MB20205 LEGAL AND BUSINESS ENVIRONMENT (MICRO AND MACRO)

UNIT I
Introduction to Business law and its significant place of micro and
macro environment of business – Business Management and
Jurisprudence; Structure of the Indian Legal Systems: Sources of
Law, Manager Legal System –Right to Information Act.

LEARNING RESOURCES
1. Ravindra Kumar– Legal Aspects of Business–Cengage–2016
2. Akhileshwar Pathak, Legal aspects of business– Tata McGraw–
Hill,2016
3. N.D.Kapoor, Mercantile Law , Sultan & Sons, 2012
UNIT I
Introduction to Business law and its significant place of micro and macro environment of business –
Business Management and Jurisprudence; Structure of the Indian Legal Systems: Sources of Law,
Manager Legal System –Right to Information Act- Case Studies.
What is Law?

The law is a set of rules, enforceable by the courts, which

regulate the government of the state and govern the relationship
between the state and its citizens and between one citizen and
another.
OR Rules made by authority for the proper regulation of a
community or society, or for correct conduct in life.
Nature of Law
¶ Law is, at one and the same time, essentially authoritative and essentially
ideal.

¶ Law necessarily comprises both a real or factual and an ideal or critical

dimension.

¶ A central element of its ideal dimension is a claim to correctness, which

includes a claim to moral correctness.

¶ A central element of the real dimension of law is coercion or force.

"Ignorance of law excuses no one", this is a legal principle holding that a
person who is unaware of a law may not escape liability for violating that law
merely because one was unaware of its content.
The Constitution of India is the supreme law of India.

It is the longest written constitution of any sovereign country in the world. It came into
effect on 26 January 1950.
Introduction to Business Law.
The law affects every aspect of our lives; it governs our conduct from the cradle to the grave and
its influence even extends from before our birth to after our death.

Law is essential to any society in that it provides the rules by which people and businesses
interact.

Law affects almost every function and area of business.

Business law encompasses all of the laws that dictate how to form and run a business.

This includes all of the laws that govern how to start, buy, manage and close or sell any type of business.

Business laws establish the rules that all businesses should follow.

