POLITICAL-LEGAL ENVIRONMENT

Presented By: Sujaya Thapa KVC, IV Sem

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.

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

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

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

POLITICAL SYSTEM

Legislature
Enacts

rules, regulations & laws.

rules, regulations & laws.

Executives/Government
Implement

Judiciary
Ensures

rules, regulation & laws are effectively implemented.

POLITICAL RISK FACTOR

Business firms encountered political risks are:

Ownership risk: risk exposes property & life of a firm Operating risk: risk refers to interference with ongoing operations of a firm Transfer risk: risk encountered when attempts made to 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 a specific industry Eg. Protests against products, campaign against foreign goods

POLITICAL RISK FACTORS

1. Political Instability

Unfavorable & unsuitable political situations.

Inflation, Balance of payments deficit/surplus etc

2. Economic Factors

3. Traditional Hostilities and Terrorism

Nepal bandh, bomb blasts, strike

Industrial unrest, unnecessary demands

4. Labor Conditions

5. Subjective Factors

Based on general perceptions of countrys attitude towards private & public enterprises

POLITICAL RISK FACTORS

Expropriation
transfer

of ownership by government to domestic entity

Intellectual Property Rights (IPR)

Boycotts
Inflation, Taxation & currency Devaluations Embargoes & sanctions

POLITICAL RISK ANALYSIS (TECHNIQUE)

Grand Tours

Team of executives visit for preliminary market research Expert opinion from diplomats, journalist, consultants. Check list is made & sent to expert for their opinion & the process continues till the check list is finalized. Includes various mathematical tools.

Expert Hands

Delphi Technique

Quantitative Methods

Observational data

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.

INTERRELATIONSHIPS BETWEEN POLITICS, GOVERNMENT AND BUSINESS

Facilitating Role

Government grants different facilities to a business like finance, subsidiary, provision of essential public services.

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.

CONTD

Public policies instruments that shape government, business relationships are:

Distributive
Such

policies

as tariffs, government contracts

Redistributive
Such

policies

as progressive taxation & welfare policies

Regulatory
Such

policies

as imposition of rules by government concerning pollution, deforestation, urbanization etc.

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.

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 a society Substantive law deals with content of law while Procedural law deals with how the content of law is implemented Public law is enacted by the state, while Private law is set of rules agreed upon by any two or more private individuals or groups.

Substantive Versus Procedural Law

Public Versus Private Law

BUSINESS LEGISLATION IN NEPAL

General Business Legislation

includes

laws relating to the registration, organization & management of a business. laws relating to mines, minerals & other natural resources.
laws relating to, wages, hours of work, payment of bonus, dispute settlement.

Mines & Natural Resources Legislation

Includes

Labour Legislation
Includes

BUSINESS LEGISLATION IN NEPAL

Financial & Investment Legislation

Includes

laws relating to investment, taxation, foreign exchange, subsidies, stock exchange. laws relating to trademark, copyright, consumer rights, environment protection.
laws relating to sectoral management like tourism, railways, forest, electricity, transportation.

Social Legislation
Includes

Sectoral Legislation
Includes

THANK YOU!!!