1. Unit 01 Y/502/5408 THE BUSINESS ENVIRONMENT
LO4 - Know how political, legal and social factors impact on business

2. LO4 - Assessment Criteria
Learning Outcome (LO)
The learner will:
Pass - The assessment criteria are the pass requirements for this unit. The learner can:
Merit - For merit the evidence must show that, in addition to the pass criteria, the learner is able to:
Distinction - For distinction the evidence must show that, in addition to the pass and merit criteria, the learner is able to: 1
Know the range of different businesses and their ownership P1
Describe the type of business, purpose and ownership of two contrasting businesses M1
Analyse the type of business, purpose and ownership of two contrasting businesses D1
Evaluate the effect of a selected business changing its ownership status P2
Describe the different stakeholders who influence the purpose of two contrasting businesses 2
Understand how businesses are organised to achieve their purpose P3
Describe how two businesses are organised P4
Explain how their style of organisation helps them to fulfil their purposes 3
Know the impact of the economic environment on businesses P5
Describe the influence of two contrasting economic environments on business activities within a selected organisation M2
Analyse the impact of changes in demand and supply on a selected business D2
Evaluate to what extent a selected business is likely to be affected by changes in the economic environment 4
Know how political, legal and social factors impact on business P6
Describe how political, legal and social factors are impacting upon the business activities of the selected organisations and their stakeholders

3. LO4 - Know how political, legal and social factors impact on business
P6 - Learners could give a presentation in which they describe how political, legal and social factors are impacting upon the business activities of selected organisations and its stakeholders.
Guidance: The presentation could be as a result of group work, with each learner taking responsibility for a particular area. However, tutors must record the contribution to the task of individual learners so that clear evidence of achieving the criteria is available for each learner.
Learners could work in groups to research how a particular business has been affected by political, legal and social factors, and summarise their findings in a visual form.
In terms of the political environment, learners will need to discover how different governments have different policies in relation to certain business activities.
Learners also need to research any additions to the law, or changes to the existing law that could impact on businesses.
Learners should also consider the social factors that can impact upon the business activities of the selected organisations. For example, learners could consider how changes in demographics, such as the age of the population, could have a serious impact on many businesses.

4. Some of the changes that have or could occur –
LO4 - Know how political, legal and social factors impact on business
All businesses are affected by external events and these can have far reaching and large changes.
Anticipation of a change can give a competitive advantage by allowing a business to position themselves in readiness for this.
Identify the different types of changes that can affect businesses
Consider the Impact it has and the way in which businesses could respond
Change occurs regularly and can be attributed to various different factors
Some of the changes that have or could occur –
To name just a few - the changes these would contribute to the business world are sometimes pronounced
Task 1 - P6.1 – Explain in your own words the term ‘External Factors’
Task 2 - P6.2 – Describe the impact these factors can have on businesses and stakeholders for your company.
Political
Legal
Social
VAT Reduction
Smoking Ban
Healthier Lifestyles
Terrorist Attack
Oil/Gas Shortage

5. Change Business Type of change Impact and response
LO4 - Know how political, legal and social factors impact on business
Change
Business
Type of change
Impact and response
Energy price rise
Manufacturing company
Interest rate increase
Estate Agent
England to host Olympics or any other sports event
Sportswear Retailer
50MB broadband announced
DVD Rental Company
Major Security glitch with Windows Vista
Bank
Education spending increase in budget
Educational Publisher
Major scandal involving football celebrity
Magazine Publisher
Flexible working rights for all working mothers are introduced
Small Firm of Accountants
Chancellor increases tax on gas-guzzling vehicles
Car Manufacturer
YOUR OWN EXAMPLE(S) X 3
Individual task
Fill in the gaps explaining the type of change (Political, Legal or Social)
Provide examples of impact and response to a external change
Create 3 more types of external changes
Task 3 - P6.3 – Identify and provide examples of the Impact created from these different External Factors (Political, Legal and Social)

6. Factors
Taking into account all of the potential changes the impact on organisations are potentially massive and far reaching. Some impact due to the changes could be:
New organisation creation
Winding up of existing organisations
Takeovers and mergers
Revision of strategic plans
Impact on stakeholders
Functional activity
Provision to new customers
Shifting demographic of current products and services
Lower/higher disposable income

7. LO4 - Know how political factors impact on business and stakeholders
Political factors include the changing of national and international law, this includes:
Degree of political stability/instability
Change of government
Government initiatives
Political Stability
Government Support for Private, Public and Voluntary Businesses
Fiscal – Levels and Types of Taxation
Direct Financial Support – Grants, Loans, etc…
Business Support, such as Business Link
Infrastructure – Transport, Internet, etc…
Employment Skills – Education, Training, Research, etc…
Membership of International Trading Communities – IMF, European Union
Task 4 - P6.4 – Describe the impact of the TWO Political factors on your chosen business
Task 5 - P6.5 – Describe the impact of the TWO Political factors on your chosen business stakeholders.

8. LO4 - Know how legal factors impact on business and stakeholders
Legal factors sometimes play the biggest part in business change, because they provide a framework for business boundaries to operate within:
Provision of an appropriate legal framework, (e.g. company law)
Consumer protection, (e.g. Trade Descriptions Act, Sale of Goods Act)
Employee protection, (e.g. Employment Act, Health and Safety at Work Act Contract Law etc…)
Governing Bodies in Different Countries – Federal Trade Commission (FTC), Department of Commerce (DOC), International Trade Administration (ITA), EU legislation etc…
Competitive Pressures – such as emerging markets from abroad or new entrants to markets (e.g. Competition Act, Supermarkets selling electronics or clothing)
Renumeration and Pay Levels – such as minimum wage introduction or regulation of wages
Task 6 - P6.6 – Describe the impact of the TWO Legal factors on your chosen business
Task 7 - P6.7 – Describe the impact of the TWO Legal factors on your chosen business stakeholders.

9. LO4 - Know how Social factors impact on business and stakeholders
Social factors are factors caused by the population either changing their habits or a natural change. Examples include:
Demographic issues, (e.g. size of population, age, structure of population, migration, e.g. An ageing population – meaning greater pensioners or older work force
Standard of living/quality of life, (e.g. impact of changes in income on people)
Attitudes to work, (e.g. changes in attitudes to male and female roles)
Religion
Ethics and morality
Education
Task 8 - P6.8 – Describe the impact of the TWO Social factors on your chosen business
Task 9 - P6.9 – Describe the impact of the TWO Social factors on your chosen business stakeholders.

10. Task List
Task 1 - P6.1 – Explain in your own words the term ‘External Factors’ Task 2 - P6.2 – Describe the impact these factors can have on businesses and stakeholders for your company. Task 3 - P6.3 – Identify and provide examples of the Impact created from these different External Factors (Political, Legal and Social) Task 4 - P6.4 – Describe the impact of the TWO Political factors on your chosen business Task 5 - P6.5 – Describe the impact of the TWO Political factors on your chosen business stakeholders. Task 6 - P6.6 – Describe the impact of the TWO Legal factors on your chosen business Task 7 - P6.7 – Describe the impact of the TWO Legal factors on your chosen business stakeholders. Task 8 - P6.8 – Describe the impact of the TWO Social factors on your chosen business Task 9 - P6.9 – Describe the impact of the TWO Social factors on your chosen business stakeholders.