Legal environment

It is concerned with how an organisation does business and covers:-

•    Law of contract i.e. validity of contract.
•    Sale of goods Act – selling practices
•    Health and safety legislation for example in UK there is an Act that governs health and safety at the workplace. It covers the working condition and the preventive measures that an employer should put in place.

•    Employment Act: How an organisation treats its employees.
•    Legislation on competitive behaviour – Law of Tort.
•    Law of Tort: Negligence, Auditor’s and management liability.
•    Environmental legislation: Pollution control such as waste management.
•    Company’s Act in Kenya Cap 486
•    Tax Act Cap 470

 Changes in the law can affect the organisation in many ways for example a tightening of health and safety legislation may increase costs. Premises failing to meet standards may be closed down.

•    A particularly damaging change is the complete ban on a company’s product and this could be worse if the company had not diversified enough its product portfolio. This is what BAT (K) Ltd is facing as many international organisation press on for a total ban on marketing of tobacco products.