Consider the following statements about the legal environment of business in India:
(A) Legal environment includes the decisions rendered by various commissions and agencies at every level of the government.
(B) Advertisements of alcoholic beverages must carry the statutory warning.
(C) Advertisements of baby food must inform the potential buyer that mother’s milk is the best.
(D) An adequate knowledge of rules and regulations framed by the Government is a pre-requisite for better business performance.
(E) Legal environment includes the specific attitudes that elected government representatives hold towards business.
Which of the statements given above are correct?
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A), (C) and (D) only
(A) Legal environment includes the decisions rendered by various commissions and agencies at every level of the government. — Correct. The legal environment covers laws, administrative orders, court judgments and the decisions of commissions and agencies at the centre, state and local levels.
(B) Advertisements of alcoholic beverages must carry the statutory warning. — Incorrect. The advertisement of alcoholic beverages is prohibited altogether. It is the advertisements and packets of cigarettes that carry the statutory warning.
(C) Advertisements of baby food must inform the potential buyer that mother’s milk is the best. — Correct. This rule protects consumers. Baby food advertisements must tell the buyer that mother’s milk is the best.
(D) An adequate knowledge of rules and regulations framed by the Government is a pre-requisite for better business performance. — Correct. Every enterprise must obey the law of the land, and breaking laws can land it in legal problems. So knowing the rules is a pre-requisite for better performance.
(E) Legal environment includes the specific attitudes that elected government representatives hold towards business. — Incorrect. The attitudes of elected representatives towards business are part of the political environment, along with political stability and peace.
NCERT (2026-27 Edition): “(iv) Political Environment: Political environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business. …” “(v) Legal Environment: Legal environment includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government— centre, state or local. It is imperative for the management of every enterprise to obey the law of the land. Therefore, an adequate knowledge of rules and regulations framed by the Government is a pre-requisite for better business performance. Non-compliance of laws can land the business enterprise into legal problems. In India, Constitutional Provisions; Companies Act 2013; Industries (Development and Regulations) Act 1951; Foreign Exchange Management Act and the Imports and Exports (Control) Act 1947; Factories Act, 1948; Trade Union Act; 1926; Workmen’s Compensation Act, 1923; Industrial Disputes Act, 1947, Consumer Protection Act, 1986, Competition Act, 2002 and host of such other legal enactments as amended from time to time by the Parliament, is important for doing business. Impact of legal environment can be illustrated with the help of government regulations to protect consumer’s interests. For example, the advertisement of alcoholic beverages is prohibited. Advertisements, including packets of cigarettes carry the statutory warning ‘Cigarette smoking is injurious to health’. Similarly, advertisements of baby food must necessarily inform the potential buyer that mothers milk is the best. All these regulations are required to be followed by advertisers.” |