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Karim Acharki Perez 2020-21 College of Central LondonUnit 1: The Business Environment
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P6: Political, Legal and Social Factors
M3: analyse how political, legal and social factors have impacted on the two contrasting
organisations
D2: evaluate how future changes in economic political, legal and social factors, may impact on the
strategy of a specified organisation.
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In this part of the task, I’m going to go over a few political factors, Legal factors and social
factors.
Firstly I’m going to start with the Political factors within the UK. If we focus on the stability
of the British government over the past few years and looking at the Manifesto set by the
Conservative party in which they state that over the last 5 years they’ve put the country
back on the right track after coming out of Britain being on the brink of going down in which
they also try to show that they’re putting the public’s interests first such as ‘’excellent
schools’’, improved medical care and described to be as ‘’world’s best medical care’’. 1 The
conservative party is also taking into play other things such as providing working parents of
3-4 year olds 30h of free childcare a week which essentially costs the government £5,000
per year. Housing also being a very important matter, they’ve also set out the ‘’Extend right
to buy’’ which essentially gives housing tenants to buy homes at a discounted price. They’ve
also provided £1billion to fund for 400,000 new homes to be built. Looking at recent
changes within Britain’s politics, the very recent Brexit meaning that the UK voted to leave
the EU therefore would be out of the common market (free trade) leading all businesses
based in the UK of import and export to have their costs increase due to the increased cost
on importing and exporting.
Now if we look at how the manifesto of the Conservative party affects the business
activities of H&M within the UK. For example, looking at their propositions with Housing,
they want to make it easier for people to buy/afford homes therefore this will be beneficial
to the customers of H&M because they will have more money to spend on H&M products
as their expenditure on their household will be lower. If we also take this proposition and
look at it in the future, it’s also very beneficial for the people because they’ll be able to pay
their mortgage faster therefore once they don’t have the mortgage to pay anymore, they’ll
have even more disposable income to spend on other luxuries like H&M products therefore
favours H&M sales which lead to higher profits leading to more capital to be able to expand
and increase their number of stores within the UK.
Another political factor that affects H&M’s business activities is the improved education of
which the Conservatives want to add 500 free schools with enough places for 270,000
children therefore this can influence the recruitment of H&M by looking into the future as
1
https://www.conservatives.com/manifesto
,Karim Acharki Perez 2020-21 College of Central London
the Conservatives build a more skilled population therefore H&M will have more skilled
people to employ from the UK leading to better customer service for the customer, better
product designs for their clothes and fashion which will overall favour H&M by bringing in
more profits because their services improve as well as their products therefore customers
will be more inclined to buy more of H&M products.
Now looking at the political
stability of Spain. It’s clear to say
that it’s not the most stable as it
had to have two elections to
finally make a coalition between
the Partido Popular, Alianza
Popular (AP) and the Partido
Democrata popular. In the first
elections in 2016, the votes
weren’t sufficient to come to a
conclusion on what party was
going to manage Spain and on
the second elections on the 26th
June 2016 they came to the
winning party which were the ‘’Coalicion Popular’’ which is led by Mariano Rajoy.
2
On the picture on the right is a summary in Spanish of the Manifesto of the Partido Popular. 3
Taking out some of the important points such as increasing the jobs by 20million by 2020
(by the next election (p.18)); Creating equal opportunities through education; bettering their
infrastructures such as improving public transport, improving internet connexion and
security.
This can and will affect businesses in Spain such as Mango and them being a large company,
the neediness to recruit workers is always there when planning expansion. According to ‘’El
Mundo’’ (Well known Spanish newspaper), it’s said that Spain holds some of the highest
percentages on people going to University with over 37% having a higher education
qualification and more than 25% of lower class families achieve a higher education degree.
This benefits Mango due to the more skilled workers that Spain has to offer. If we look at it
from another perspective, the people with degrees are more likely to have a higher salary
than those that do not meaning they will have a higher disposable income to spend on
Mangos clothing. The public transport in Spain is said to be 30% cheaper than the rest of
Europe meaning people/customers are more likely to go to shopping centres, shops, high
street in which Mango stores are open meaning more customers will be around the stores
therefore potentially higher sales due to cheaper transport.
The next political factor of the UK is the infrastructure of the UK. This is essentially the
structure that the UK offers such as rail roads, the road systems and everything else that
makes the country work.
2
http://www.elmundo.es/espana/2016/02/15/56c225f722601d07128b45a9.html
3
http://www.pp.es/sites/default/files/documentos/programa2015.pdf
,Karim Acharki Perez 2020-21 College of Central London
If the UK didn’t have a good infrastructure, businesses would think twice about setting up
their business there and this is due to a whole range of reasons such as the suppliers not
being able to reach the stores with the supplies; even if the supplies are there, if there isn’t
good public transport, potential customers won’t be able to get there, therefore hindering
their potential sales.
