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POLITICAL-LEGALENVIRONMENT
Presented By:
Sujaya Thapa
KVC, IV Sem
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POLITICAL ENVIRONMENT
Stable political situation encourages
business investment & growth and vice
versa.
Eg: Norway, Finland
Business firm confront numbers of tensions
like ideological conflict, terrorism,
government interventions, labor activism etc.
So, political forces poses number of risks to
a business form.
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CONTD
Political system is concerned with
i. State: system of laws, defined territories
ii. Government: implementing and making
laws iii. Social relationship: national harmony,
peace & well-being, human rights
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IMPACT OF POLITICAL ENVIRONMENT ON
BUSINESS STRUCTURE OF NEPALESE
POLITICAL SYSTEM i. Political system reflects social values
& philosophies It governs decision making process &
allocation of resources
ii. Political environment generates degree of instability
&
uncertainty Generates both opportunity & threats
Eg. American Life Insurance Company (ALIC)
iii. Business firm not only react but also influence
political
figures
Eg. UTL
iv. Business firm also affected by international political
events
Eg. Commodity market
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POLITICAL STRUCTURES
Constitution It is a legal document, a blueprint for the
governance of the state.
It lays down fundamental principles, policies etc.
Political Parties They have different ideologies,
philosophies,
norms & values.
Government Refers to Center of political authority having
the
power to govern it serves.
Represents executive systems
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POLITICAL SYSTEM
Legislature
Enacts rules, regulations & laws.
Executives/Government
Implement rules, regulations & laws.
Judiciary
Ensures rules, regulation & laws are effectively
implemented.
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POLITICAL RISK FACTOR
Business firms encountered political risksare: Ownership risk:
risk exposes property & life of a firm
Operating risk: risk refers to interference with
ongoingoperations of a firm
Transfer risk: risk encountered when attempts madeto shift funds
from country to country
Political risk analysis from 2 perspectives Macro-political
risks: affects all the firms
operating in a country Eg. Civil wars, terrorism
Micro-political risks: affects only specific within aspecific
industry
Eg. Protests against products, campaign against
foreign goods
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POLITICAL RISK FACTORS
1. Political Instability Unfavorable & unsuitable political
situations.
2. Economic Factors Inflation, Balance of payments
deficit/surplus etc
3. Traditional Hostilities and Terrorism Nepal bandh, bomb
blasts, strike
4. Labor Conditions Industrial unrest, unnecessary demands
5. Subjective Factors Based on general perceptions of countrys
attitude
towards private & public enterprises
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POLITICAL RISK FACTORS
Expropriation
transfer of ownership by government todomestic entity
Intellectual Property Rights (IPR)
Boycotts
Inflation, Taxation & currency Devaluations
Embargoes & sanctions
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POLITICAL RISK ANALYSIS (TECHNIQUE)
Grand Tours
Team of executives visit for preliminary marketresearch
Expert Hands
Expert opinion from diplomats, journalist,consultants.
Delphi Technique
Check list is made & sent to expert for their opinion
& the process continues till the check list is
finalized.
Quantitative Methods
Includes various mathematical tools.
Observational data
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PROCEDURES
Assessing Issues of Relevance to the firm 1st: Identifying
critical political issues.
2nd: Effects in a business firm.
3rd
: Government control ownership of business.Assessing Potential
Political Events
What political events will occur in future?
What will be their cause & effects?
Assessing Probable Impacts and Responses Managers should analyze
the impact & response
accordingly to sustain in the market.
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INTERRELATIONSHIPS BETWEEN POLITICS,
GOVERNMENT AND BUSINESS
Facilitating Role Government grants different facilities to a
business
like finance, subsidiary, provision of essential
publicservices.
Regulating Role Government provides constitutional &
legal
framework for a business.
It further prescribes the limits & freedom to business.
Entrepreneurial Role Government promotes business enterprises
like
public enterprise, public utilities for economic growth.
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CONTD
Public policies instruments that shape
government, business relationships are:
Distributive policies
Such as tariffs, government contracts
Redistributive policies
Such as progressive taxation & welfare policies
Regulatory policiesSuch as imposition of rules by government
concerning
pollution, deforestation, urbanization etc.
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LEGISLATION
Legislation is the act of making or enacting
laws by an authoritative bodies.
Features of Business Legislation
Preserve social order & specify penalties for
violation of such order
It establish nature of property & other rights in
the society It acts as a compromiser, by mediating the views
of differential segments of the society.
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FEATURES/CATEGORIES OF BUSINESS
LEGISLATION
Criminal Versus Civil Law Criminal law deal with wrongs done to
society while
Civil law deal with wrong done to individuals in asociety
Substantive Versus Procedural Law Substantive law deals with
content of law while
Procedural law deals with how the content of law
isimplemented
Public Versus Private Law Public law is enacted by the state,
while Private law
is set of rules agreed upon by any two or moreprivate
individuals or groups.
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BUSINESS LEGISLATION IN NEPAL
General Business Legislation
includes laws relating to the registration,organization &
management of a business.
Mines & Natural Resources Legislation Includes laws relating
to mines, minerals & other
natural resources.
Labour Legislation
Includes laws relating to, wages, hours of work,payment of
bonus, dispute settlement.
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BUSINESS LEGISLATION IN NEPAL
Financial & Investment Legislation
Includes laws relating to investment, taxation,foreign exchange,
subsidies, stock exchange.
Social Legislation Includes laws relating to trademark,
copyright,
consumer rights, environment protection.
Sectoral Legislation
Includes laws relating to sectoral managementlike tourism,
railways, forest, electricity,transportation.
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THANK YOU!!!
