1.5.5
Political & Legal Change
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Political and Legal Change
Changes in the external environment include political and legal changes.
Impact of political and legal changes
- Political and legal changes can present businesses with opportunities and threats.
- Political and legal changes can affect decision making at the corporate level and functional or departmental level.
- For example, the introduction of the National Living Wage presented a threat for many businesses as total costs increased.
How the legal environment affects decision making
- Legislation about competition and competitive practices can affect a business. Competition laws ban businesses from acquiring or taking over other businesses if competition will be substantially reduced.
- Legislation about employment regulations can affect a business. Working time regulations and the equality act state provisions a business must make for supporting and protecting employees.
- Legislation related to environmental protection can affect a business. Laws around pollution provide guidance in terms of the pollution created by businesses and these laws must be complied with.
Examples of the impact of legal environments
- VW was accused of an environmental scandal which failed to comply with environmental regulations.
- In 2016 Three’s takeover of mobile operator, O2 was banned on the basis that competition would be reduced substantially and this could lead to the exploitation of consumers.
How the political environment affects decision making
- Enterprise is a political factor which involves national and local schemes to support new, start-up businesses.
- Regulators exist to ensure businesses are following industry rules so that consumers are not taken advantage of. Infrastructure is a political factor and relates to the transport systems and communications networks used to support trade and supply.
- International trade is a political factor and refers to the trading of goods and services internationally.
Examples of the impact of political environment
- For example, the government provides a scheme for those wishing to access a loan for the purposes of starting a new business.
- For example, the Financial Conduct Authority is a financial regulator which can intervene in banking and lending products to ensure customers are receiving a fair and transparent deal.
1Business Organisation & Environment
1.1Introduction to Business Management
1.2Types of Organisation
1.3Organisational Objectives
1.4Stakeholders
1.5External Environment
1.6Growth & Evolution
1.7HL Only: Organisational Planning Tools
2Human Resource Management
2.1Functions & Evolution of Human Resource Management
2.2Organisational Structure
2.3Leadership & Management
2.4Motivation
2.5Organisational (Corporate) Culture
2.6HL Only: Industrial/Employee Relations
3Finance & Accounts
3.1Sources of Finance
3.2Costs & Revenues
3.3Break-Even Analysis
3.4Profitability & Liquidity Ratio Analysis
3.6HL Only: Investment Appraisal
3.7HL Only: Budgets
4Marketing
4.1The Role of Marketing
4.2Marketing Planning
4.3Market Research
4.4The 4 Ps
4.4.1Product Decisions4.4.2Pricing Decisions & Price Skimming4.4.3Pricing Decisions & Price Penetration4.4.4End of Topic Test - Pricing & Competition4.4.5Promotional Decisions4.4.6Promotional Decisions 24.4.7Promotional Decisions 34.4.8Digital Marketing4.4.9Evaluating Digital Marketing4.4.10Case Study - The Marketing Mix & Promotion4.4.11Place & Distribution
4.5HL Only: The Extended Marketing Mix
4.6HL Only: International Marketing
4.7E-Commerce
5Operations Management
5.1The Role of Operations Management
5.2Production Methods
5.3HL Only: Lean Prodution & Quality Management
5.4HL Only: Production Planning
5.5HL Only: Research & Development
Jump to other topics
1Business Organisation & Environment
1.1Introduction to Business Management
1.2Types of Organisation
1.3Organisational Objectives
1.4Stakeholders
1.5External Environment
1.6Growth & Evolution
1.7HL Only: Organisational Planning Tools
2Human Resource Management
2.1Functions & Evolution of Human Resource Management
2.2Organisational Structure
2.3Leadership & Management
2.4Motivation
2.5Organisational (Corporate) Culture
2.6HL Only: Industrial/Employee Relations
3Finance & Accounts
3.1Sources of Finance
3.2Costs & Revenues
3.3Break-Even Analysis
3.4Profitability & Liquidity Ratio Analysis
3.6HL Only: Investment Appraisal
3.7HL Only: Budgets
4Marketing
4.1The Role of Marketing
4.2Marketing Planning
4.3Market Research
4.4The 4 Ps
4.4.1Product Decisions4.4.2Pricing Decisions & Price Skimming4.4.3Pricing Decisions & Price Penetration4.4.4End of Topic Test - Pricing & Competition4.4.5Promotional Decisions4.4.6Promotional Decisions 24.4.7Promotional Decisions 34.4.8Digital Marketing4.4.9Evaluating Digital Marketing4.4.10Case Study - The Marketing Mix & Promotion4.4.11Place & Distribution
4.5HL Only: The Extended Marketing Mix
4.6HL Only: International Marketing
4.7E-Commerce
5Operations Management
5.1The Role of Operations Management
5.2Production Methods
5.3HL Only: Lean Prodution & Quality Management
5.4HL Only: Production Planning
5.5HL Only: Research & Development
Practice questions on Political & Legal Change
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