UNIT 1: THE BUSINESS ENVIRONMENT IMPACT 0F POLITICAL, LEGAL & SOCIAL FACTORS ON BUSINESS

◦ Political stability ◦ Government support ◦ Taxation ◦ Infrastructure ◦ Enhancing skills ◦ Membership of international trading communities Political factors:

 Political party elected & draw up manifesto (plan) which is made public  Businesses use manifesto to identify changes that might affect them  Example: Rises in environmental taxes, especially on larger cars resulted in businesses in car industry producing more smaller, fuel- efficient and energy efficient cars

 Private sector – government tries to create competitive environment  Voluntary sector – government provides: ◦ Cash grants, e.g. National Lottery Commission, for activities that benefit wider community ◦ Tax relief on premises owned by organisation  Public Sector – government: ◦ Covers losses made by organisations ◦ Subsidise non-profit making activities, e.g. maintaining roads, funding of welfare, education & health services

 Direct support: ◦ Grants and loans ◦ Given as business activity supports government policy  Example – grants given to employers training young & previously unemployed workers  Organisations to support businesses:  Example: Business Link - ◦ A free service providing businesses with information ◦ To help businesses be more efficient

 Helps government raise revenue  Helps discourage some activities and encourage others  Example: High taxes on – ◦ Cigarettes ◦ Fuel  Businesses see taxes as a cost that eats into profit  Tax rates are changed in the annual budget (March)  Taxes affecting businesses – Corporation Tax, Income Tax, National Insurance, VAT, Customs Duty

 Government provides central infrastructure of the economy:  Builds & maintains motorways & major transport links  Maintains railway lines & stations  Paid for Internet facilities to be installed in libraries and other public locations

 Education and training:  Educational framework – types of qualifications  Training courses – industry training schemes, e.g. construction, motor vehicle, etc  Research labour market to identify future growth in particular industries to target education & training effectively

 Important to create international links  UK is important member of EU  Benefits include free movement of: ◦ Goods ◦ Capital ◦ Labour

 Company law ◦ Governs how businesses are set up and run  Contract law ◦ Consumer protection ◦ Employment law  Competition law ◦ Governs how businesses are allowed to compete with each other

 Rules regarding: ◦ Who can set up a business ◦ Steps and paperwork involved ◦ Reports and accounts of a business ◦ Business names

 Businesses form contracts with different individuals, groups and bodies: ◦ Consumers – consumer protection law ◦ Employees – contract of employment; employment directives ◦ Lenders ◦ Sellers of land and buildings ◦ Suppliers of equipment ◦ Suppliers of stock

 Governs how businesses can compete with each other to ensure fair and honest trading  Laws against restrictive business practices to reduce competition, e.g. 2 or more sellers agreeing to set prices  Monopoly and merger legislation to stop businesses from dominating a particular market  Laws against Resale Price Maintenance, stopping a manufacturer from controlling the price at which a retailer can sell their goods

 Over time changes in society can affect businesses: ◦ Demographic issues ◦ Changes in structure ◦ Household & families ◦ Education ◦ Attitude to work ◦ Religions ◦ Attitudes to male & female roles ◦ Ethics

 When population grows, is increase in: ◦ Demand for goods & services ◦ No. of people available for work  First decade of 21 st Century saw rapid increase in UK population. Reasons include: ◦ Boom in economy ◦ Large no. of (some highly skilled) workers from EU states ◦ Young people & learners from overseas = ready pool of labour

 No. of older people in Britain is increasing fast  No. of people over 60 could rise by 40% in the next 30 years  People work and save when young & live off the proceeds when they retire  Aging population have different spending patterns to the young  New businesses will open to cater for their needs, especially e-commerce

 Change in UK population due to rise of single- person households  Average age of marriage is increasing & many people live alone  Many single people are high-income earners with high disposable incomes

 Many modern jobs require good educational qualifications  Employees expected to have good IT, maths & English skills  Vocational qualifications good preparation for supervisory & management posts at work  Previous government set target for 50% of population to attend university  Businesses support government initiatives and can suggest skills required for future employees

 Refers to: ◦ Hours of work ◦ Care taken by employees in completion of work ◦ Employees attitudes to customers ◦ Employees relationship with employers

 Britain consists of many different religious groups  Each group has own beliefs and values  Beliefs & values affect types of goods purchased and used by customers and attitudes in the workplace

 Male & female roles in society have been shifting over the last 50 years  Today 50% of working population is female and over half of new entrants to careers in medicine, the law and similar professions are female  Changing gender roles has impacted on consumption patterns, e.g. rapid rise on ‘ready meals’ market is partly a response to families where both parents work and there are growing numbers of ‘cash rich, time poor’ individuals

 Business ethics are the values & principles held by those running businesses.  Ethics help shape the actions & decisions of a business  Key ethical issues: ◦ Fair trade ◦ Environment ◦ Not misleading customers ◦ Providing useful goods & services  Corporate Social Responsibility (CSR) – modern businesses develop policies and carry out actions that are responsible

 The information on these slides will help you complete task 2 of assignment 2