D2- Discuss one political, one legal, one social and one
economic factor only.
Political- UK
One political factor that has a huge affect on Costa in the UK is Brexit. This is because
a number of reasons. One is that import costs to the UK will rise and therefore will
make the coffee beans more expensive, this could lead to the company to rise their
prices to balance out their costs and sales.
Brexit will also result in the decrease of the value of the pound; because of this, it puts
a lot of pressure on the financial system in the UK to bring the value of the pound back.
Costa will have to manage their profits more carefully, as a result of an increase in
costs, the company may have to make staff redundant or also increase their prices,
however this can also lead to loosing customers as they wouldn't want to pay a lot for
their coffee especially when their money is not worth that much since leaving the EU.
The exchange rates will rise, therefore, as mentioned before, imports will cost the
company more. Coffee is usually grown in continents like Asia or Europe, not in the UK
because of weather and other factors so Costa need to import it in to Britain. One
resolution that they have come up with to make their own coffee beans in the UK so
that they don't rely completely on imports that would cost them a lot. For this they
would need to find a location, they also plan to spend more than £30 million to produce
around 45,000 tonnes of coffee each year. This may affect the financing department as
well as the research and development department as they would need to research
where they would grow the coffee which could be time consuming. However this could
be very bad for Costa if they invest all their money into making their own coffee supply
because if the economy it self isn't good and the value of the pound is still low, then
who is going to want to buy their coffee anyway? So therefore this could be a big loss
for the company.
Another possible solution that Costa have come up with to ensure coffee shops,
restaurants and bars are fully staffed after Brexit, is the "barista visas". Home secretary
Amber Rudd is reportedly considering introducing “barista visas"; this is two-year visas
for young EU citizens allowing them to come to Britain to work, although they will not
be able to claim benefits.
Legal- China
In China, there is a new employment law, one thing is that they can only work one hour
overtime earning employees more money and having more to spend. This also looks
good for the government when their people are being able to find jobs and make more
money, it could make a change to the Chinese per capita income percentage which
has been getting higher since 2005.
Part of this new employment law in China is that people of China no longer need
permits to work, making it easier for them to find jobs and earn money. This
, contributes to China getting a higher middle class percentage every year meaning they
have more money which they could choose to spend on Costa coffee. Therefore ifs its
easier for people in China to get jobs they will therefore earn more money which they
could spend on Costa coffee. This can boost sales for Costa and also get them new
customers. It also means that because most adults in China wont need permits to
work, Costa will be able to offer more jobs and can make the service at Costa a lot
better. As a result of better customer service in Costa, customers will want to keep
coming back meaning more sales for the company.
The Chinese labour market consists of around 900 million employees, but this number
has dropped for the first time in history since 2012, this is the 6th consecutive year that
this has happened. This is because there is an increasing number of people aged 60
plus, China has quickly become an ageing society. For businesses this means they
have less people to work for them as the elderly would want to settle down and relax at
home since they wouldn't be able to work in a fast paced environment like Costa.
Due to this, the Chinese government as changed its long held one child policy and is
allowing parents to have 2 children so that when they grow older they are able to work
for businesses.
As a result of China having an ageing society, Costa will have to employ young people
as most have aged and wont be able to work. Employing young people means that
Costa can keep them for around 15 years and they will still be able to have energy and
work in the industry.
One other problem from the new employment law is that employees can only work one
hour overtime and not more which means workers in China cant earn as much money
as they could have if they were able to worker longer overtime hours. They do still get
more money which they could spend on Costa, but the government has only allowed
them one hour and not more. So for Costa, they may need to hire more workers as
their worker now are legally required to work only one hour overtime and not more. This
gives Costa more costs.
Annual law is provided by the Chinese government according to the total years an
employee has worked. If they have worked for less than a year, they then are not
entitled to any paid annual leave. If they work more than 1 year but less than 10 then
the employee is able to get 5 days off. Over 10 years but less than 20 is 10 days and
15 days for those who worked 20 years plus. This may be an advantage for Costa so
that they don't have to get a lot of employees, and when the do take a break it wont be
for long.
However, during the Chinese new year, February 15-21st, are paid days off; Saturday,
February 11th, and Sunday, 24th become official work days. Employers who require
employees to work during the holiday must pay three times normal wages. For Costa
this means that if they are going to be open during these days, then they would have to
pay their employees a lot of money which is just unnecessary costs for that month.
economic factor only.