Business law is the law that governs what happens with commercial matters, and there are two main types: regulation
of commercial entities and regulation of commercial transactions. Laws have evolved over centuries, and have had to
adapt to changes in technology and society.
Types of Business Law
Here are some of the most common types of business law:
Employment Law
Especially in today’s modern workplace, it is vital for any company with even one employee to stay abreast of
current employment laws. Are you required to offer health insurance or workers’ comp insurance? Has your
business discriminated against an employee, or stood by while one employee committed sexual harassment against
another? There are many areas where your company could face major financial liability, not to mention the potential
loss of reputation when treating employees unfairly.
Immigration Law
There are more and more occasions where immigration law becomes an issue in modern businesses. Temporary
employees, full-time employees, and special event workers may be from other countries. You need to know if you
are following the law when dealing with foreign labor.
Consumer Goods Sales
The Uniform Commercial Code contains the laws governing financial transactions in the United States. The Code deals
with everything from contracts to fraud to leases to secure transactions. Ambitious in its aim to consolidate the laws in
one place, the Code is actually quite complex. Lawyers spend a lot of time learning about how to apply the UCC to
actual business practice and can give businesses advice on how to stay compliant with the laws while staying
productive.
Contract Drafting/Negotiations/Litigation
Whether for a property lease or for a product sale, contracts help make sure that the parties who are making a deal are
on the same page. Attorneys can help make sure your best interests are represented when your business enters into a
contract.
Antitrust
Antitrust laws help make sure the different businesses in a marketplace are operating on a level playing field. Some
companies use unfair or deceptive practices in order to get a larger share of the market, and it may be difficult to
identify unfair behavior in your own company. A business lawyer can help you make sure that your business is
operating ethically while helping protect you from unfair actions by other companies.
 Intellectual Property
Businesses may need to patent unique products in order to protect that work in the marketplace. Otherwise, anyone could sell a product your
company worked hard to make. Copyright laws will protect creative work, and you will need to file for protection if your business is identified by
a unique logo.
Taxes
Businesses may have to pay and/or figure several kinds of taxes:
1.Income taxes for the profits of the company, which may be paid as personal income taxes for sole proprietorships or single-person LLCs or
through a partnership business tax return. Partners earning profit from a business must report that income personally, too.
2.Sales tax on services and/or products. Every state has different rules and there may be further complications when sales across state lines. If your
business has a state income tax, you will probably be required to set up a system to collect, report, and pay the taxes you collect on a regular
basis.
3.Property tax on any real estate owned by your business. You may end up paying capital gains tax if you sell a business-owned property.
4.Self-employment taxes, so that business owners will still pay into Social Security and Medicare. Normally employers take those taxes out of their
employees’ paychecks.
5.Employment or payroll taxes, including FICA taxes for Social Security and Medicare and workers’ compensation taxes.
6.Dividend taxes on corporate shareholders. This is a kind of income tax based on the profits received from the business.
7.Excise taxes on certain products your business uses, like fuel.
Bankruptcy
Sometimes businesses are forced into a bad situation because of circumstances beyond their control. There are several kinds of options, with
different requirements and filings. Business lawyers can help find the best solution to what seems an impossible problem and will have
experience with the advantages and disadvantages of each option.
Business Law Examples
Here are just a few examples of how attorneys can help your business:
Business Formation
Business law attorneys can give you advice when you are starting your company as to how to form and register your
company. You will need to choose your business structure and decide how and where your business will operate.
Your attorney will help make sure your business is protected from the beginning.
Contracts
Unless you have some experience with legal terminology, you may not understand all the complicated terms in a
contract. Sometimes parties will try to take advantage of you by inserting clauses which are against your best interest
or even changing the terms of the contract. Your attorney will make sure your rights and interests are protected.
Lawsuits
Many businesses don’t think to get an attorney involved until there is a lawsuit, but having an attorney assist with how
your business operates can help you avoid many lawsuits. Sometimes a lawsuit is inevitable, and your attorney will
work to mitigate the damage to your business. You may want to negotiate a settlement or go to trial and deny liability
entirely, and your attorney will help you get through the complicated process of trial litigation.
The main sources of business law in India are:

Statutory Law: Legislation or statutory is the most important source of law.

Legislation is the making of law.

But when we use the term legislation as a source of law, we mean law making by statutory authority.

Both parliament and stat assemblies have enacted a number of legislation that cover various aspect of
business.

In England, a distinction is made between statute law or written law and the common law.

Only the former is called legislation. In India, there is no common law. Here legislation or enacted law is
different from customary or personal law.
English Mercantile Law: The English mercantile law constitutes the foundation on which
the super structure of the Indian mercantile law has been built.

Our sales of goods Act, for instance has been taken from the English sales of goods of
Act.

Even now, despite the enactment of various statutes relating to matter falling with the
purview of the mercantile law, our courts generally takes recourse to the English law
where some principles are not expressly dealt within the Act, or where there is
ambiguity.
.

Indian statue law: Statutory law or statute law is written law set down by a body of legislature or by a
singular legislator (in the case of absolute monarchy).

This is as opposed to oral or customary law; or regulatory law promulgated by the executive or common
law of the judiciary.

Statutes may originate with national, state legislatures or local municipalities.

Mercantile law is also known as “Lex Mercatoria”,it is the Latin expression for a body of trading
principles used by merchants throughout Europe in the medieval. Literally, it means “merchant law". It
evolved as a system of custom and practice, which was enforced through a system of merchant courts
along the main trade routes.
Business Environment is sum or collection of all internal and external factors such as employees, customers needs and
expectations, supply and demand, management, clients, suppliers, owners, activities by government, innovation in
technology, social trends, market trends, economic changes, etc. These factors affect the function of the company and
how a company works directly or indirectly. Sum of these factors influences the companies or business organisations
environment and situation.
Difference Between Micro and Macro Environment

Organizations operate businesses in a business environment that consists of different factors. The business
environment is categorized as Micro-environment and Macro-environment.

