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Question
Distinguish between the following.
Political Environment and Legal Environment.
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Solution
| Sr no. | Aspect | Political Environment | Legal Environment. |
| 1. | Meaning | Refers to the influence of the political system, government policies, stability, and political parties on business activities. | Refers to the framework of laws, rules, and regulations under which business is established, operated, and controlled. |
| 2. | Factors | Stability of government, ideology of ruling party, policies of leaders, foreign policy, taxation policies, etc. | Business laws, labor laws, consumer protection laws, environmental regulations, company law, etc. |
| 3. | Interrelation | Closely linked with the economic environment, political decisions often shape business policies. | Closely linked with the regulatory environment, laws provide the structure for smooth functioning of businesses. |
| 4. | Impact on Business | Political ideology and stability influence investment, confidence, and growth of businesses. | Legal provisions provide protection, control, and direction to business operations. |
| 5. | Purpose | Ensures stability, security, and a favourable climate for business and investors. | Ensures justice, protection of rights, and fair practices among business organisations, workers, and consumers. |
| 6. | Effect of Changes | Political instability, policy changes, or unrest negatively affect business confidence and growth. | Frequent changes in laws, strict controls, or excessive regulations may increase costs and create hurdles for business development. |
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