P6: Introduction
This section of Unit 1: Business Environment focuses on the effect of political, legal
and social factors on the business procedures of an organization as well as their
stakeholders.
POLITICAL: Political deals with anything relating to the government or the
public affairs of the country. Any changes within the government can have a major
impact on the business activities of an organization.
1. -Change in the Government
2. -The stability of the Government
3. -Government spending and taxation policies
LEGAL: Legal deals with anything that is related to the law that is created by the
government. Any changes to the law can cause change within an organization and
have either a positive or negative impact.
1. -Employment Laws
2. -Health and Safety Laws
3. -Consumer Laws
4. -Environmental Laws
SOCIAL: Social deals with the public and the impact they may have on the
business activities of an organization.
1. -Demographic Change
2. -Pressure Groups
3. -Consumer tastes and fashion
4. -Crime Levels
M3: Introduction
This section of M3 Unit 1: Business Environment will focus on the two selected
organizations from P1 and how such political, legal and social factors will affect them
individually and how they can adapt to such factors to prevent conflict from
escalating within the organization.
7
, RIVER ISLAND & RAINBOW TRUST
Factors Effect on Organization Effect on Stakeholders
POLITICAL -If the government changes, then -Overall, changes within an
Change in that will affect the organization organization can affect stakeholder
the because they will also have to make in different ways. Some such as
Government the minor or major changes to staff and employees might end up
adjust to the new changes and unemployed depending on the law
ensure that they are following the changes while others might see a
law before the business has to be decrease in their salary.
closed down. -Stakeholders such as customers
The stability -If the government is not stable, might not get what they are looking
of the then the stability of the business is for due to the changes and shop
Government also affected in terms of wages or elsewhere, therefore affecting the
tax. It will make it difficult for the profit of the business.
business to adapt if they are -Stakeholders such as the owner
constantly changing their layout, might have to shut the business
and this will prevent them from sown if he/she/they are not making
Government making a profit. a profit due to a low unemployment
spending -The government is in control of level and a decrease in profit
and taxation supplying the goods and services for because they are unable to cover
policies the UK, therefore businesses need expenses and tax costs.
to make profit so that the
government can collect tax, to
ensure that they can continue to get
these supplies needed and run their
business successfully, of not the
business will fail.
LEGAL -Employment laws govern the rights Stakeholders might protest if no
Employmen and responsibilities of employees, changes are made within the
t Laws treatment of employees etc. These business and cause corruption in
laws help the business to recruit the business. It might push
and ensure that the environment is employees to work elsewhere if the
happy and productive for them. organization does not change to
Changes in the law might push the adjust to the new implementations
organizations to recruit new made. If there are not enough
employees and even fire current employees, then the business might
employees, because if the business not function well and a profit will
does not comply with the law, the not be made. However, less
Health and government can shut them down. employees mean a decrease in
Safety Laws - Health and Safety Laws ensure wages which means an increase in
that the working conditions of the profit but the business should
employees does not cause damage follow the law to continue to
or is fatal to their life. Changes in survive in the market.
this law will push the business to -Changes in this law will
make changes within the encourages employees to seek
Consumer organization that can be costly to higher expectations when seeking
Laws upgrade the environment. a job and if the business does not
-Consumer Laws protect the buyers comply with the law then they
from being taken advantages of by become a push factor for potential
companies and ensure that they employees and current employees
receive the right products and and other members of staff who
services to satisfy their needs. If will work somewhere with someone
these laws are changes then the who is providing what they need.
Environmen business might have to upgrade -Changes in the consumer law will
8
This section of Unit 1: Business Environment focuses on the effect of political, legal
and social factors on the business procedures of an organization as well as their
stakeholders.
POLITICAL: Political deals with anything relating to the government or the
public affairs of the country. Any changes within the government can have a major
impact on the business activities of an organization.
1. -Change in the Government
2. -The stability of the Government
3. -Government spending and taxation policies
LEGAL: Legal deals with anything that is related to the law that is created by the
government. Any changes to the law can cause change within an organization and
have either a positive or negative impact.
1. -Employment Laws
2. -Health and Safety Laws
3. -Consumer Laws
4. -Environmental Laws
SOCIAL: Social deals with the public and the impact they may have on the
business activities of an organization.
1. -Demographic Change
2. -Pressure Groups
3. -Consumer tastes and fashion
4. -Crime Levels
M3: Introduction
This section of M3 Unit 1: Business Environment will focus on the two selected
organizations from P1 and how such political, legal and social factors will affect them
individually and how they can adapt to such factors to prevent conflict from
escalating within the organization.
7
, RIVER ISLAND & RAINBOW TRUST
Factors Effect on Organization Effect on Stakeholders
POLITICAL -If the government changes, then -Overall, changes within an
Change in that will affect the organization organization can affect stakeholder
the because they will also have to make in different ways. Some such as
Government the minor or major changes to staff and employees might end up
adjust to the new changes and unemployed depending on the law
ensure that they are following the changes while others might see a
law before the business has to be decrease in their salary.
closed down. -Stakeholders such as customers
The stability -If the government is not stable, might not get what they are looking
of the then the stability of the business is for due to the changes and shop
Government also affected in terms of wages or elsewhere, therefore affecting the
tax. It will make it difficult for the profit of the business.
business to adapt if they are -Stakeholders such as the owner
constantly changing their layout, might have to shut the business
and this will prevent them from sown if he/she/they are not making
Government making a profit. a profit due to a low unemployment
spending -The government is in control of level and a decrease in profit
and taxation supplying the goods and services for because they are unable to cover
policies the UK, therefore businesses need expenses and tax costs.
to make profit so that the
government can collect tax, to
ensure that they can continue to get
these supplies needed and run their
business successfully, of not the
business will fail.
LEGAL -Employment laws govern the rights Stakeholders might protest if no
Employmen and responsibilities of employees, changes are made within the
t Laws treatment of employees etc. These business and cause corruption in
laws help the business to recruit the business. It might push
and ensure that the environment is employees to work elsewhere if the
happy and productive for them. organization does not change to
Changes in the law might push the adjust to the new implementations
organizations to recruit new made. If there are not enough
employees and even fire current employees, then the business might
employees, because if the business not function well and a profit will
does not comply with the law, the not be made. However, less
Health and government can shut them down. employees mean a decrease in
Safety Laws - Health and Safety Laws ensure wages which means an increase in
that the working conditions of the profit but the business should
employees does not cause damage follow the law to continue to
or is fatal to their life. Changes in survive in the market.
this law will push the business to -Changes in this law will
make changes within the encourages employees to seek
Consumer organization that can be costly to higher expectations when seeking
Laws upgrade the environment. a job and if the business does not
-Consumer Laws protect the buyers comply with the law then they
from being taken advantages of by become a push factor for potential
companies and ensure that they employees and current employees
receive the right products and and other members of staff who
services to satisfy their needs. If will work somewhere with someone
these laws are changes then the who is providing what they need.
Environmen business might have to upgrade -Changes in the consumer law will
8
