External environment illustration External environment theory


Legislation is the process of making laws. This is done through Acts of Parliament, and 'rules', 'regulations' and 'bye laws' made by those who are given authority to legislate by parliament e.g. local government bodies. An Act of Parliament is always set out in writing starting with the following introduction:

'Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same as follows:'

Businesses are affected by all sorts of legislation, including:

  • Legislation that sets up new public bodies, such as the Legal Services Commission and the Public Defender System.
  • Consumer Protection legislation that gives rights to consumers.
  • Taxation legislation that creates a framework for taxing business.
  • Employee rights and Health and Safety legislation.
  • Trade Union Rights legislation.
  • Fair competition legislation.

The law

The laws, which the government creates, are then supervised by various bodies, which have a responsibility for ensuring that individuals get their rights and protection where appropriate. For example, the creation of the Public Defender System creates a framework for providing inclusion for disadvantaged members of society who might otherwise not be able to get legal representation.

Legislation creates 'the law of the land' and criminal courts exist to make sure that individuals can be prosecuted by 'the Crown' for failure to abide by the law. In addition to criminal cases, businesses can also use the civil courts to pursue disputes with other businesses and with individuals (rather than breaches in the law).

The legal system of the European Union takes priority over national legislation. EU regulations are directly binding on all Member States without the need for national legislation to put them in place. Directives bind Member States to the objectives to be achieved within certain time limits and are implemented in national legislation.

Supporting Documents

These downloads will help to put external-environment theory into context using real world examples from real businesses.

Sponsorship as part of the marketing mix
Ford logo

Find out how Ford applied external-environment theory to thrive in the automotive industry by downloading our premium case study.

Re-focussing a company's culture and marketing mix
Argos logo

Discover how Argos employed external-environment theory to thrive in the retail industry by downloading our premium case study.

Entering a new market with a new product
Experian logo

Discover how Experian used external-environment theory to thrive in the financial services industry by downloading our premium case study.

Meeting customers' needs in growth markets - online gaming
BT logo

Discover how BT used external-environment theory to succeed in the telecommunications industry by downloading our premium case study.

Innovation in infant nutrition
Cow & Gate logo

Discover how Cow & Gate applied external-environment theory to prosper in the food & drink industry by downloading our premium case study.