The political factors affecting business are often given a lot of importance

The political factors affecting business are often given a lot of importance. Several aspects of government policy can affect business. All firms must follow the law. Managers must find how upcoming legislations can affect their activities. The political environment can impact business organizations in many ways. It could add a risk factor and lead to a major loss. You should understand that the political factors have the power to change results. It can also affect government policies at local to federal level. Companies should be ready to deal with the local and international outcomes of politics.
Changes in the government policy make up the political factors. The change can be economic, legal or social. It could also be a mix of these factors. Increase or decrease in tax could be an example of a political element. Your government might increase taxes for some companies and lower it for others. The decision will have a direct effect on your businesses. So, you must always stay up-to-date with such political factors. Government interventions like shifts in interest rate can have an effect on the demand patterns of company.
Economic
The economic reasons for a business usually depend on monetary reasons, such as taxation exchange rates and government policies. For other business inflation and tax will have a big impact on the business. Businesses pay a tax called cooperation tax, which is currently at 20%. This means that business have to pay 20% of their revenue to the government. Another economic discussion is that today, the economy around the world remains fragile, even after three years of slow recovery from its bottom in year 2009. In UK particularly, the unemployment rate remains high, and consumers are commented to be cautious and prudent in their spending habits.
Social
Overall, the living standards of people are rising around the globe. Today, consumers are becoming more demanding. People simply have higher expectations on the level of services provided by businesses. Overall, for businesses this will mean that they have to up their standards and supply more for the people. Banks and the government rely on people to save money. The money saved is used to boost the economy as it is borrowed by businesses and householders for mortgages etc. Also, people are leaving their houses to live by themselves at a much younger age than before, this means that people are getting a mortgage at a younger age and getting into a debt a lot quicker. Furthermore, there has been a change in demographic trends this can have a significant influence on businesses. For example, in one place there may be more ethnicity than another.
Technological
Many different technologies are affecting the business nature of airline in the past decades. One of the main issues are internet services, such as trivago, expedia, travel supermarket, go compare and many more. Apart from that, as technologies improve, people may be expecting improvement of services provided by operators. For examples, the ability to adopt new technologies fast and to enable customers to access to high speed internet connectivity may strengthen competitive positions of certain operators. New businesses are increasing rapidly and some innovative ideas may even operate from a ‘back bedroom’ – these are sometimes based on a new craze, such as the aluminium scooter in the mid-1990s. However, unless business owners know how to sustain their business idea, and can cope with changes in demand, they can be short lived. One recent ‘back bedroom’ innovation is that of Marc, ‘inventor’ of Sublime Science children’s parties.
Environmental
Today, global warming is a serious issue affecting people and the next generation. People started to aware on the harms brought forward by short term oriented and self-fish business entities. The public are increasingly demanding that businesses should practice Corporate Social Responsibility in the development and growth of the businesses. On other businesses global warming can be an issue as they may have to use certain resources and materials to be sustainable. Environmental factors can also have a big effect on a business as if they do not meet a goal of reducing their CO2 emissions then this could show a bad face for the business. This could bring their brand loyalty down and then have less customers for the future. Businesses also have to focus on waste such as household rubbish or rubbish within their factories or warehouses which the council will then collect. Also businesses must recycle, they must comply with the governments green policies which ultimately have an impact on our lives.
Legal
In different country, and depending on the changes in legal and regulations of the airline industry, different issues may affect the industry. For different businesses their legal factors may be that they have to follow the minimum wage act. The National Minimum Wage (NMW) is the minimum wage per hour a worker is entitled to in the United Kingdom. These rates are reviewed yearly by the government. Every business has to follow this act. Certain legislations must be complied with inn businesses otherwise heavy fines are imposed and even imprisonment may be a possibility. There are many laws and regulations which a business has to follow however, certain laws only apply to certain businesses such as the partnership act will only apply to businesses which are partnerships and the charities act will only apply to organisations which are registered charities or non-for-profit.