Whenever human activity is organized, there will be rules of law, as expressed in the ancient adage ubi societas, ibi jus. Law is a complex set of rules and institutions. It consists not only of the formal rules enshrined in the constitutions, statutes, or precedents, but includes the legal practices that may or may not follow the formal law. Ignorance of law is no excuse to not to follow the legal dictates.
The legal environment refers to the framework of laws, regulations, and court decisions intended to encourage, guide and control business activities. The laws relate to consumers, workers, firms, and communities. Others relate to enforcement of contracts; and product, pricing, channels of distribution, promotion, sale of goods and services, market entry laws, etc.
When the Supreme Court of India made a decision that no diesel driven city buses will ply in Delhi, it was an opportunity for gas kit manufacturers and the gas-based bus manufacturers and a threat for the Delhi Transport Corporation, which had a big fleet of diesel buses. When the Government of Delhi decided to do away with polythene bags, it was an opportunity for jute and paper bag makers and a threat for the polythene bag makers and also for those whose costs were bound to increase. When the Reserve bank of India increased the repo and reverse repo rates, the banks had no option, but to increase interest rates on loans.
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There are laws the competition Act 2006 and Consumer Protection Act 1986. A marketer has to follow the contents. India has its Patents Act 1970. A marketer can’t think of anticompetitive practices, trademark and copyright infringement, maximum Resale Pricing, false and misleading advertisement.
It is necessary to follow government instruction on information on labelling. There are numbers of regulators for different sectors and their rules are to be followed. There are self-regulatory entities also. One such body is Advertising Standards Council of India, which decides on complaints filed.
As part of consumer Protection Act, the rights to be protected (not hazardous to life and property); informed (about the quality, quantity, potency, purity, standard and price of goods or services so as to protect the consumers against unfair trade practices); assurance (access to a variety of goods and services at competitive prices); to be heard and to be assured (that consumers’ interests will receive due consideration at the appropriate for a); to seek redressal (against unfair trade practices or unscrupulous exploitation of consumers); and consumer education.
Firms going global have to take care not of home country, but also the host country and the third country environment, i.e., WTO and host of other international legal environments. Because of sanctions against Iran by the USA, India was compelled to pay in Euro through Turkish Bank, and when EU also allied with the USA, India had to search for some other way out. No US firm can trade with Iran or Iranian firm. Even the companies can’t export to other companies to export to Iran and vice versa.