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M3; analyse how political, legal and social factors have impacted on the two contrasting
organisations.
Political
The government can have a major impact on F.R Furniture by altering taxation. Several
internal/external stakeholders will be affected and the owner must make adjustments to the
business in order to satisfy customers. A change in taxation can reduce cash flow and increase costs;
it will also have a financial effect on stakeholders. If the business does not plan for changes in the
political field, it can lose its stability and the business may end up in negative cash flow. In order to
avoid this, the owner of F.R Furniture could introduce his business into different countries where
taxation on firms is low. Countries within or out the EU have different taxation policies, therefore
the owner can take advantage of this and run a firm elsewhere. If taxes are increased on indirect
taxes, (taxes that are imposed on goods and service which are paid by consumers)consumers will
have to pay more for their goods and may be put off from purchasing goods and services, which
results a decrease in revenue for the firm. F.R Furniture can adapt to this by providing cheaper
products or by issuing vouchers to customers in order to reduce their overall price, this would allow
F.R Furniture to continue generating revenue despite an increase in indirect taxes.
The Government may not impose taxes on its own businesses, however if the government does
impose tax on external factors that are required by the NHS, for e.g. they may increase road tax
which is required to be paid by all road users. The NHS provides services such as emergency
collection via vehicles, therefore vehicles are necessary to the NHS and they must therefore cover all
the legal costs in order to use the vehicle. Increasing road tax would mean the costs for the NHS
would increase. The NHS needs to avoid increasing costs, however they cannot avoid paying tax,
therefore they must adapt by making financial cuts in other areas. With limited money and fixed
income, there is not much the NHS can do. The NHS can adapt to higher taxes by reducing the
amount of the good or service consumers. If possible, they could reduce the number of ambulances
as it would reduce costs to run their services.
Legal
Changes to laws and policies bring limitations to businesses such as F.R Furniture. The owner of F.R
Furniture must use legal laws as boundaries and has to act upon them instantly. New laws may be
enforced in order to increase costs, in hope the owner would stop from carrying out specific
business actions. If new laws such as limited carbon footprint have been imposed, the owner may
have to order stock from suppliers that are nearer to his firm, therefore transportation would
decrease for goods and help decrease overall carbon footprint, in result the owner would avoid
breaking the new law. However, at the cost of this, changing suppliers may have an effect on cash
flow as well as quality of products. The owner could also adapt to this issue by purchasing goods
and services that initially have a low carbon footprint during the manufacturing process. This would
result in a lower overall carbon footprint for the product and F.R Furniture may avoid this new law.
The NHS must also adapt to new laws instantly, if information on a product (e.g. medicine) is unclear
or misleading, it must be changed instantly or they will be breaking the law. Consumer’s protection
may increase and can become even stricter, for e.g. specific data of ingredients should be listed on
packaging. Therefore the NHS must adapt to this and alter their packaging for all food products,
including medicine. Government may impose new policies such as, unhealthy foods should be
completely banned from hospitals. Therefore the NHS must adapt and find different ways of
pleasing customers. New competition law may be put into place
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