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

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Introduction

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. ...read more.

Middle

Tesco could look to reduce packaging in order to reduce waste and to also ensure that their distribution vehicles make larger deliveries less often. What are the social influences in the UK which impact on Tesco:- With the population living longer the structure of the UK is changing, because people are living longer they may feel they want to eat healthier and better their lifestyle. People may choose to eat low in fat products and more fruit and vegetables to maintain a healthy lifestyle. Tesco may have to look into employing older members of staff to ensure they comply with the age discrimination legislation. The internet is becoming more and more accessible for people to purchase their goods online. As online sales are increasing each year, Tesco needs to ensure that they have an attractive website and good delivery facilities to benefit from this shift in the way consumers purchase their goods. Ensuring there are providing up to date purchasing methods and meeting customers? demands this will help Tesco to increase their sales and profits. In recent years people have become more interested in maintaining a healthy lifestyle. This has seen the growth of fitness centres and gyms. Tesco could benefit from this by increasing their healthy living range of foods to help their customers better their lifestyles. ...read more.

Conclusion

Tesco would have to ensure that they abide by the laws and could possibly bring a higher standard of employment protection from their experience operating within the UK. Social Factors:- The Chinese population is the largest population in the world, with 1.3 billion people. This means there are plenty of opportunities for Tesco, with a potentially high market to sell their good. The highest percentage age group within China is 15-64 years old at 72.1%, and 65 years and over was the lowest percentage of 8.1%. With such a young population businesses will need to provide goods to meet their needs. With the standard of living improving within China people are looking to purchase more luxury items leading to a demand for higher quality goods, moving away from own brand cheaper products. This will benefit Tesco and help them to improve their profits. China is one of the world?s oldest cultures with many traditions, colours being one of the more important ones. Red, yellow and pink are portrayed as happy prosperous colours, white and black are seen as unlucky as they tend to be related to funerals. Businesses, such as Tesco, need to be cautious when marketing their goods in China to ensure they do not offend customers. It may be a good idea to employ a Chinese marketing company to help them in doing so, although this could increase costs. Language differences will affect the marketing of products as they will have to be relabelled into the Chinese language. ...read more.

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Here's what a teacher thought of this essay

4 star(s)

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.

Marked by teacher Dennis Salter 04/04/2013

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