Unit 1 Business Environment
P6- Describe how political, legal and social factors are impacting upon the business
activities of the selected organisations and their stakeholders
M3- Analyse how political, legal and social factors have impacted on the two contrasting
organisations
Introduction
Businesses are constantly being impacted by external factors, many of
which are out of their control. These factors include social factors;
examples are demographics (population), changes in household &families,
education, religions, attitudes to work, attitudes to male and female roles
and ethics. There are also political and legal factors which includes
legislation, company law, and political stability and so on. All these factors
have serious impacts on all businesses.
Political/legal factors
Government support for competition
A political factor which affects businesses is the government support for
different types of organisations. For private businesses, the government
gives tax credit to businesses for employing more people or expanding
their business. This affects HMV because this provides a goal because if
they grow they will get awarded. Also if private limited companies expand
they will get bigger profits and with the tax credit, it is easier to grow. For
publicly owned companies, the government supports them by paying for
part of their budget and the public businesses don’t pay taxes. This
affects public limited companies because the company doesn’t have to
worry about taxes cutting into their profits and as the government pay for
their budget, there is less worry about paying for everything. For example
the government will cut corporation tax for big businesses to 20% by
2015; this will have a significant impact on HMV. However there are also
benefits to belonging to the EU, such as free movement of people
(labour), capital and goods. Which results in lower levels of paper work,
makes it easier for EU skilled residents to move more easily allowing
businesses to focus on innovation and expansion.
Changes to fiscal policy
Changes to fiscal policy would be another political factor. Inflation is
where the average price for things increases. In the UK, average prices
are measured by the government using a measure known as the
Consumer Price Index (CPI) and the Retail Price Index (RPI) Inflation can
P6- Describe how political, legal and social factors are impacting upon the business
activities of the selected organisations and their stakeholders
M3- Analyse how political, legal and social factors have impacted on the two contrasting
organisations
Introduction
Businesses are constantly being impacted by external factors, many of
which are out of their control. These factors include social factors;
examples are demographics (population), changes in household &families,
education, religions, attitudes to work, attitudes to male and female roles
and ethics. There are also political and legal factors which includes
legislation, company law, and political stability and so on. All these factors
have serious impacts on all businesses.
Political/legal factors
Government support for competition
A political factor which affects businesses is the government support for
different types of organisations. For private businesses, the government
gives tax credit to businesses for employing more people or expanding
their business. This affects HMV because this provides a goal because if
they grow they will get awarded. Also if private limited companies expand
they will get bigger profits and with the tax credit, it is easier to grow. For
publicly owned companies, the government supports them by paying for
part of their budget and the public businesses don’t pay taxes. This
affects public limited companies because the company doesn’t have to
worry about taxes cutting into their profits and as the government pay for
their budget, there is less worry about paying for everything. For example
the government will cut corporation tax for big businesses to 20% by
2015; this will have a significant impact on HMV. However there are also
benefits to belonging to the EU, such as free movement of people
(labour), capital and goods. Which results in lower levels of paper work,
makes it easier for EU skilled residents to move more easily allowing
businesses to focus on innovation and expansion.
Changes to fiscal policy
Changes to fiscal policy would be another political factor. Inflation is
where the average price for things increases. In the UK, average prices
are measured by the government using a measure known as the
Consumer Price Index (CPI) and the Retail Price Index (RPI) Inflation can
