The Importance Of Legal Regulations In Business

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The diverse range of legal regulations and policies of which govern the conduct of businesses within Australia can be considered as a crucial element in controlling the business environment. Laws that restrict businesses to certain boundaries are done so in order to promote fair competition and keep the business market competitive, whilst many laws act with regard to being beneficial for the sustainability of the environment. However, it can be argued that these legal regulations also bring increased costs and negative impacts within the business environment and can restrict the operating abilities of businesses. Areas where legislation is considered most controversial include the increased costs that come with abiding by legal regulation and …show more content…
The essence of legislation in business is centred upon the notion of a fair, competitive market and the upholding of the rights of the consumer. The Australian Government, as well as state and territory governments, provides regulations that lay down the rights, duties and obligations owed by parties to a contract (Barron, 2015) in order to promote fair-trading and competition. Many of these laws, which are contained within the Competition and Consumer Act (2010), govern the way that businesses are able to interact with their customers, suppliers and other …show more content…
Abiding by legal regulation can place immense strain and increased financial costs on businesses to adapt their operations to align with new legislation and policies in the business environment. The transitional nature of the business environment inevitably leads to the introduction of new regulations and policies to combat the new challenges faced by statutory bodies. Unfortunately for businesses, these new laws may mean that they have to develop new strategies or undergo new training and development in order to comply with these regulations and avoid facing potential sanctions. This can be increasingly costly for companies to implement and may have impacts on profitability through direct and indirect financial and administrative costs. Furthermore, this increase in costs can be particularly problematic for small businesses. Regulatory compliance exerts a disproportionately large burden on small companies because the fixed costs of adherence can be spread out over more revenues in large firms than it can in small ones. (Business Insider 2011) Nonetheless, the cost of compliance remains a problematic factor for many businesses of all sizes. This is particularly exemplified in the finance industry, as regulations have intensified following the financial crisis of 2007 (Financial Times 2015). In particular,

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