2. Introduction
Political-legal Environment is a collection of factors such as,
• the general state of politics,
• the degree of politicisation of business and economic issues,
• the level of political morality,
• the law and order situation,
• the political ideology and practices of the ruling party
• specific legal enactments and framework in which the
enterprise has to function and the degree of effectiveness
with which they are implemented, public attitude towards
business in general and the enterprise in particular, and so
on.

3. 3 IMPORTANT ELEMENTS IN
POLITCAL – LEGAL ENVIRONMENT
Government
Legal
Political

4. Government
• It is an important institution which regulates business.
• It is an agency which is responsible for creating a
favourable business environment.
• Government and business are the 2 major institutions
which contribute towards shaping of the economy
irrespective of its nature.
• The type of government running a country is a powerful
influence on any business.
• The Govt. acts as a Promoter, Entrepreneur, Planner and
Regulator.

5. Government regulates business activities by using certain
measures:
 Direct & Indirect Control measures.
 Licensing
 Special reservation system(small industries, heavy industry
segments, large scale etc)
 Indian Companies Act was legislated to regulate activities of
the Companies.
 Payment of Taxation is regulated by Taxation Act.
 Capital markets are regulated by SEBI.
 Consumer Act protects the Consumers

6. LEGAL ENVIRONMENT IN
BUSINESS
 Basically India is an emerging economy and it promotes
Foreign Direct Investments in the country. That is the
reason why the legal system for businesses in India is very
flexible.
 In any country, businesses must have a good working
knowledge of the major laws protecting consumers,
competitions and organisations.
 Businesses must understand the relevant laws relating to
companies, competition, intellectual property, foreign
exchange, labour.
 The implementation of the legal system starts right from
one’s decision to start a business in India.

7. CURRENT LEGAL ENVIRONMENT
BUSINESS IN INDIA
• They have to take an online Director Identification
number (DIN) and then they obtain an online Digital
signature certificate.
• It is a legal requirement to register the name and
nature of the business in Registrar of Companies or
ROC.
• Then they have to stamp the company documents
from a superintendent.
• Medical insurance is also required for all sorts of
businesses.

8. • There is an employee provident organization, where
registration of companies are carried out. It is a legal
requirement for all of the businesses to register for
profession tax.
• Although India encourage business opportunities
but still the legal environment requires a lengthy
process to start or carry on a business.
• It takes 35days to start business in India. India ranks
a lowly 134th in the world when it comes to ease of
starting a business.

9. ENVIRONMENT IN POLITICAL
BUSINESS
• The political environment includes all laws, government
agencies ,and lobbying groups that influence or restrict
individuals or organizations in the society.
• Political uncertainty, political movements against certain
products, service and organisations, politicalisation of
trade unions, etc., put a lot of pressure on business
organisations. The political environment of business is one
that deals with the concepts of politics and the way they
influence how business operate.
• Ranging from election rigging, to military-political
corruption, political bribery has become a pervasive and
inescapable truth of our everyday life. This is the case not
only in India, but in several nations around the world.
Even though it remains inconspicuous, political bribery
and Corruption exist behind the shadows.

10. political environment’s
effects on Business
• The political environment can affect a business either positively, or
negatively, depending on the prevailing situation in a country.
• Political corruption and bribery have various effects on the
community, including economic effects as well as social and communal
effects. Not to mention, it makes people trust the government less and
makes them more wary about their leaders.
• the government uses legislation and regulation as a way of sustaining
the environment. It puts limits on levels of pollution that a certain firm
may reach, and if that limit is crossed, a fine will have to be paid by the
firm.
• However, in such a case, if government officers and executives are bribed
with ease, companies may take advantage of it by violating their grants.
This may have adverse effects on the environment, ultimately leading to
market failure.
• Corruption through political bribery leads to poverty. For instance, in
Bihar, around 80% of the subsidized food aid that is meant to be received
by the poor is filched by officials.

