Political factors
Political factors involve the decisions and laws that governments make. These include:
- tax
- laws
- political stability
| Political factor | Impact |
| Governments can raise or lower corporation tax. They can also affect businesses by increasing value-added tax on products or business rates | This can impact profits. If the rate of VAT is raised a company will need to increase their selling price which may reduce sales |
| Government can implement new laws like the National Minimum Wage | Impacts on profits as the wage costs of the business will rise |
| Governments can introduce new health and safety legislation | This means that a business may have to change the way it works, for example by training its staff or upgrading its machinery or safety equipment |
| The vote to leave the European Union, also known as Brexit will have an impact on the way UK firm鈥檚 trade with the EU single market | The impact may be negative (a loss of trade with EU customers) or positive (less restrictions placed on firms by EU lawmakers). For example, Scottish fishermen hope that leaving the EU will help boost their industry. On the other hand UK-based car manufacturers are worried about losing out on free access to wealthy customers in France and Germany |
| Political factor | Governments can raise or lower corporation tax. They can also affect businesses by increasing value-added tax on products or business rates |
|---|---|
| Impact | This can impact profits. If the rate of VAT is raised a company will need to increase their selling price which may reduce sales |
| Political factor | Government can implement new laws like the National Minimum Wage |
|---|---|
| Impact | Impacts on profits as the wage costs of the business will rise |
| Political factor | Governments can introduce new health and safety legislation |
|---|---|
| Impact | This means that a business may have to change the way it works, for example by training its staff or upgrading its machinery or safety equipment |
| Political factor | The vote to leave the European Union, also known as Brexit will have an impact on the way UK firm鈥檚 trade with the EU single market |
|---|---|
| Impact | The impact may be negative (a loss of trade with EU customers) or positive (less restrictions placed on firms by EU lawmakers). For example, Scottish fishermen hope that leaving the EU will help boost their industry. On the other hand UK-based car manufacturers are worried about losing out on free access to wealthy customers in France and Germany |
Competition policy
The main aim of competition policy is to ensure that there is fair competition in the market.
Increased competition encourages suppliers to maintain a good price and a high quality service so they remain competitive against other suppliers. This can lead to increased innovation as companies aim to outdo competitors.
The Competition and Markets Authority (CMA) are the main competition policy regulators in the UK
The Competition and Markets Authority (CMA) are the main competition policy regulators in the UK. They aim to ensure that competition policy is enforced throughout UK markets.
Competition policy can impact a business by preventing...
- ... businesses colluding with other organisations to fix prices. This is known as a A group of businesses who aim to increase profits by means of price fixing.. Businesses may be fined if they are found to be partaking in a cartel. They may also be forced to change their prices
- ... When two companies decide to join together. or When one business tries to gain control of or acquire another business. Unlike a 'merger', this does not have to be a mutual agreement between both businesses. that would lead to a considerable decrease in competition in the market. Businesses may be forced to sell off branches or divisions to ensure that enough competition remains in the market
- ... businesses from making agreements with other firms when The process of making a formal offer to carry out work, supply goods, or buy land, shares, or another asset for a fixed price. for projects. If they are found to be doing this they may be fined for anti-competitive behaviour
- ... A market where there is only one seller of a particular good or service. from occurring. A monopoly occurs if there is only one supplier of a particular product or service
Economic policy
This is the behaviour of the government in influencing the economic performance of the country. This would include the decisions the government make on:
- Money collected by a government.
- government spending
- The price at which you can borrow money, or the return on how much money you can save.
Economic policy covers two areas:
- The use of government revenue collection (mainly taxes) and expenditure (spending) to influence the economy. 鈥 this area deals with tax rates and the level of government spending
- Actions of a central bank or other agencies that influence the size and rate of growth of the money supply. 鈥 this area deals with setting interest rates and controlling the supply of money in the economy