✎✎✎ What Are Legal Factors
Risk management is informed by scientific assessment of what are legal factors to human and what are legal factors health with information drawn from toxicology, chemistry, epidemiology, ecology, and statistics - to what are legal factors a few. Government-business trade relations are the what are legal factors between national governments and global businesses. In what are legal factors, the ideology influences or controls the people, not just a person or party. The business need what are legal factors study the culture, what are legal factors values, the norms, what are legal factors of the country and what are legal factors their products, services to Dbq Essay On The Electoral College culture. Legal factors are external factors which Hillary Clinton: The Most Successful Speech to how the law affects the way businesses operate and customers behave.
Marketing 1: Ch 2.2.7 - Legal Factors
Table 2. In the past thirty years, governments have increasingly privatized a number of industries. State companies, like their private sector counterparts, get to keep the profits from oil production, creating a significant incentive for governments to either maintain or regain control of this very lucrative industry. Whether the motive is economic i. Multinationals now find themselves competing as never before with state-owned companies armed with substantial financial and political support from their governments. Governments are also motivated by economic factors to intervene in trade. They may want to protect young industries or to preserve access to local consumer markets for domestic firms.
While the past century has seen a major shift toward free trade, many governments continue to intervene in trade. Governments have several key policy areas that can be used to create rules and regulations to control and manage trade. As shown in the opening case study, China is using its economic might to invest in Africa. With its huge population, China is in constant need of energy to meet the needs of its people and businesses. As a result, the government has placed a priority on energy related technologies, including solar energy. Facing a shortage in , growing domestic demand, and high prices from foreign companies that dominated production, China declared the development of domestic polysilicon supplies a priority.
Domestic Chinese manufacturers received quick loans with favorable terms as well as speedy approvals. The company now has a 25 percent market share of polysilicon and almost 50 percent of the global market for solar-power equipment. How did this happen so fast? Many observers note that it was the direct result of Chinese government intervention in what was deemed a key industry. It leverages state control of the financial system to channel low-cost capital to domestic industries—and to resource-rich foreign nations such as those we read in the opening case whose oil and minerals China needs to maintain rapid growth. China is both an emerging market and a rising superpower. Contrary to the approach of much of the world, which is moving more control to the private sector, China has steadfastly maintained its state control.
For example, the Chinese government owns almost all the major banks, the three largest oil companies, the three telecommunications carriers, and almost all of the media. Free trade advocates perceive this government-directed intervention as an unfair tilt against the global private sector. Nevertheless, global companies continue to seek the Chinese market, which offers much-needed growth and opportunity.
Previous Section. Table of Contents. Next Section. Identify the different legal systems. Understand government-business trade relations and how political and legal factors impact international business. What Are the Different Political Systems? Did You Know? What Are the Different Legal Systems? Government—Business Trade Relations: The Impact of Political and Legal Factors on International Trade How do political and legal realities impact international trade, and what do businesses need to think about as they develop their global strategy?
Why Do Governments Intervene in Trade? State Capitalism: Governments Seeking to Control Key Industries Despite the movement toward privatizing industry and free trade, government interests in their most valuable commodity, oil, remains constant. China National Iranian Oil Co. How Do Governments Intervene in Trade? Tariffs are taxes imposed on imports. Two kinds of tariffs exist— specific tariffs Taxes or tariffs that are levied as a fixed charge, regardless of the value of the product or service. Many governments still charge ad valorem tariffs as a way to regulate imports and raise revenues for their coffers.
A subsidy is a form of government payment to a producer. Types of subsidies include tax breaks or low-interest loans; both of which are common. Subsidies can also be cash grants and government-equity participation, which are less common because they require a direct use of government resources. Import quotas and VER. Import quotas and voluntary export restraints VER are two strategies to limit the amount of imports into a country. The importing government directs import quotas, while VER are imposed at the discretion of the exporting nation in conjunction with the importing one. Currency controls. Governments may limit the convertibility of one currency usually its own into others, usually in an effort to limit imports.
Additionally, some governments will manage the exchange rate at a high level to create an import disincentive. Local content requirements. Some countries specify that a local firm must be used as the domestic partner to conduct business. Antidumping rules. Dumping occurs when a company sells product below market price often in order to win market share and weaken a competitor. Export financing. Governments provide financing to domestic companies to promote exports.
Free-trade zone. Companies are also rewarded for having a positive impact on the environment. The consumers are willing to switch brands if they find a business is ignoring its environmental duties. The impact on the environment is a rising concern. Note that the environment benefits the company too. Running water for a hydro-power plant is an example. This step involves learning about the laws and regulations in your region. It is critical for avoiding unnecessary legal costs. These factors overview the legal elements. Often, start-ups link these elements to the political framework.
Many legal issues can affect a company that does not act responsibly. This step helps to avoid legal pitfalls. You should always remain within the confines of established regulations. Managers might conduct it before any large projects are undertaken. Understanding all the influencing factors is the first step to addressing them. Remember, there are many factors other than these which can have an effect on business success. The evaluation is a one-to-one process. Each company should do it for themselves and find the key drivers of change. You must identify the factors which have strategic and competitive consequences. Analyzing the total macro-environment is an extensive task.
Even though, it is complex, understanding the PESTEL framework of basic influences will allow you to maintain an organized and strategic approach. These will isolate each opportunity or threat. Risk managers also use risk assessment results as a basis for communicating risks to interested parties and the general public. Management may involve regulatory and non-regulatory responses. Examples of risk management actions include deciding how much of a substance a company may discharge into a river; deciding which substances may be stored at a hazardous waste disposal facility; deciding to what extent a hazardous waste site must be cleaned up; setting permit levels for waste discharge, storage, or transport; establishing national ambient air quality standards; and determining allowable levels of contamination in drinking water.
Risk management is informed by scientific assessment of risks to human and ecosystem health with information drawn from toxicology, chemistry, epidemiology, ecology, and statistics - to name a few. Risk management also is informed by:. Appropriate risk management actions for sectors of industry or for local communities can be spelled out in risk management plans for day-to-day activities and for actions to be taken under emergency situations.