In this assignment, I will describe how political, legal and social factors are
impacting upon the business activities of the Coca Cola PLC and its stakeholders.
Political:
Firstly I will talk about a change that can have both a positive and a negative
effect on the Coca Cola PLC, which is pay rises. When the government issues a
pay rise, the general public has more disposable income, which means that they
can spare more to spend on less vital items, like Coca Cola products. In October
2013, the government increased the minimum wage rate for adults to £6.31.
This had a positive impact on businesses like the Coca Cola PLC as consumers
could afford to spend more on luxury goods (Coca Cola soft drinks) and therefore
the sales of the products increased, and thus profit as well. Pay rises can also
prove to be a disadvantage for the Coca Cola PLC’s owners, as when the
government increases the minimum salary rate, the business will have to give
the staffs more money as wage, and this will be deducted from their overall
revenue. The employees however, will be pleased with this decision, as it will be
to their advantage. On the other hand, if there was a pay freeze instead, the
opposite would occur. That is, people would not be able to spare much money
for other items.
The next political factor that I am going to talk about is benefit cuts. The
government may issue benefit cuts and this can have serious consequences and
effects on businesses. As Coca Cola PLC does not sell vital products, consumers
might opt to remove such products from their shopping baskets to make ends
meet. This will result in a decrease in the sale figures of the Coca Cola PLC.
An increase in tax can also create serious consequences in the activities of the
Coca Cola PLC. If the tax rate increases, the business will have to pay more to
the government and this will result in a decrease in their after-tax income. This
decrease in profit will be a disadvantage for the company.
Legal:
The Coca Cola PLC has to pay heed to many laws which have been issued by the
government. One law which is in favour of consumers is the ‘sales of goods act’.
This concerns the Coca Cola PLC as it suggests that the company should display
ingredients used in manufacturing the product and other additional information
on the packaging. If the sale of goods act is breached, serious consequences
may arise and as a result, the business will have to undergo legal processes.
This can destroy the image of the company and if this happens, it will be a hard
to re-build it. Furthermore, consumers will have a bad impression concerning the
product or even the whole company and they might even switch to other brands
instead. Moreover, if there are changes in law, it is very likely that the company
will have to spend money as they will have to change some things to comply.
This can affect both managers and employees as they are going to have to come
up with new strategies to abide to new laws.
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