Describe how political, legal and social factors are impacting upon the business activities of Tescos in the UK and China.

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Assignment 4

The Business Environment

Pass 1

A business will have many factors that will impact upon it. Political, legal and social factors are the three main factors that impact upon a business. Businesses must operate within the framework of the law. If they fail to do so it can lead to fines and even imprisonment of directors. Businesses must therefore give a high priority to ensure they comply with the law. Politicians make many important decisions and businesses must act in accordance with these decisions. These decisions involve making choices that may affect large numbers of people and businesses; this could include a new law. Over various time periods many changes could take place in the society which is relevant for businesses. These social factors could include demographic issues, changes in structure, religion, education and ethics.

For Tesco:-

UK

What are the political influences in the UK which impact on Tesco:-

The government sets a corporation tax rate, and Tesco must comply with this and pay a proportion of their profits to the government. This means that Tesco will have less money which they can reinvest into the business. The government has also set a VAT rate (value added tax) and it was recently increased to 20%. This may reduce the demand for some of Tesco’s products, such as electrical goods, as customers may not find them a necessary item.

Spending on infrastructure is another political factor that can affect a business. The government uses money they receive from taxes to improve the road, rail and communication infrastructure. The government has improved the roads service enabling Tesco to locate in various areas and have their products distributed with ease. With Tesco having the ability to locate anywhere and still being able to supply an extensive range of products, this could increase the business Tesco attracts.

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By enhancing the skills of population the government has established and education framework in order to ensure that the population is well trained and the country has the ability to compete internationally. Tesco could benefit from highly trained employees that are well qualified. This could help Tesco to compete against their competitors and make a profit.

What are the legal influences in the UK which impact on Tesco:-

Minimum wage is a legal requirement that all businesses must pay their employees. The minimum wage for employees aged 22+ is £6.08. These minimum wage requirements increase costs for Tesco ...

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Many good points in this essay and it is well applied. The writer has clearly thought about the points in relation to China. It would have been improved by consideration of the economic effects on a business and they should have used the standard PEST analysis. I do not really understand why there is a section on China but it has been well researched.