Bpp learning Media is an acca approved Content Provider

PART A: THE BUSINESS ORGANISATION, ITS STAKEHOLDERS AND THE EXTERNAL ENVIRONMENT 
 
24
 
 
2
The political and legal environment 
Government policy
influences the economic environment, the framework of laws, industry structure and 
certain operational issues. Political instability is a cause of risk. Different approaches to the 
political 
environment
apply in different countries. 
International trade
is subject to a further layer of international 
law and regulation. 
The 
political environment
affects the firm in a number of ways. 

A basic legal framework generally exists. 

The Government can take a particular stance on an issue of direct relevance to a business or 
industry. 

The Government's overall conduct of its economic policy is relevant to business. 
2.1 The political and legal environment 
Laws come from common law, parliamentary legislation and government regulations derived from it, and 
obligations under treaties such as those establishing the European Union. 
Legal factors affecting all companies 
Factor 
Example 
General legal framework: 
contract, tort, agency
Basic ways of doing business, negligence proceedings 
Criminal law
Theft, insider dealing, bribery, deception 
Company law
Directors and their duties, reporting requirements, takeover proceedings, 
shareholders' rights, insolvency 
Employment law
Trade Union recognition, Social Chapter provisions, minimum wage, 
unfair dismissal, redundancy, maternity, Equal Opportunities 
Health and safety
Fire precautions, safety procedures 
Data protection
Use of information about employees and customers