Political- UK
One political factor that has a huge affect on Costa in the UK is Brexit. This is because
a number of reasons. One is that import costs to the UK will rise and therefore will
make the coffee beans more expensive, this could lead to the company to rise their
prices to balance out their costs and sales.
Brexit will also result in the decrease of the value of the pound; because of this, it puts
a lot of pressure on the financial system in the UK to bring the value of the pound back.
Costa will have to manage their profits more carefully, as a result of an increase in
costs, the company may have to make staff redundant or also increase their prices,
however this can also lead to loosing customers as they wouldn't want to pay a lot for
their coffee especially when their money is not worth that much since leaving the EU.
The exchange rates will rise, therefore, as mentioned before, imports will cost the
company more. Coffee is usually grown in continents like Asia or Europe, not in the UK
because of weather and other factors so Costa need to import it in to Britain. One
resolution that they have come up with to make their own coffee beans in the UK so
that they don't rely completely on imports that would cost them a lot. For this they
would need to find a location, they also plan to spend more than £30 million to produce
around 45,000 tonnes of coffee each year. This may affect the financing department as
well as the research and development department as they would need to research
where they would grow the coffee which could be time consuming. However this could
be very bad for Costa if they invest all their money into making their own coffee supply
because if the economy it self isn't good and the value of the pound is still low, then
who is going to want to buy their coffee anyway? So therefore this could be a big loss
for the company.
Another possible solution that Costa have come up with to ensure coffee shops,
restaurants and bars are fully staffed after Brexit, is the "barista visas". Home secretary
Amber Rudd is reportedly considering introducing “barista visas"; this is two-year visas
for young EU citizens allowing them to come to Britain to work, although they will not
be able to claim benefits.
Legal- China
In China, there is a new employment law, one thing is that they can only work one hour
overtime earning employees more money and having more to spend. This also looks
good for the government when their people are being able to find jobs and make more
money, it could make a change to the Chinese per capita income percentage which
has been getting higher since 2005.
Part of this new employment law in China is that people of China no longer need
permits to work, making it easier for them to find jobs and earn money. This
, contributes to China getting a higher middle class percentage every year meaning they
have more money which they could choose to spend on Costa coffee. Therefore ifs its
easier for people in China to get jobs they will therefore earn more money which they
could spend on Costa coffee. This can boost sales for Costa and also get them new
customers. It also means that because most adults in China wont need permits to
work, Costa will be able to offer more jobs and can make the service at Costa a lot
better. As a result of better customer service in Costa, customers will want to keep
coming back meaning more sales for the company.
The Chinese labour market consists of around 900 million employees, but this number
has dropped for the first time in history since 2012, this is the 6th consecutive year that
this has happened. This is because there is an increasing number of people aged 60
plus, China has quickly become an ageing society. For businesses this means they
have less people to work for them as the elderly would want to settle down and relax at
home since they wouldn't be able to work in a fast paced environment like Costa.
Due to this, the Chinese government as changed its long held one child policy and is
allowing parents to have 2 children so that when they grow older they are able to work
for businesses.
As a result of China having an ageing society, Costa will have to employ young people
as most have aged and wont be able to work. Employing young people means that
Costa can keep them for around 15 years and they will still be able to have energy and
work in the industry.
One other problem from the new employment law is that employees can only work one
hour overtime and not more which means workers in China cant earn as much money
as they could have if they were able to worker longer overtime hours. They do still get
more money which they could spend on Costa, but the government has only allowed
them one hour and not more. So for Costa, they may need to hire more workers as
their worker now are legally required to work only one hour overtime and not more. This
gives Costa more costs.
Annual law is provided by the Chinese government according to the total years an
employee has worked. If they have worked for less than a year, they then are not
entitled to any paid annual leave. If they work more than 1 year but less than 10 then
the employee is able to get 5 days off. Over 10 years but less than 20 is 10 days and
15 days for those who worked 20 years plus. This may be an advantage for Costa so
that they don't have to get a lot of employees, and when the do take a break it wont be
for long.
However, during the Chinese new year, February 15-21st, are paid days off; Saturday,
February 11th, and Sunday, 24th become official work days. Employers who require
employees to work during the holiday must pay three times normal wages. For Costa
this means that if they are going to be open during these days, then they would have to
pay their employees a lot of money which is just unnecessary costs for that month.
