Transcript Political influences File

Level 2
Business Studies
2.2 - AS90844
Demonstrate understanding of the external
operations of a large business
Political Influences
(changes to government policy)
Students will explain political influences on business
 Identify the political influences that impact on business
 Explain the impact of changes in government on business
Political Influences
 Relates to ways in which changes in government and
government policy can influence business
 Governments sometimes support and sometimes frustrate
the activities of business.
 Political decisions play a large part in creating the
conditions within which businesses must work.
 Many are ongoing and predictable, such as being
required to meet employment laws.
 Others are can be sudden and unexpected, such as,
changes to GST.
Political Influences
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Political influences or factors are how and to what
degree a government intervenes in the economy.
Specifically, political factors include areas such as
a. tax policy,
b. social and employment law,
c. environmental and consumer-protection legislation,
d. trade restrictions, tariffs, and
e. regulation and de-regulation trends
f. political stability.
http://en.wikipedia.org/wiki/PEST_analysis
Political Influences
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Political factors may also include goods and services
which the government wants to provide or be provided
(merit goods) and those that the government does not
want to be provided (demerit goods).
Governments also have great influence on the health,
education, and infrastructure of a nation.
source:http://en.wikipedia.org/
What do businesses need to consider?
The political arena has a huge influence upon the regulation
of businesses, and the spending power of consumers and
other businesses. Businesses must consider issues such as:
1.How stable is the political environment?
2.Will government policy influence laws that regulate or tax
your business?
3.What is the government's position on marketing ethics?
4. What is the government's policy on the economy?
5. Does the government have a view on culture and religion?
6. Is the government involved in trading agreements such as
CER, NAFTA, ASEAN, or others?
source: http://www.marketingteacher.com
Political or Legal?
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Political changes are closely tied up with legal changes.
Laws are continually being updated in a wide range of
areas, e.g. consumer protection legislation,
environmental legislation, health & safety and
employment law, etc.
Examples of the impact of a change
in government on business
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Taxation policy affects business costs.
For example, a rise in business tax (on business profits)
has the same effect as an increase in costs. Businesses
can pass some of this tax on to consumers in higher
prices, but it will also affect the bottom line.
Other business taxes are environmental taxes (e.g.
landfill tax), and GST (goods and services tax). GST is
actually passed down the line to the final consumer but
the administration of the GST system is a cost for
business.
continued
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Government spending policy also affects business.
For example, if the government spends more on schools,
this will increase the income of businesses that supply
schools with books, equipment etc.
Government also provides subsidies for some business
activity - e.g. an employment subsidy/assistance to take
on the long-term unemployed
Setting up: http://www.business.govt.nz/ to assist NZ
businesses.
continued
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The Government is looking at a range of regulatory and
non-regulatory measures that will support the roll-out of
the government's Ultra-Fast Broadband Initiative and the
Rural Broadband Initiative.
This will support all business with an online presence.
There is a continuing need for businesses to operate via
the internet, therefore increased broadband speeds will
assist the majority of NZ businesses.