The Impact of Political, Legal and Social Factors on Two Businesses
All businesses in the world have to obey to the political, social and legal factors that are within the world. These factors can have both a negative and positive effect on the business. The businesses I will be concentrating on is Toys ‘R’ Us and National Health Service.
Toys ‘R’ Us
Political factors that affect businesses include new legislation such as the national minimum wage and setting tax rates such as VAT or Corporation Tax. Most business operators will keep a watchful eye on any political factor, such as new laws or regulatory shifts, which could have a substantial impact on how their company ...view middle of the document...
For instance, if the government decide to raise the Value-Added Tax (VAT), large businesses like Toys ‘R’ Us would have to lose profit and pay for the loss of profit or increase the prices of products to cover the loss but this can lead to the loss of customers. Political stability can also have an effect on Toys ‘R’ Us’ stakeholder, like the suppliers and customers, with higher VAT prices, the customers would probably decide to shop at Toys ‘R’ Us competitors. Suppliers will also ask for more money from Toys ‘R’ Us. However, Toys ‘R’Us wouldn’t be able to pay their suppliers which means they won’t have certain profits and this can result to the loss of more customers.
Another important political factor affecting business is in creation international links, particularly in relation to trading. For instance, Toys ‘R’ Us will ship UK products that are their own to China which is another country which they operate. This can result to the UK having the most Toys ‘R’ Us stores which will benefit largely in goods and money. This can also affect the stakeholders, such as suppliers. Suppliers will need to send their goods/products across the country to other place where Toys ‘R’ Us operates. However, this can mean that Toys ‘R’ Us may have to pay them extra in order for them to ship the products. If suppliers don’t go ahead with this trade network, other countries where Toys ‘R’Us operates will not receive the products which result to loss of customers.
Legal factors relate to changes in law and regulations. All businesses must operate within the frame of the law. Failure to do so can lead to fines and even imprisonment of directors. Therefore, businesses give high priority to making sure they comply with law. There are a number of laws that affect businesses but the main three are: Company, Contract & Competition.
The legal factors that affect Toys ‘R’ Us activities are Company and Contract Law.
Company Law covers who can set up the business, the steps and the paperwork that is included in order for the business to be set up, and the reports that the business makes which involves how they present their accounts. The most important piece of legislation is the Company Act, covering a range of important matters such limited liability, business name and etc.
Toys ‘R’ Us shareholders have legal protection that limits how much a shareholder in a company can lose if by any chance the company becomes bankrupt. This means, in other words, the money the shareholder has put into the company would be the same amount of money he/she would lose if Toys ‘R’ Us becomes bankrupt.
Contract Law are the contracts that businesses make with employees, consumers, suppliers and so on. Within the contract law, there are two main types of contracts affecting the business – contracts with consumers and contracts with employees also known as Employment Law and Consumer Protection. Employment Law, which comprises a many of government laws, including...