Business activities are directly affected by micro-environment while macro-environment leaves an indirect
impact on all businesses on a large-scale.
1. Micro-environment and its factors
Micro-environment has a direct impact on routine business activities and associated with business at a
small-scale. It consists of different forces that are specific to a particular business and are capable to influence
daily operations and performance of the business for a shorter period. These forces or factors include suppliers,
shareholders, customers, employees, competitors, media, etc.

•Suppliers: These provide resources to businesses like raw material, machinery or equipment, etc. Their
actions can create an impact on the organization’s strategy as they provide necessary inputs for production. In
the absence of timely and adequate services, the production process may delay that result in more production
time and fewer sales.
For example, the marketing strategy of business
gets affected in case of increased raw material
prices by suppliers. It will further increase the
final product prices. So it is very much required to
maintain a healthy liaison with suppliers to gain a
competitive advantage over competitors.

•Customers: Customers being the king of any

business are the final receivers of products or
services. They are central to any organization as
they contribute to generating revenue by
attracting more customers. So the marketing
strategy of an organization is required to be
focused on existing customer retention and
attracting potential customers by satisfying their
needs and preferences. After-sales service and
more value-added services also play a key role in
increasing the customer base.
For example, In today’s digital era most of the customers share their positive or negative reviews
about the product or services of a brand on different social media channels. This influences the
buying decision of other customers as well because a lot of people are using social media for
different purposes. So satisfied and happy customer always increases the brand value of a business
and contributes to increasing customer base and more loyal customers of the organization.

•Competitors: Competitors or rivals of businesses can directly affect business strategies. So, it is
very much required to conduct a competitive analysis of competitors to a competitive advantage
that includes the knowledge of their USP (Unique selling point) of product and service offered.
Also, a business can remain in a competitive position by offering products or services better than
competitors.
For example, Wow! Momos brand’s USP lies in its diverse
range of momos of different flavors that give it a competitive
advantage over its competitors.

•Employees: Organizations can achieve objectives through

skilled employees who are also experts in their areas. By hiring
the right employees and providing adequate training and
development opportunities to them, organizations can ensure
success.
For example, Different departments of an organization like finance,
production, purchase, HR, etc. can be more productive if these have
competent staff having adequate skills and knowledge in their
respective domains. In case of incorporating new technology in an
organization to increase the efficiency of staff; training on how to use
that technology is required to be given to employees so that they can
use the new technology in a better and productive way.

•Shareholders: Shareholders are those who invest their money in a

company and also own shares of it. By doing so, they attain ownership
in the company. Ultimately, they are eligible for return on investment
on their share. This makes organizations liable to forward benefits to
them from profits. Organizations also pay dividends to keep the
interest of shareholders. So, to make the right balance between the
stakes of shareholders and own interest is an essential aspect for the
organization.
For example, shareholders may expect an increase in their share in the organization’s profit that can affect an
organization in the future. So, better and strong relationships with shareholders are required for success in the
long-run.

•Media: Media channels also play an important role in the way organizations market themselves. Media has
become the necessity of any business for promotional activities of its products and services. So, organizations are
required to maintain a healthy relation and status with the media people. The company’s negative image in the
media may result in heavy losses. That’s why organizations now have separate PR (Public relations) department
to handle media related activities smoothly and positively. Also, organizations need to find alternative ways to
reach their audience or customers to create a positive brand image among them.
For example, Different media channels are being used for
this, i.e. newspaper advertisements, television mediums,
social media platforms like Youtube, Facebook, Twitter,
Instagram, Linkedin, etc.
2. Macro Environment and its factors
The macro-environment of an organization is related to its general and external environment that impacts the
working style, decision-making process, strategy, and performance of the business. The macro-environment is
a dynamic environment that has a changing tendency. It has external factors that an organization can’t
control.