Looking at a news story from the government’s website in which they talk about introducing
5G and improving telecommunication technology. In March 2016 the National Infrastructure
Commission was asked to consider what the UK needs to do to become a world leader in 5G
deployment, and to ensure that the UK can take early advantage of the potential
applications of 5G services.4 If the UK do take advantage of this service they will then be
improving connectivity of businesses with the customers and any other stakeholder they
hold relations with Ex. Many times, when we’re on the bus or Overground we’re constantly
looking at products and services online and it gets frustrating to many when a page doesn’t
load or similar problems meaning this could prevent a potential customer to buy while on
the move and by introducing the 5G network which is described to be ‘’ Ultra-fast, ultra-
reliable, ultra-high capacity transmitting at super low latency.’’ Therefore will improve the
way people shop while on the move or at home without having to leave their home and
wait the ques.
Another example of the infrastructure in the UK is from England’s Economic Heartland
which target in improving the infrastructure in the main Countries outside of
London(England) such as Buckinghamshire, Oxfordshire and North Hampshire. Their plans
for 2020 will cost £3bn and are to add many roads to connect the places outside of London
better and is meant to help unlock a 20% growth in GVA across the three countries and will
generate an additional £9bn per year.5 This will inevitably effect H&M in a positive way as
their deliveries have better routes to reach their stores in the UK other than England. As the
UK has faced Brexit, a lot of the plans have been put on hold according to the ‘’Financial
Director’’ in which they put an example on siting a runway at Heathrow or Gatwick that had
been scheduled for July but was delayed until at least October. This means that the
potentially better run way for more people to come into London and buy H&M products has
also been put on hold because of this. Another example are the skilled construction workers
of which 20-30% are foreign and a projected pipeline which requires 400,000 workers and
according to the Institution of Chartered Engineers, warned a lack of skilled workers will
cause delays.6 The last example is from the Infrastructure Manifesto in which they want to
deliver super-fast broadband in urban and rural areas to provide coverage to 95% of the UK.
The improved connectivity means that people that live in rural parts of the UK also have
access to buying products online and are more likely to do so instead of travelling far to get
to a mall or big shopping centre of which H&M stores are at. All of these infrastructure
projects will benefit H&M, essentially the government tries to provide the population with
4
https://www.gov.uk/government/news/government-must-take-action-now-to-secure-our-connected-future-
so-we-are-ready-for-5g-and-essential-services-are-genuinely-available-where-they-are-n
5
http://www.englandseconomicheartland.com/Documents/Strategic%20Alliance%20-%20Strategic
%20Transport%20and%20Infrastructure%20Framework%20-%20Final.pdf
6
https://www.financialdirector.co.uk/2016/07/22/what-brexit-means-for-infrastructure-investment/
, Karim Acharki Perez 2020-21 College of Central London
easier access to places such as main cities/countries within the UK of which many H&M
stores are located therefore if it’s easier for the public to reach the places that Malls or
stores are located in, they’re more likely to go there and spend their money at H&M stores
that are easily accessible.
Looking at the Infrastructure of Spain, they’re one of the leaders of infrastructure and run
nearly 40% of all the infrastructures of the world. 7 This is perfect for a company of their size
because they have all the means of infrastructure provided by the government in order to
do their business activities effectively.
A news article from ABC.es by Juan Carlos Soler comments on Spain’s infrastructure
compared to other countries within the Eurozone and the World. They’re placed 5 th in the
world having amazing rail roads and trains and 2nd within the EU behind France. Not only
that but other forms of transport like airports (placed 12th worldwide) and bearing in mind
that a lot of deliveries are done by trucks that use roads we must also look at how good
their roads are and looking at the figures they place 13th out of 148 countries.8 A few
objectives that we can take out of the Spanish governments infrastructure manifesto is
improving accessibility to all territories of Spain, improve the efficiency and competitiveness
of the Global Transport system optimised by using the latest technologies, and promoting a
more sustainable economic mobility and making it compatible with economic effects as well
as looking after the environment.
This effects Mango because the better the infrastructure of Spain is, the more efficient the
suppliers can be with the deliveries and taking into consideration that Mango is a big
company, they will receive multiple deliveries along the year and of a considerable size so if
there weren’t sufficient connexions on the roads to get to specific places, the supplies
wouldn’t get to the shop therefore no business would be done. Also, public transport as
mentioned before is top of the rankings in Europe therefore making their stores more
accessible to the public which in turn would make them potential customers and increasing
their sales. It’s said that the connections to Barcelona are the best in Spain and taking into
consideration the most recent store opening of Mango of 2500m2, it makes it an attractive
city for more people to go and buy from Mango.
The next political factor is Taxation in the country. This is a small cut the government take
from individuals and companies from their salaries and is used on the public sector such as
the Police, the NHS or Fire brigades. They can come in different forms such as VAT which is
value added tax which is on essentially everything you buy from a supermarket apart from
certain products which are ‘’necessities’’ like nappies and those specific items won’t have
VAT added to them. There’s also Income tax which is the tax that the average person has to
pay from their wages; National insurance is also another type of tax which protects
individuals with health care when abroad or in the UK and lastly we have corporation tax
which is the one that’d mostly effect business which is a small percentage on the profits the
company make.
7
http://marcaespana.es/talento-e-innovaci%C3%B3n/sectores-punteros/infraestructura-y-medioambiente
8
http://www.abc.es/economia/20131011/abci-espana-infraestructuras-mundial-201310101636.html
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