Learning Aim 4: Task 5
Radio programme research-Political, legal and social factors
Businesses are always adapting to keep up with changes within economic, political, legal and social
factors. These factors will have affected businesses in the past, still affect them currently, and are
likely to affect them in the future. In order to keep up with these changes, businesses need to be able
to predict what changes they think are going to take place and plan how they can adapt to this.
Businesses such as Tesco need to make sure that they are adapting appropriately in order to staying
successful.
Economic changes can affect businesses largely and they have to be able to predict which economic
factors are changing and how they are doing so. One economic factor which can affect business and
will affect them in the future is a recession. If a recession hits, then there is less money circulating in
the economy. This isn’t good for businesses such as Tesco because they rely on money circulating
through the economy in order to gain income. The economic status of the UK fluctuates and during a
boom, businesses can benefit more and make more expensive sales. Businesses are also more likely
to expand during a boom as they will be able to gain more customers. The UK has just come out of a
recession and we are in the recovery stage, which suggests we will eventually reach a boom time.
GDP for 2015 was originally forecast to be 2.5%, but it has more recently been re-estimated at 2.4%.
During 2013 and 2014, GDP growth was higher than predicted, but for 2015 the GDP estimate has
been lowered. This supplies evidence that GDP may begin to fall again in the future and businesses
will suffer due to less disposable income. The UK may fall back into a recession before reaching a
boom period. Interest rate estimates can also support this as there is a prediction of 2.3% for CPI
interest rates. This is 0.3% above the government’s ideal rate and may also force a recession.
However, business investment rates are expected to make a large increase of 5.8% in 2015 therefore
businesses may remain successful despite the possibility of an upcoming recession.
These economic changes in the future would affect Tesco’s strategy as they would need to plan out
how they are going to cope with a recession if there is one. Tesco will need to consider that there will
most likely be a higher demand for their ‘value’ range of products as this will be the cheaper
alternative for people who are losing out on disposable income. They also need to be prepared to
make less large sales; people will not be able to afford new televisions or other expensive items
during a recession. During a recession there may also be wage changes so Tesco need to re-budget
and ensure they can still pay their staff. Tesco need to change their strategies in order to cope with
losing profits. As people are earning less and being made redundant, they cannot afford to stay loyal
to Tesco and may shop in stores with better prices. As inflation rates also rise alongside all of this,
prices at Tesco will need to increase which reinforces my last point of customers shopping in the
cheapest stores.
Political changes also mean that businesses need to look at what the government are planning to
change in order to maintain a good strategy for the business. As the UK is a member of the EU,
businesses such as Tesco have to take into consideration both UK and EU laws. Political changes are
closely linked with legal changes, but they are two separate things. Political changes include tax
changes and anything that the government has the power to change. The government are still
deciding on which rules will apply to pensions as of 6th April 2015, but it is likely that you can either
take it as a lump sum or invest it where you like, providing you are over 55. Up to 25% of the money
will be tax free but the balance will be subject to tax at your marginal rate. This is an example from
the gov.co.uk webpage on the HMRC overview: “Emily is 60 and has taxable income of £50,000. She
has £250,000 in her pension pot, and takes all this money out on 7 April, 2015. She will receive
£62,500 without tax (25%) and the balance will be taxed at a mixture of 40% and 45%. She also loses
her personal allowance because her total taxable income is over £100,000. She would have paid less
Radio programme research-Political, legal and social factors
Businesses are always adapting to keep up with changes within economic, political, legal and social
factors. These factors will have affected businesses in the past, still affect them currently, and are
likely to affect them in the future. In order to keep up with these changes, businesses need to be able
to predict what changes they think are going to take place and plan how they can adapt to this.
Businesses such as Tesco need to make sure that they are adapting appropriately in order to staying
successful.
Economic changes can affect businesses largely and they have to be able to predict which economic
factors are changing and how they are doing so. One economic factor which can affect business and
will affect them in the future is a recession. If a recession hits, then there is less money circulating in
the economy. This isn’t good for businesses such as Tesco because they rely on money circulating
through the economy in order to gain income. The economic status of the UK fluctuates and during a
boom, businesses can benefit more and make more expensive sales. Businesses are also more likely
to expand during a boom as they will be able to gain more customers. The UK has just come out of a
recession and we are in the recovery stage, which suggests we will eventually reach a boom time.
GDP for 2015 was originally forecast to be 2.5%, but it has more recently been re-estimated at 2.4%.
During 2013 and 2014, GDP growth was higher than predicted, but for 2015 the GDP estimate has
been lowered. This supplies evidence that GDP may begin to fall again in the future and businesses
will suffer due to less disposable income. The UK may fall back into a recession before reaching a
boom period. Interest rate estimates can also support this as there is a prediction of 2.3% for CPI
interest rates. This is 0.3% above the government’s ideal rate and may also force a recession.
However, business investment rates are expected to make a large increase of 5.8% in 2015 therefore
businesses may remain successful despite the possibility of an upcoming recession.
These economic changes in the future would affect Tesco’s strategy as they would need to plan out
how they are going to cope with a recession if there is one. Tesco will need to consider that there will
most likely be a higher demand for their ‘value’ range of products as this will be the cheaper
alternative for people who are losing out on disposable income. They also need to be prepared to
make less large sales; people will not be able to afford new televisions or other expensive items
during a recession. During a recession there may also be wage changes so Tesco need to re-budget
and ensure they can still pay their staff. Tesco need to change their strategies in order to cope with
losing profits. As people are earning less and being made redundant, they cannot afford to stay loyal
to Tesco and may shop in stores with better prices. As inflation rates also rise alongside all of this,
prices at Tesco will need to increase which reinforces my last point of customers shopping in the
cheapest stores.
Political changes also mean that businesses need to look at what the government are planning to
change in order to maintain a good strategy for the business. As the UK is a member of the EU,
businesses such as Tesco have to take into consideration both UK and EU laws. Political changes are
closely linked with legal changes, but they are two separate things. Political changes include tax
changes and anything that the government has the power to change. The government are still
deciding on which rules will apply to pensions as of 6th April 2015, but it is likely that you can either
take it as a lump sum or invest it where you like, providing you are over 55. Up to 25% of the money
will be tax free but the balance will be subject to tax at your marginal rate. This is an example from
the gov.co.uk webpage on the HMRC overview: “Emily is 60 and has taxable income of £50,000. She
has £250,000 in her pension pot, and takes all this money out on 7 April, 2015. She will receive
£62,500 without tax (25%) and the balance will be taxed at a mixture of 40% and 45%. She also loses
her personal allowance because her total taxable income is over £100,000. She would have paid less
