug Administration and receive FDA approval. Before issuing shares, Pfizer must register the securities with the Securities and Exchange Commission. The Federal Trade Commission will penalize Pfizer if its advertising promoting the drug`s benefits is misleading. These are just some of the ways in which the political and legal environment influences business decisions. In a country, the political system, the constitutional disposition, the party system, the events that occur from time to time determine the political environment. These determine the extent to which government and government policies may affect a particular organization or industry. This includes political policy and stability as well as trade, fiscal and fiscal policy. In marketing, before any type of strategy or tactical plan can be implemented, it is fundamental to conduct a complete analysis of the situation. This analysis should be repeated every six months to identify changes in the macroeconomic environment.
Organizations that successfully observe and respond to changes in the macroeconomic environment can stand out from the competition and thus gain a competitive advantage over others. The distinction between the legal and policy components of the PESTEL framework is often difficult to make – policy decisions are often translated into law, so there are clear links between the two parties. However, there are distinctions between political factors (related to a government) and legal parties (associated with courts and regulators). Political factors overlap with legal factors; However, the main difference is that political factors are guided by government policy, while legal factors must be respected. 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. This is a non-market factor, but it can still have a strong impact on a business. The political-legal environment is a combination of many factors such as the current political party, the degree of politicization of trade and industry, the effectiveness of the current government, government policy, the current legal framework, the attitude of the public towards the economy, etc. In the United States, laws passed by Congress and numerous regulatory bodies cover areas such as competition, minimum wage, environmental protection, workplace safety, copyright, and patents. For example, Congress passed the Telecommunications Act of 1996 to deregulate the telecommunications industry.
As a result, competition increased and new opportunities emerged as traditional boundaries between service providers blurred. Today, the dramatic growth of mobile technology has changed the direction of telecommunications, which now face challenges in terms of broadband access and speed, content streaming, and much-needed improvements in network infrastructure to cope with ever-increasing data transmissions. The focus is on the social environment and the recognition of emerging trends. This helps a marketer better understand the needs and wants of consumers in a social context. Factors include family demographics, education levels, cultural trends, attitudinal changes and lifestyle changes. As we have seen, a company has no control over the different elements that make up its macro environment. But it`s important to study them, as it allows companies to prepare for change. Let`s find out a little more about the political-legal environment and the social environment and its impact on a company. 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.