Legal Factors
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The list of legal factors that should be considered includes current and impending legislation that may affect the industry in areas such as employment, competition, and health and safety. Anticipated changes in legislation in the main trading partner countries should also be investigated.
Recent years have seen a significant rise in the number of regulatory bodies that have been set up to monitor organizations' observance of legislation relating to all areas of operations, including consumer protection, employee welfare, waste disposal, and how their earnings and investments will be taxed. There are also the trading restrictions, quotas, and excise duties to consider.
All these factors affect the way in which an organization functions and have cost implications that need to be taken into account when formulating business strategy. For example,
Insurance and banking organizations have to demonstrate their legal compliance to the regulatory body, which has implications for how they operate.
The level of market share is often restricted (e.g. under the Antitrust laws of America) to prevent organizations having an unhealthy control of a market or obtaining it through acquisition.
Your PESTLE Analysis should consider the impact of your own national laws as well as those originating in other countries that could have implications for you, for example global accounting regulations, safety compliance, etc. This analysis needs to include those laws affecting working relationships with other organizations that form part of your overall operations. Examples of this type of legislation include:
The 2002 US federal law, Sarbanes-Oxley Act. This set out new or enhanced public accounting standards for all American public company boards. This law came about after several major corporate accounting scandals, such as Enron, Peregrine Systems, and WorldCom.
The Waste Electrical and Electronic Equipment Directive (WEEE Directive) is a European Union directive, which, together with the RoHS Directive, set legally binding collection, recycling, and recovery targets for all types of electrical goods sold in the EU.
Many regulations are applied at a regional as well as a national level and create another layer of complexity that you must consider when developing your strategy. It is these types of influences that can have a significant impact on the ease of operations and require detailed investigations before any decision is made.
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You may also be interested in: Introduction to PESTLE Analysis, PESTLE Factors, Political Factors, Economic Factors, Social Factors, Technological Factors, Legal Factors, Environmental Factors and Advantages and Disadvantages.
