Legal factors refer to the laws and regulations that businesses must comply with in their operations. These can include labor laws, consumer protection laws, health and safety regulations, and environmental laws. Understanding these legal requirements is crucial for companies to avoid penalties and ensure smooth operations. Additionally, legal factors can influence market entry and competition. For instance, intellectual property laws protect innovations, while antitrust laws prevent monopolistic practices. Companies must stay informed about changes in legislation to adapt their strategies and maintain compliance, which can ultimately impact their profitability and reputation.