Tesco External Influence

Assignment 1.4 - External Influences
Scenario: For this assignment, you have been examining two contrasting business organisations. The final part of the assessment asks you to examine how your chosen organisations are affected by changes in their political, legal and social environments.

Task 1: P6

Political:
Political Factors are basically the important decisions that are made by the government. The UK is governed by the political party at a national level. This means they secure the most members/seats in the general election for parliament. These politicians have to make important choices/decisions for the public to vote for them. These political factors consist of political stability, Government support for different types of organisations,

taxation, direct support, providing infrastructure, enhancing the skills of the population, organisations to support businesses, membership of international trading communities, employment policies and changes to regulation and competition law.
Employment policy affects the business activities of Tesco's by a raise in the minimum wage.

If the minimum wage has increased then Tesco's will need to make a decision. The decisions they will have to consider are whether they decide to pay more to their employees because of how well they work and because they have no choice or Tesco's will have to decide on how many employees they will have to cut.
Taxation has a huge impact on organisations, especially Tesco's, as some of their products have increased on tax. Some products have increased in tax because it is considerate for the government such as for the economy, healthy living and the environment. Due to an increase of tax on certain products not many people will agree with the price they are paying for these specific products and/or services. This is the reason why it has a huge impact on the companies because they aren't gaining much profit from them, they are losing profit from

them.

Legal:
Every business must operate within the framework of the law so they can run their business legally. If the framework of the law is not followed correctly then the directors and owners of the company can be sentenced imprisonment and have to pay fines to the government. Legal factors are very important and must be followed correctly at all times. These legal factors consist of providing a framework for business (company law), protecting consumers and employees (Contract Law) and ensuring fair and honest trading (competition law).
Competition Policy has a big impact on organisations because if the business competition is not monitored by the government properly or at all then the organisation will be effected by certain issues within their profit. The effect the competition policy can have on organisations, such as Tesco's, is if certain businesses make too much or more profit than others therefore the other companies will become bankrupt. The organisations that make more profit than others could take over as the leading organisations of the market making it harder for new businesses to start up in the area. These effects will be due to the government not monitoring the business competition properly or at all.
The Employment law which is introduced within the contract law can have an impact on businesses. This can effect the businesses because if they fail to provide protection for their employees at work then the company will have to pay out large sums of money to the employee which could leave the company in a situation of unbalance financial stability. Especially if the employee takes the matter to court and other employees decide to leave the company due to the incident, depending on how well the company handle the matter.

Social:
Social factors are known as the changes that take place within the society that businesses need to adapt to.

These social factors consist of Demographic issues (political issues), Changes in structure, household and families education, attitudes to work, religions, crime levels, attitudes to male and female roles and lastly ethics.
Demographic Issues relates to population issues which has a huge impact on businesses. It effects businesses because if the population grows bigger within the country and customers are demanding for availability in specific products and services, the businesses may not be able to gain availability from their suppliers. This could be because it is costing them too much and there maybe a lot of pressure on them too.
Crime levels are another big impact on businesses because the companies would have to may out more money for security guards, pay for security equipment to check the building and lastly the business could lose out on employees as they may decide to leave work if the crime levels are becoming increased quicker. These affects are all due to crime levels increasing in certain areas where the business maybe

located.