The political environment comprises actions taken by local, national or international authorities that affect the activities of businesses. A number areas of government policy may be considered to shape the political environment, including:
The regulation of markets
The country’s infrastructure
Issues relating to the environment
International trade
What is the legal environment?
The law is a framework of rules governing the way in which our society operates. The rules apply businesses as well as individuals. The legal framework affects businesses in a number of ways impacting on almost all areas of business activity. E.g. marketing, production, employment, relationships with customers, competitors, its form of ownership. You need an understanding of three elements of the legal environment. The are:
Competition
The employment of labour
Environmental issues
What is business legislation? LEGAL
A set of rules and regulations with which a business has to comply
A constraint on action or a threat
An opportunity
Main roles of business legislation LEGAL
Regulate the rights and duties of people carrying out business
Protect customers from harmful business activity
Ensure employees are treated fairly and not discriminated against
Provide protection to investors and creditors
Deter and prevent unfair competition
What are the three main areas of legislation? LEGAL
Labour market, competition, environment
What are the two main areas of the labour market? LEGAL
employment rights, industrial relations
Equal pay act - labour
Men and women are entitled to equalpay for work of equal value
Workers have the right to ask their employer for information to check equality
If they believe their pay is unequal, they can take the employer to an employment tribunal
Minimum Wage Legislation - labour
Employers required to ensure they pay their workers at least the nationalminimum wage (NMW)
In the UK, for workers over 25, a top-up is applied to create the NationalLiving Wage (NLW)
Employment Legislation and Discrimination - labour
It is illegal for an employer to discriminate against an employee on the basis of: sex, race, age, sexual orientation, disability, relationship status
Employment Rights in UK - labour
Reasonable notice before dismissal
Right to redundancy
Right to a written employment contract
Right to request flexible working
Right to be paid nationalminimum wage
Right to take time off for parenting
Aims of Competition Policy LEGAL
The aims of competition policy are to promote competition; make markets work better and contribute towards improved efficiency in individual markets and enhanced competitiveness of UK businesses within the EU single market.
Examples of Anti-Competitive Behaviour LEGAL
predatory pricing, charging high prices, price fixing, patent misuse
Examples of Regulators in the UK LEGAL
OFcom, OFWAT, CMA, financial services
What do the Competition Regulators Actually Do? LEGAL
moniter and regulate prices, standards of customer service, open up markets, the 'surrogate' competitor
Environmental legislation LEGAL
emissions, packaging, business waste,hazardous subtances
influential factors: encouraging enterprise POLITICAL
Making funds accessible to small businesses, guidance on running new businesses, supporting established businesses
Influential factors: developing infrastructure POLITICAL
speeding up communication and transportation. Allow access to new markets
Influential factors: regulating markets POLITICAL
regulation of specific industries, promoting freecompetition, regulating private monopolies
Environment issues
protecting environment, create opportunities for businesses that specialise in environmental products eg recycling
Influential factors: international trade
Policies to increase exports to other countries, exports bring in revenue from abroad