Marketing decisions are highly affected by changes in the political/ legal environment. The environment is made up of laws and government agencies that influence and constraint various organizations and individuals in society. Legislations affecting business has steadily increased over the years. The product the consumes and the society against unethical business behaviour and regulates the functioning of the business organizations.
Removal of restrictions to the existing capabilities, enlargement of the spheres open to MRTP and FEMA companies and broad banding of industrial licenses were some of the schemes evolved by the government. The legal enactments and rules and regulations exercise a specific impact on the marketing practices, systems and institutions in the country. Some of the acts which have direct bearing on the marketing of the company include, the Prevention of Food Adulteration Act (1954), The Drugs and Cosmetics Act (1940), The Standard Weights and Measures Act (1956) etc.
The Packaged Commodities (Regulative) Order (1975) provides for clearly making the prices on all packaged goods sold in retail excluding certain items. Similarly, when the government changes, the policy relating to commerce, trade, economy and finance also changes resulting in changes in business. Very often it becomes a political decisions. For instance, one Government introduce prohibition, and another government lifts the prohibition. Also, one Government adopts restrictive policy and another Government adopts liberal economic policies.
All these will have impact on business. Hence, the marketing executives needs a good working knowledge of the major laws affecting business and have to adapt themselves to changing legal and political decisions. All the above micro environmental actors and macro environmental forces affect the marketing systems individually and collectively. The marketing executives need to understand the opportunities and threats caused by these forces and accordingly they must be able to evolve appropriate marketing strategies.