Final answer:
Tax legislations and social security legislations are part of the legal or regulatory factors in external environmental scanning, impacting business operations and market entry, and can be addressed through flexible market-oriented environmental policies.
Step-by-step explanation:
Within the context of external environmental scanning, tax legislations, social security legislations, and tax provisions are typically classified as legal or regulatory factors. These are part of the broader category of the PESTEL analysis (Political, Economic, Social, Technological, Environmental, and Legal factors), which businesses use to understand the external landscape in which they operate.
Specifically, tax legislations, such as corporate income tax and estate and gift tax, are set by the government and directly impact how businesses and individuals financially operate. Social security legislation determines employer contributions to social safety nets, influencing both employers and employees. These elements can create barriers for entry into markets, affect the costs of doing business, and can lead to what is known as 'crowding out', where private investment is reduced due to increased government spending and borrowing. Incorporating flexible, market-oriented environmental policies such as pollution charges, marketable permits, and well-defined property rights can ensure those who impose negative externalities are accountable for the social costs incurred.