The macro-environment study is termed as PESTLE analysis that includes different external environment
factors or forces like:
•Political forces
•Economic forces
•Socio-cultural and demographic forces
•Technology forces
•Legal forces
•Ecology and physical forces
Major or key differences that differentiate Micro and Macro environment are mentioned as below:

•The micro-environment is a specific environment that is in close contact with the organization. Wherein,
the macro-environment is general to the organization that can make an impact on all business functions.

•The micro-environment factors can affect a specific business, whereas factors of the macro-environment
influence whole business groups.

•Factors of the micro-environment are under control of the organization but controlling the
macro-environment factors is next to impossible for organizations.

•Micro-environment factors include internal factors i.e. customers, suppliers, competitors, etc. whereas
macro-environment has external factors like political, social, economic, etc.

•Micro-environment factors functioning revolve around the strengths and weaknesses of an organization
which is internal to it.

•However, macro-environment factors are concerned about opportunities and threats in the external
market of an organization.
3. Summary
Both micro and macro-environment play an important role in the organization’s growth, success, and
existence. Despite being different from each other, both are complementary. By studying these environmental
factors, an organization can prepare a marketing strategy by doing SWOT (strength, weakness, opportunity,
threat) analysis of its business.
Business management definition is managing the coordination and organization of business activities. This
typically includes the production of materials, money, and machines, and involves both innovation and
marketing.3 min read
1. What Does Management Do?
2. What Is Business Management System?
3. Business Management Tactics
4. Management Styles

Business management definition is managing the coordination and organization of business activities. This
typically includes the production of materials, money, and machines, and involves both innovation and
marketing. Management is in charge of planning, organizing, directing, and controlling the business's resources
so they can meet the objectives of the policy.
 What Does Management Do?
Managers and directors have the responsibility and power to look over an enterprise and
make decisions. The management size can be anything from a single person in an
organization to thousands of managers in companies that are in different nations. In
bigger organizations, the policy is defined by the board of directors and then carried out
by the CEO, or chief executive officer.
Some people think the best way to evaluate a company's future and current worth
depends on the experience and quality of the managers. The goal of management is to
get people together to achieve the same desired objectives and goals by using the
resources that are available in an effective and efficient way.
Management functions include the following:
•Organizing
•Directing or leading
•Planning
•Staffing
•Controlling an organization
They also encompass the manipulation and deployment of financial resources, natural
resources, human resources, and technological resources. Management is necessary to
facilitate a united effort towards achieving the company's goals.
What Is Business Management System?
Business Management System, or BMS, is a toolset that's used for tactical implementation and strategic planning
of practices, processes, policies, guidelines, and procedures to use in the deployment, execution, and development
of business strategies and plans, as well as any associated management activities. They provide a foundation for
both tactical and strategic business decisions when it comes to current processes, tasks, activities, and procedures
with the goal of meeting all objectives an organization has and satisfying the customer expectations and needs.
The main idea of Business Management System is to give management the tools for monitoring, planning, and
controlling their activities and measure the performance of a business. They also aim to put into effect continuous
improvement processes in the company. This system finds the principles of the organization's existence and is
linked closely to business success criteria. It is a multi-level hierarchy of different business solutions that show
how an organization that's profit-oriented will perform different functions, such as marketing, sales, staffing, and
purchasing to complete a task successfully.
Business Management Tactics
The functional group of a BMS finds what the tactical techniques and approaches are when it comes to
implementing business plans that are linked to their business strategies. Tactical solutions should only be brought
up during the decision-making part. They should be executed based on the timeframes that are in the document
for the business management strategy. Extra business schedules can be formed and assigned to this tactical
implementation practice as well.
Business Management Tactics are defined as activities that follow the business standards that were identified in
the company's policies. They put into effect business tasks and plans so they can meet the goals that have been
prioritized.
There are also processes and guidelines in this functional group to develop business management plans. The
guidelines have practical instructions and directions to show how decision makers can control all the tactical
solutions. They include operations and procedures that show how performers get daily tasks and activities
accomplished. This group also directs the staff towards the completion of business solutions and recognizing
implementation plans that are aligned with the management tactics.
Management Styles
There are several types of management that are common, including democratic, autocratic, paternalistic, and
laissez-faire. Democratic management style is used when employees are able to give feedback or input on
business decisions. Autocratic management lets the business owner be the person in charge of making all
decisions and leading the company through the business environment. When the best work environment
possible is created for each employee, it's known as paternalistic management. Laissez-faire has the most
employee autonomy and lets decisions be made with little to no business owner oversight.
Traditional management is a hierarchy of employees, with low, mid, and senior-level management. The
manager creates expectations for the goals employees need to make.
If you need help with business management definition, you can post your legal need on UpCounsel's
marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come
from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including
work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.
Introduction
Jurisprudence helps a person to understand the deeper meaning of the law.
Jurisprudence is an integral part of the law which is based on theories and various
analysis. Jurisprudence talks about the relationship of law with other social sciences,
society, man and nature.
Meaning
Jurisprudence means the study of law in a logical and philosophical manner.
The word Jurisprudence has been originated from the Latin word Juris prudentia which
can be broken down into two parts, and that is juris which originated from the word jus
which means law and the word prudential which means prudence, forethought or
discretion.
Jurisprudence can also be referred to as a legal theory.
Jurisprudence gives us an overview and a much more in-depth understanding of
the law and the role of law in society.
Jurisprudence deals with legal reasoning, legal institutions and legal systems.
Importance of the study of Jurisprudence
One of the major importance of the study of Jurisprudence is its fundamental value

