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P6; describe how political, legal and social factors are impacting upon the business activities of the
selected organisations and their stakeholders.
Political Influences
Political processes within a country generate laws and regulatory requirements, businesses and
companies must follow these rules or will face legal penalties. The laws and regulations reflect the
social values and governmental objectives of that country. The following are factors of ‘Political’;
Political stability, government support, taxation, infrastructure, internet and enhancing skills of the
working population.
The Government may increase taxes to promote or discourage certain business activities. Businesses
would feel discouraged from certain business activities in order to avoid tax and save money. The
government may benefit from this as businesses will be more moral, for e.g. less harm to
environment. If the Government imposes taxes onto certain business activities, costs may increase
for F.R Furniture, therefore survival would become unlikely as they need to reduce costs, not
increase it. Therefore the owner of F.R Furniture can avoid it by not carrying out specific business
activities. It is unlikely the government would impose taxes on the NHS as the NHS is solely funded
through taxes, therefore the NHS would not be affected by taxation. Businesses that are not owned
by the government are likely to struggle if there is a change in taxation.
Government support, also known as subsidies is when the government helps cover costs of a
business or firm. This helps the economy’s output as firms can supply more at all prices due to costs
being partially covered. This would help sole traders including the owner of Faisal; it will also help
him reach his aim which is to break even. If the owner’s costs are partially covered, Faisal will be able
to break even, or re-invest into the business in order to increase revenue. If Faisal’s costs are not
covered, it is likely he would struggle to survive and the business could eventually end up in debt,
whereas this is unlikely if Faisal receives help from the government. On the other hand, the NHS is
fully funded through the government (through individual taxes) and therefore without the
governments funding, the NHS would end up in debt as they have no source of income. The only way
the NHS would be able to overcome this challenge, is by finding new investors which is incredibly
difficult.
Legal
This is when the parliament passes ‘home’ legislation. Businesses must be careful to keep within the
law and to anticipate ways in which changes in laws will affect the way they must behave. The main
areas of legal regulation affecting firms are employee and employment protection, consumer
protection and competition policy. However, it can be further broken down into; Company Law,
Employment Law, Contract Law, Consumer Protection Law and Competition Law.
Consumer Protection Law gives customers protection against unfair selling practices. It would be
considered unfair if: a misleading description has been given, it is unsatisfactory quality or it is not fit
for its intended purpose. It is important for F.R Furniture follow this regulation. The owner of F.R
Furniture might find it necessary to mislead customers in order to make sales; however he is virtually
breaking the law. Therefore this law acts as a constraint on firms, and as a framework within which
firms operate. Businesses such as F.R Furniture must be licensed in order to offer credit. It is also
important for the NHS to follow this law as providing the wrong medication does not protect the
consumer and therefore going against the law. This law works as a framework and the NHS should
not make this mistake. The Food Safety Act consolidates earlier law relating to the supply of good
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