NEERAJ KUMAR

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LEGAL ENVIRONMENT TO BUSINESS

 Table of Contents
Introduction ..................................................................................................................................... 3

Discussion ....................................................................................................................................... 3

Conclusion .................................................................................................................................... 10

Reference List ............................................................................................................................... 11

Introduction

The modern highly globalised market of the business world creates compulsion for the
organisations to work in coherence with the commercial law of the respective countries for
obtaining sheer competitive advantage. The guidelines of commercial law have to be followed
properly to counter the severe challenges in the business market for fostering the way towards
development. This particular assignment will elucidate the details of two airlines organisation such
as Biman Bangladesh Airlines and Oman Air respectively of Bangladesh and Oman.

The Oman Air is the national government owned airlines of Oman along with the leader in the
domestic market based on the Muscat International Airport of Seeb of Muscat. Apart from the
domestic flights, it also operates international flights in the Gulf region. It provides the services of
charter flights and air taxi as per the organisational guidelines of the Arab Air Carriers
Organisation. The company was founded in the year 1993 based on the airports of Muscat and
Salalah. This airlines operates with the Sindbad Frequent Flyer program with a fleet size of 51 and
more than 50 domestic and international destinations.

On the other hand, Biman Bangladesh Airlines is also the flag carrier airlines company of
Bangladesh. It was founded on 4th January of 1972 whereas the journey was commenced on 4th
February of that same year. The main hubs of the airlines are the Shahjalal International Airport
and Shah Amanat International Airport along with the Osmani Interantional Airport. This airlines
operates under the Biman Loyalty Club frequent flyer program of the country with a small fleet
size of 12 and possible destinations of 23 airports. Headquarter of the airlines is at Balaka Bhaban
of Kurmitola in Dhaka under the leadership of AM Mosaddique Ahmed as the CEO. This
organisation has managed to generate a sustainable revenue of US$35 million in the financial year
of 2014-15.

In this particular assignment, the very management and establishment of the two airlines company
will be discussed along with the organisational process for maintaining compliance with the
commercial law guidelines of the respective countries. Apart from that, this assignment will also
discuss the comparative similarities and differences in the process of the airlines companies to
counter the market challenges.

Discussion
Management and establishment:

The Biman Bangladesh Airlines had started their operations on 4th February of 1972 from the
Chittagong and Sylhet airport with an active air service agreement with almost 42 countries of
different continents but their maximum yearly reach is 16 countries. The company has procured
effective management techniques to provide unique and competitive e services in order to get
advantage in midst of hard core competition with domestic private airlines of the country. Biman
enjoyed a monopolistic market till 1996 in Bangladesh whereas the airline has focused on
expanding their fleet to arrange proper management of the airlines services. In order to properly
manage the effectiveness of the services, the company has moved to become the largest public
limited company of the country in the year 2007 for using the management protocols of the
government. This airlines is certified as very safe for the effective management through the proper
management from the European Aviation Safety Agency. The vision of this airlines is as follows:

Bimal Bangladesh Airlines plans to fly very high with the bi-coloured flag of the nation with sheer
pride across the global destinations

On the other hand, the mission statement of the Bimal Bangladesh Airlines is as follows:

Biman Bangladesh Airlines are committed for providing safe, sustainable and secure air travel to
the customers with access to various domestic and international destinations.

Apart from that, the objectives of the airlines are as follows:

• Ensuring very safe and sustainable aviation services with the use modern technology and
corporate governance
• Increasing rate of regional connection with providing fiscal support and infrastructural
development of Bangladesh
• Enhancement of the easiness of performing the business activities with deregulation and
e-governance with simplified process
• Promotion of the aviation sector with services like general aviation, MRO, cargo airlines
and skill development in the process of aerospace manufacturing

The Oman Airlines was established in 1993 and since then it is been managed with sheer activities
of corporate governance to maintain utmost level of compliance with the fluctuating aspirations of
customers and the commercial law of the Sultanate of Oman. The main purpose of introducing the
airlines was to cease the dependence on the airlines of other neighbouring countries from
international journeys along with enhancing the ease of communication among the domestic states
of Oman. The civil aircraft was established to replace the light aircraft of Gulf Air whereas the
government took serious steps for the management of the airlines. The organisation fostered the
building process of hangars and workshops along with catering system in flight to provide
emphasis on the improvement of the management and airlines services to customers. For the
purpose of better management process, the company became a joint stock company to impose
better management supervision through improving the service quality. The Oman Air also started
jet service that following year for making improvement to the services. In the regard of
management of the business practices, the company has focused on the provision of the various
opportunities for their employees along with business partners and shareholders to impose
maximum potential to ensure corporate governance effectiveness. The airlines also use new and
advanced technologies in their service based on the viability of application to improve the
reliabilities of management services and efficiencies of the airlines services in Oman.

