Legislation and Political Factor

Legislation and political factor

This factor affects the companies the most, examples are the worldwide movement towards privatization of former government owned utilities and businesses. They make major readjustments to their marketing approaches since being privatized. Legal factors follow on from political factors, in that governments often pass laws which affect business. It basically means, the government passes on the law for the changes to be made upon the company.

In Malaysia, companies like Pos Malaysia, SYABAS, and TM has been through privatization.

In the 1980s, MAS became the first major government agency to be privatized and in 1985, MAS entered the corporate sector by offering 70 million shares for sale. This exercise raised Malaysian Airline System's paid-up capital to RM350 million and brought reserves up to RM227 million.

government has taken control of the carrier but after Malaysia Airlines announced year to date losses of more than 25% on the year 2011, it mentioned that it will be considering privatization in an effort to restructure and return to profitability.

It was reported that Maybank Investment Bank suggested that Malaysia Arilines be privatized but list Firefly Sdn Bhd, MAS Engineering, MasKargo and even its terminal services.

Privatization could enhance the image and bank account for Malaysian Airlines, if it turns out well but also go on a loss if it doesn't.

There are merits to a privatization, it provides a shelter away from further downside volatility in the share price, while the company reshapes itself up for a re listing in the future years.

Since it has gone through major losses, various times since the year 1997, the Malaysian Government has been pumping in money for the company so that it does not endure loss in a bigger scale.

That affects