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BTEC Business Level 3 Unit 1 P6 M3
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BTEC Business Level 3 Unit 1 P6 M3
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Unit 1 P6/M3P6: Describe how political, legal and social factors have impacting upon the
business activities of the selected organisations & their stakeholders.
In this section I will be analyzing the political, legal and social factors of Apple in
the UK and China.
Political:
Political stability is an important aspect that impacts Apple and their
stakeholders. Political stability can be seen by a stable government that is new
to power or also can be seen within the country if there is peace and no conflict
this is important for a business like Apple as they need to ensure the country
they invest in does not become unstable. The UK is politically stable as there is
currently a conservative government in power that has four more years left. The
conservatives promote businesses and support the free market this benefits
Apple, as they know that they will be welcomed into this economy and the
stakeholders will also be content with this, as they know that the businesses will
be secure in the UK. As the government supports private industry Apple and its
stakeholders will feel confortable in investing in the UK and this will in turn
benefit the government as it provides the country with more industry and jobs in
the private sector.
China can also be argued to be politically stable as they have only one political
party this means that there is stability within the country, as the companies
know that there will be no sudden change within the country. Although this is
risky for a business as the government is extremely controlling and they may
change their views suddenly what could affect the business. As China has such a
controlling system this can affect Apple and the stakeholders in various ways if
they do not agree with the actions of the business they may suddenly change
their policy to disadvantage the business and this may result in negative effects
like Apple having to more its production. If this where the case it would increase
the costs of Apple and would cause massive disruptions to the business what
would effect the stakeholders of the company.
Types of taxation are a huge area for Apple and they hire specialists to try and
reduce their taxes across countries. Cooperation tax in China is 25% and
cooperation tax in the UK is 20% this shows how cooperation tax in China is
more then it is in the UK. Although this brings arise to the question for why apple
produce their products in China, as this would not benefit the stakeholders, as
they will need to pay higher tax. This is true although Apple uses a loophole to
not pay tax in China.
‘Apple has an Irish holding company with no operations or employees at the top
of its foreign operations. This company also serves as a group finance company.
Apple Inc., the U.S. parent of the whole group, pays U.S. tax on the investment
earnings of this company. Otherwise, the holding company pays no tax to any
government, and has not paid tax for five years. It claims tax residence nowhere’.
Source: http://www.forbes.com/sites/leesheppard/2013/05/28/how-does-
apple-avoid-taxes/#2715e4857a0b5d90e851d6f7
, Unit 1 P6/M3
Ireland is a tax haven for Apple and this means that they do not need to comply
with tax laws within China and also within the UK. As Apple use a shell company
in Ireland this means that they do not need to comply with other taxation laws of
different countries. This impacts the business as it allows Apple to maximize its
profits by using a lower tax thresh hold although this can badly affect the
countries in which Apple operates in as it uses their resources but doesn’t give
anything back to the country through tax. This tax loophole affects the
stakeholders of Apple as it allows them to have more money to invest back into
the business and this in turn improves their products what allows them to reach
a wider range of consumers.
The availability of Internet is also an important political factor that affects Apple
the UK aims that that in five years everyone will have Internet speeds 10Mbsp
this effects Apple as it allows more consumers access to their company what
could result in more demand making the profits of the businesses increase. This
will also affect Apple’s stakeholders, as it will allow the business to grow thus
allowing them to spend more on development of new products. The political
aspects of China concerning availability of Internet are completely different to
the experience consumers will get in western countries.
‘China does restrict access to certain types of websites, predominantly those
which permit free interaction between people, such as social media and sites
given to forum-style discussions. Thus you will find Facebook, YouTube, Twitter,
and other social network sites are not available in Mainland China.’
Source: http://www.chinahighlights.com/travelguide/article-internet-access-in-
china.htm
As China restricts its Internet access to consumers this can impact the business
activity of Apple. The Chinese government restricts most social media outlets
and this is one of the main ways in which Apple advertises its products to
consumers, because of this restriction it will then mean Apple will not be able to
reach all of the consumers. This can then affect the stakeholders as it means that
they are not able to expand the business in China and the government is
restricting the access Apple can have to the citizens and this means that there
products may not sell as they don’t have the publicity that they have in western
countries.
Population is another important social factor that affects Apple. Enhancing the
skills of the population is an important factor for Apple; this doesn’t only affect
the business but also benefits the whole country making it more competitive.
Enhancing the skills of the working population can be done either by the
government or by the business providing courses for their workers. The UK has
increased the compulsory leaving age for schools for the purpose of making a
more skilled workforce this will result in companies like Apple having to pay
more for workers as there will be more incentive to hire them. This will mean
that Apple will have to compete with other companies for the skilled workers.
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