There are three external factors that affect business: Political, Legal and Social. Political factors involve political stability, government support, taxation and direct support. Legal factor involves things such as employment laws, consumer laws, it also influence attitudes such as healthy eating. Social factor involves education, age, ethics, attitudes etc. Political factors
An activity related to government policy and its administrative practices that can have an effect on something. Most business operators will keep a watchful eye on any political factor, such as new legislation or regulatory shifts, which could have a substantial impact on how their company operates and its bottom line. Political decisions involve making choices that affect large number of people and business. Government support for different types of organization- government supports different organizations in different ways. There are three types of organizations- private, public and nonprofit/voluntary. In private sector, government tries to create an environment where business can compete. In the nonprofit/voluntary sector, government support business by giving various grants and tax reliefs. In the public sector the government covers the losses made by government owned organizations. Governments use taxation to encourage or discourage certain economic decisions. For example, reduction in taxable personal (or household) income by the amount paid as interest on home mortgage loans results in greater construction activity, and generates more jobs. Government also puts high taxes, for example they put high taxes on cigarettes and alcohol to discourage smoking and drinking, and high taxes on fuel to reduce pollution by discouraging people of driving cars so much. Government also tries enhancing the skills of the population. They enhance education and training help to increase skills of working population. They provide a range of training and creates the educational framework including...
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