The vision of the Oman Air is as follows:

To become the very best in the competitive market of Gulf airways with providing sustainable and
affordable services to the customers with prioritising the green venture of the Vision 2020

The organisation thrives for becoming the best cargo and passenger handling terminal in the global
area with managing the true Omani identity.

The mission statement of the Oman Air is as follows:

The airlines work based on the benchmarking services for upholding the commitment of
development of the skills and technology to provide better services. The organisation is committed
for working effectively in the Omani environment with affordable prices without making
compromise to the profitability and quality of business.

The objectives of Oman Air are as follows:

• To expand the market territory in other Gulf countries

 • To become and retain the place of first choice for either passenger airlines or cargo airlines
facility
• To make continuous analysis to eradicate the existing flaws to thrive for betterment in
airlines services
• To generate sustainable revenue for funding the advanced technology usage in airlines
services to ensure comfort and safety of passengers

Compliance of the airlines organisations with the guidelines of national commercial law:

The Biman Bangladesh Airlines is liable to work within the spectrum of the commercial law of
Bangladesh to avoid punishment for breaching the law with their practices. The management of
this airlines is liable to know the commercial law rules of Bangladesh to use them for making
coherent policies to maintain compliance in practice. The commercial law of Bangladesh focuses
on maintaining effectiveness and transparent fairness in the organisational accounting whereas
Biman Bangladesh fairly reveals the financial statement and annual report to the market to
maintain legal compliance. The commercial law is accounted in the process of cost accounting and
financial management of Biman Bangladesh. The Biman Bangladesh also follows the taxation
regulation of the country in course of paying yearly taxes to the competent authority. The contract
instructions of the Bangladesh commercial law through the Contracts Act 1987 are completely
followed by the airlines industry even in the process of selling tickets. As per the contractual
obligation of the commercial law, the sellers are liable to provide coherent services as per
contractual promises to buyers to avoid breach of law. Hence, the airlines provides details of their
services with no exaggeration in the ticket selling portal to maintain utter compliance with law.
Apart from that, the Companies Act Bangladesh of 1994 is also an important doctrine of the
commercial law for Biman Bangladesh Airlines. The organisation follows this law to excel the
operations of human resource department to eradicate the hazardous threats from the workplace to
secure the employees along with providing the employees with different kind of rights to satisfy
them. The taxation system of Bangladesh is heavily influenced by VAT and supplementary duties
whereas Oman Air focuses on maintaining these taxation guidance in order to follow them
properly. The proper compliance towards the taxation law enables Biman Bangladesh to maintain
their pricing strategies for enabling customer retention along with evading the violation of taxation
law. The Labour Act 2006 of Bangladesh is followed by the airlines company to allow the
employees to form trade unions along with ensuring the occupational health and safety for
maintaining compliance. The commercial law relating with insurances are also maintained by the
airlines company to ensure life insurance and accidental insurance for all the employees and
passengers to ensure the imposition of sheer trust and rigour about the service provider to the
customers.

