Business Context C.E 01 Part 3

Key Factors that influence the business environment

Political Factors

Government Policy: Government can change the way a business has to function as well as influencing the economy. This can occur by the government passing new legislation or by changing the way that it spends money or implements taxes.

Foreign trade policy: Changes in a government's trade policy can make it easier or more difficult for businesses to trade across international borders. A trade policy can include import tariffs and subsidies for local producers, for example farmers and fishers, to provide them with support.

Tax Policy: Taxes include:

                    Income tax: Tax from an employee's salary

                    National insurance contributions: Tax from an employee's salary with a contribution also paid                     by the employer.

                    Value added tax: Added to goods and services when sold

Key Terms

Tariffs: Taxes that are charged on the imports of goods from other countries. Thus the price of imported goods is increased to try and persuade consumers to buy products made in their own country.

Subsidies: Given to businesses in order to support and industry where it is struggling against international competition or where the international businesses have lowered their prices so hat the local businesses cannot make a profit without the subsidy .

Quotas: Imposed by the government to restrict the number/monetary value of goods that can be imported and/or exported during a particular period of time. The purpose of quotas is to reduce imports so that there is an increase in domestic production, therefore restricting competition from other countries.

Bilateral: Trade agreements made between countries in order to promote trade and commerce. Trade barriers such as tariffs, import quotas and export restrictions are removed.

Test yourself

1. Inter-generational mobility is when a position of class changes from one generation to another. While Intra-generational mobility is when a position of class changes during the lifetime of a single generation.

2. Socioeconomic aspects affect business' because if income, occupation and economic growth is lower, certain industries can be disregarded by the consumer as unnecessary, as they may not be able to afford/want to invest.

3. 1.Organisational Law - Can mean that a business may need to function in a certain way to maintain its            legal status

    2. Employment Law - A business will need to follow and accommodate for a minimum wage.

    3. Consumer Law - A business will need to make sure there advertising is clear and does not mislead.

4. Some political factors that could affect a business include foreign trade. When a government makes it easier or harder

5. Carbon footprint refires to the amount of carbon an individual or business contributes. They can reduce it in many, for example recycling can help reduce your carbon footprint.