Level 2 Business Studies AS90844 Demonstrate understanding of the external operations of a large business

Political Influences (changes to government policy) Students will explain political influences on business Identify the political influences that impact on business Explain the impact of changes in government on business

Political Influences  Relates to ways in which changes in government and government policy can influence business  Governments sometimes support and sometimes frustrate the activities of business.  Political decisions play a large part in creating the conditions within which businesses must work.  Many are ongoing and predictable, such as being required to meet employment laws.  Others are can be sudden and unexpected, such as, changes to GST.

Political influences or factors are how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as a. tax policy, b. social and employment law, c. environmental and consumer-protection legislation, d. trade restrictions, tariffs, and e. regulation and de-regulation trends f. political stability. Political Influences

Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods). Governments also have great influence on the health, education, and infrastructure of a nation. source: Political Influences

What do businesses need to consider? The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. Businesses must consider issues such as: 1.How stable is the political environment? 2.Will government policy influence laws that regulate or tax your business? 3.What is the government's position on marketing ethics? 4. What is the government's policy on the economy? 5. Does the government have a view on culture and religion? 6. Is the government involved in trading agreements such as CER, NAFTA, ASEAN, or others? source:

Political or Legal? Political changes are closely tied up with legal changes. Laws are continually being updated in a wide range of areas, e.g. consumer protection legislation, environmental legislation, health & safety and employment law, etc.

Examples of the impact of a change in government on business Taxation policy affects business costs. For example, a rise in business tax (on business profits) has the same effect as an increase in costs. Businesses can pass some of this tax on to consumers in higher prices, but it will also affect the bottom line. Other business taxes are environmental taxes (e.g. landfill tax), and GST (goods and services tax). GST is actually passed down the line to the final consumer but the administration of the GST system is a cost for business.

continued Government spending policy also affects business. For example, if the government spends more on schools, this will increase the income of businesses that supply schools with books, equipment etc. Government also provides subsidies for some business activity - e.g. an employment subsidy/assistance to take on the long-term unemployed Setting up: to assist NZ businesses.

continued The Government is looking at a range of regulatory and non-regulatory measures that will support the roll-out of the government's Ultra-Fast Broadband Initiative and the Rural Broadband Initiative. This will support all business with an online presence. There is a continuing need for businesses to operate via the internet, therefore increased broadband speeds will assist the majority of NZ businesses.