BTEC Business Unit 1 P6

Topics: European Union, Company, Law Pages: 5 (2856 words) Published: November 1, 2014

For this assignment, I will be describing how political, legal and social factors are impacting upon the business activities of Wal-Mart and Tfl. For businesses, this is important because they need to know how these change such as political decisions made by the government or changes to the law or changes that take place in society over time is going to affect their business.  Political Factors 

Political factors is an external environment in which a business functions. This is a type of external constraint for a business and are related to actions of governments. This factors can affect how the business operates. Political factors include politicians, who make important decisions. These can be done at national level at the UK parliament. This is because the UK is a representative democracy, who has a member of parliament that are elected. There are political parties who with the most Members of Parliament run the country. This party is led by the Prime Minister who appoints the Cabinet of Ministers in charge of key areas of the government.   Political stability is the durability and integrity of a current government regime. This is determined based on the amount of violence and terrorism expressed in the nation and by citizens associated with the state. A stable society is one that is satisfied with the ruling party and system of operations and is not interested in revolutionary or despotic ideas. For businesses, they hate instability. Businesses operates according to forecasts and scenarios about the future so instability is not what they want. Political stability is important for Wal-Mart because the society is satisfied so that this provides a platform for Wal-Mart to sell their goods. However if the is political instability in the UK, it affects the decision making process and their profits. This is because the confidence in the economy will go down and customers will be less likely to spend. For Tfl, political stability is important because as the organisation budget is paid by the government, if there is instability the money flow will get disrupted. Also when political instability happens there is usually conflict and as Tfl provides a transport service, there could be damage. However in the UK there is a stable political system, so this is the environment for the business to grow and expand.     Another political factors which affect a business is the fiscal policy of the business. Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply. These two policies are used in various combinations to direct a country's economic goals. Fiscal policy works by increasing or decreasing tax levels and public spending to maintain the health of the economy. Fiscal policy affects Wal-Mart because by changing the amount of disposable income people have to spend. This can affect the consumer demand. This happens by higher taxes. If taxes are higher than customers will have less money to spend and this will affect the profits of Wal-Mart as less people have money to spend. For Tfl, the fiscal policy will affect the business because as Tfl is a publicly funded, if there is a cut in taxes this will lead to less money for the government. To balance the books, the government will have to cut spending. This directly affects Tfl because their budget will be cut.  Another political factor which affects a business is the membership of international trading organisations. For the UK, they are part of the EU or European Union. The European Union, or EU, is known formally as the European Economic and Monetary Union. It establishes a common market among its 28 member countries. This means that all border controls between members have been eliminated, allowing the free flow of goods and people. The EU common market also means that any product legally...
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