11. Attitude Of the Company
• The attitude of the company is also important. A foreign
business enterprise must realise that it is a guest of the host
country. If a firm realises this fact then the political risk is
minimised because it needs to contribute to the national
goals of the host country if it wants to continue doing
business in that country.
• For instance Cerro v/s. Macron Mining Corporation both
belonging to the mining industry one was encouraged by the
government while the other firm was discouraged. This was
essentially because Macron realised its position as a guest of
the country, making contribution for achievement of
national objectives; whereas Cerro Corporation undertook
no such task and therefore was given out an unfavourable
decision.

12. • Business success depends on politics to a high degree, and
in many ways. Politicians are usually the people controlling
the operations of a government, and will decide which
countries to trade with, as well as on setting the trading
conditions. This means that, if a certain business or its
owners are not on good terms with the politicians, then
they will suffer.
• Political influence is part of starting a business in India,
especially if one is planning to start a large business.
Political patronage is necessary, not only to safeguard the
interest of the company but also to begin the process of
getting the required sanctions.

13. • Usually, the new party comes in and transfers a few civil
servants and cancels the old regime’s government works
projects. For instance when Ms.Jayalalitha was re-elected
as Chief Minister of Tamil Nadu, her first action was to
relocate the assembly and secretariat from the newly
constructed building back to Fort St.George. Even the
'Semmozhi Poonga' (Classical Tamil Park) is taken off its
neon lights after the change of guard in the state.
• This means a Company must be aware of all these issues to
start of business in a place. Many MNC’S have political
patronage. They need to support any particular party in
the state by giving them some benefits and shares of the
company in order to sustain in Business there. If a
particular party is ruling at that time then the Companies
associated with that party will receive so much benefits.

14. PEPSI
"Convincing India that it needs Western junk has not been easy."
- A New Internationalist Magazine Article, commenting on Pepsi's
struggle to enter India, in August 1988.
PEPSI is a carbonated soft drink that is produced and manufactured by
PepsiCo. Created and developed in 1893 and introduced as Brad's Drink, it
was renamed as Pepsi-Cola.
Hurdles faced by PepsiCo while entering India:
Political Environment:
1. No intent to invest locally in industries or provide employment
2. Opposition to promotion of carbonated drinks
3. Fear of invasion of foreign brand
Legal Environment:
1. Severe restrictions in equity through FERA(Foreign Exchange Regulation Act)
2. Dispute in relation to ownership of Pepsi brand name .

15. Corporate Social Responsibility:
Pre-Establishment Attempts:
The Punjab card:
1. Develop Punjab’s agriculture and employment generation
rather than on soft drinks.
2. Green revolution in Punjab which would end the stagnation
there and promote small and medium farmers.
3. Also help divert the youth away from terrorism and bring
peace.
The ruling parties agreed to this and PepsiCo formed a joint
venture with Voltas. The bundle offered by Pepsi turned the scale
on their side.
Pepsi with its strong market instinct and research decided to play
along with the government’s conditions. Once after establishing a
certain amount of goodwill and local support they began with their
main motive of selling soft drinks. Multinationals working towards
improvement of economy like Pepsi also involve themselves in
other social activities to maintain their public image.

16. pepsi’s entry into india-A
lesson of Globalisation
• The letter was written by the General Secretary of one of the
country's leading political parties, Janata Dal. He wrote, "I
learned that you are coming here. I am the one that threw
Coca-Cola out, and we are soon going to come back into the
government. If you come into the country, you have to
remember that the same fate awaits you as Coca-Cola.“
• PepsiCo's arch-rival and the world's number one cola
company, Coca-Cola, had indeed been forced to close
operations and leave India in 1977 after the Janata Dal came
to power. Even in the late 1980s, India had a closed economy
and government intervention in the corporate sector was
quite high.

21. PRESENTED
BY
• Noelta.S 10/UCMA/611
• Steffy 10/UCMA/629
• Ashwini 10/UCMA/637
• Abirami.R 10/UCMA/652
• Poojitha.K 10/UCMA/653
• Shrinidhi.S 10/UCMA/661
• Paveethra Lakshmi 10/UCMA/671