Oman Air procures effective business strategies based on the commercial law of the country to
achieve maximum amount of leverage in the competitive market through avoiding the violation.
As per the article 57 of the commercial law of Oman, the business organisations must maintain the
confidentiality of the personal information of customers. In order to maintain compliance, the
Oman Air has started the customer loyalty programmed with the supervision by Sinbad to use the
Oman Air Privacy Policy to safeguard personal information. The commercial law of Oman
provides allowance to each business organisations based on their legal liability to follow all the
rules precisely to avoid negative consequences. The Oman Air focuses in corporate governance
process to supervise the compliance with the commercial law in regular practices with appointing
some board of directors to look over this issues. The directors of Oman Air are imposed with the
duties of maintaining utmost level of transparency in the management practices. The article 76 is
also maintained by the directors to disclose the financial report to the shareholders with preferences
to the instructed audit process of the country. The Sultanate of Oman regulates the commercial
law for binding the actions of the organisations with the legal liabilities for showing relentless
maintenance. The Oman Air has focused on accounting these legal guidelines in the process of
using them in the decision making traits to procure coherent policies and strategies of the
organisation with law. On the other hand, the article 92 and the article 75 of the commercial law
of Oman incurs sheer obligation for the business organisations to conduct the operations of
commercial sphere. Oman Air has a legal branch that focuses on the compliance of the business
with commercial law for helping in making appropriate policies to support the legal regulations.
The Omani commercial law also has a distinct rule about bankruptcy as Oman Air has policies to
use the administrator for dealing with the insolvency process as a determined contingency plan as
per legal standards. The Oman Air also focuses on providing appropriate service related
information in their website to comply with the commercial law guideline for preventing the
process of misleading the customers with wrong and lucrative information for unethical purpose
of business excellence.
The Attitude of the Omani people is very full of relaxation and flexibility as the people prioritise
the relationship and social values more than professional duties and time punctuality. The Oman
Air fosters sheer policies of employee training through the human resource department for
educating employees about the need and importance of time management in a serious business like
air transportation. The Oman Air also faced the challenges related with cost management for the
sudden enhancement in the rate of corporate tax in the country from a flat rate of 12% to 15% with
a steady jump. The Oman Air has working on maintaining and enhancing the value of their assets
along with minimizing the operational cost of the business to retain limited amount of portability
after the payment of tax. In addition to that, the commercial law of Oman also imposed a heavy
10% tax obligation of dividends of each year fir causing problems for Oman Air to manage their
cost of services. In response to this challenge in the Oman market, Oman Air has started to use
ABC cost accounting model for appropriate and quality performance in financial management
through assigning costs to each service related activity to minimize wastage of resources. Oman
government has also introduced VAT or Value Added Tax from the January of 2018 which also
has caused challenge for the Oman Air to maintain the price of ticket and quality of services in
affordable prices. This challenge by VAT is countered by Oman Air through choosing their pricing
policy as skimming pricing to gradually increase the ticket price to maintain service quality and
profitability as per VAT enhancement. The sudden enhancement in ticket price could have caused
a sheer trouble in the brand image and customer perception of the airlines. The labour related laws
are also sheer challenges and problems for Oman Air to maintain the demands of the contractual
privileges for the employees. The legal guideline depicts the need of hiring minimum 30%
employees from Omani background that incurs limitation for the recruitment process of Oman Air
in seeking proper talent and skill. Oman Air has procured many training agencies that provide
coursework to the Omani boys and girls for being employed in airlines industry to maintain
coherence between aspired level of skill and skill of selected Omani employees. The operation of
Oman Air is also available in the neighbouring countries like Saudi Arabia and Yemen which are
often disturbed due to political instability and financial crisis due to utmost level of dependence
on the price of crude oil in international market. In order to counter this challenge, Oman Air has
procured many insurances that can compensate them for the loss of property in those countries due
to political violence. There are many common things along with many distinguishing factors
among the Biman Bangladesh Airlines and Oman Air. The same industry generates the
commonness among their pratcies whereas the different political, social and external business
environment of Bangladesh and Oman cause the differences.

The economy of Brazil is still developing and hence there are many undeveloped sector in the
Brazil economy which causes problem for the business of Banco Do Brasil. The consumer base
and the regulatory environment of commercial law of Brazil causes problems for the bank to
operate in the market as per the business expectation. The bureaucratic challenge of the
commercial law of Brazil also procures challenges for the bank whereas the bank focuses on
procuring policies to maintain the bureaucratic regulations to prevent them in creating issues in
the regular operations. Brazil has ranked 19th in the Global Corruption Index and it is indeed a
challenge for Banco Do Brasil whereas the bank provides the onus of audit and supervision on the
regulatory agencies of the country to deal with these elements of preventions. The Banco Do Brasil
has adopted the Integration Programme of the government in order to prevent the corruption for
maintaining compliance with the law (Chesseman et al. 2016). The credit related risks are very
high in the banking industry of Brazil along with business challenges of insolvencies for tight
market economy. The bank focuses on the knock-on efforts for payment purpose in trend of
behaviour for protecting against the market related risk. The commercial tax regime of Brazil also
causes sheer challenges for the Branco Do Brasil as there are more than 90 taxes, surcharges and
duties ought to be paid by the business organisations based on the different spheres of government
administration level. The Banco Do Brasil has procured a single system to send complete reports
to the social security, internal revenue and labour and employment ministry for eradicating the
short term complexities in the process of tax payment. The commercial law of Brazil also provide
some barriers in the process of export and import in all the business to maintain a positive trade
balance. The bank services has provided foreign currency exchange policies in coherence with the
law to manage the challenges of import and export barriers of the country (Litka et al. 2014). The
commercial law of Brazil provides huge compulsion of holidays and employee benefits for the
organisations like paid vacations, transportation, 13th salary and FGTS deposit whereas the
organisations also have to share the profit with the employees. In order to cope up with this
pressure of legal compulsion, the bank procured policy for family benefit system for the employees
that includes from insurance schemes, health schemes to education provision for children along
with the high rate of payment and meal for employees working more than designated eight hour
span.

Conclusion

This particular assignment has dealt with two distinct banking organisation from two different
continent such as Bank Muscat of Oman and Banco Do Brasil of Brazil. There are many
differences between those geographical locations but they both focus on gaining customer
satisfaction through financial services in their respective markets. The establishment and
management of the banks are described in detail in this assignment whereas the main focus of this
assignment was on the organisational operations and strategies to maintain utmost level of
compliance with the commercial law of the respective countries. It also focused on the similarities
and differences between those two banks in their process of mitigating the problems and challenges
of business operations. Hence, this assignment establishes the fact of focusing on the compliance
with the commercial law for evading the probable barriers in the process of business operations
irrespective of business types.
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[Accessed on 26th May 2018]

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NEERAJ KUMAR :- +91-9549542974; +91-6350651177