. Jurisprudence mainly comprises of research and the method to construct and clarify the
basic concepts of law.
Jurisprudence is not concerned with the making of the new laws; rather, it focuses on
existing laws in the system and Jurisprudence, and its theories can help lawyers to form
a better and much more improved practice.
Jurisprudence can also help students.

It has its own scholastic worth in the life of students. Jurisprudence not only focuses on
primary legal rules, but it also talks about the social impact of those laws.

Jurisprudence combines logical and theoretical analysis of legal concepts. So it

proliferates the analytical methods and techniques of a student.
Jurisprudence also focuses on law and its social value.

It talks about fairness and the articulation of law.

Jurisprudence deals with the basic fundamentals of the law and it is the eye of law. It
helps a person to understand the thoughts and divisions of law.

Jurisprudence is also the grammar of law. It helps a person to understand the language
and the grammar of law. Legal language and grammar are very different when compared
to ordinary language, so Jurisprudence trains the mind of a lawyer so that he can use
proper legal vocabularies and expressions.
Jurisprudence provides the rules of interpretation and as a result, it helps judges and
lawyers in understanding the importance of laws passed by the legislators.
Jurisprudence and its relationship with other social sciences provide a broad spectrum to
students in understanding how law can be related and connected with other disciplines.
Jurisprudence teaches people that an answer to a legal problem is not hidden in the past
or awaiting in the future rather than the answer to a legal problem is hidden around them
in the fundamentals of legal studies.
Jurisprudence also talks about political rights and legal rights and how the system can
strive to balance them out.
https://www.geektonight.com/business-law/ business law
https://cronuslaw.com/what-is-business-law-the-different-types-with-examples/ business law
https://www.toppr.com/guides/business-environment/ business environment
https://studiousguy.com/difference-between-micro-and-macro-environment/
https://online.uc.edu/what-is-business-management/#:~:text=Business%20management%20is%20the%20coordina
tion,its%20operational%20and%20financial%20objectives. Business management
https://www.upcounsel.com/business-management-definition business management
https://blog.ipleaders.in/introduction-jurisprudence/ jurisprudence
https://www.slideshare.net/talwant/indian-legal-system-an-introduction Structure of the Indian legal system
https://www.slideshare.net/arvindsaini13/sources-of-law-manager-and-legal-system manager legal system