Identify the correct combination of explanation of legal environment.

(A) Public Debt

(B) Political stability, high inflation rates

(C) Legislations passed by government, administrative orders issued by government authorities

(D) Court judgements, decisions rendered by various committees

Choose the correct answer from the options given below.

(C) and (D) Only

The correct answer is option (3)- (C) and (D) Only.

(A) Public Debt: Public debt is related to economic environment.

(B) Political stability, high inflation rates: Political stability is related to political environment and high inflation rates related to economic environment.

(C) Legislations passed by government, administrative orders issued by government authorities: It is directly related to the legal environment as it involves laws and regulations created by the government.

(D) Court judgments, decisions rendered by various committees: It is also directly related to the legal environment, as it involves the outcomes of legal proceedings and decisions made by committees, which can impact businesses.

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.