3.7.4 Analysing the external environment to assess opportunities and threats: political and legal change Flashcards
1
Q
What are the key factors of competition laws?
A
- EU and UK laws exist to prevent exploitation of monopoly power
- Prevents companies working together to the detriment of consumers by operating a cartel
- Monitor behaviours of businesses with strong enough position in market to abuse its power
- Ensures takeovers and mergers do not brake the rule of the thumb, that 25% should be the ceiling on any firms share
2
Q
What are the effects of competition law?
A
- CMA gets involevd in potential takeovers that will have an impact on UK consumer
- This impacts strategic decision as they may not be able to do takeovers/ mergerss and forced to enter new markets
3
Q
What are the key factors of labour laws?
A
- Designed to prevent the exploitation of employees by businesses. E.g. Pay, working conditions, holidays
- Employers must at least pay the national minumum wage
- Legislation also exists to prevet discrimination in the workplace
4
Q
What are the effects of labour laws?
A
Tightening employment laws may make firms adapt their operations strategies to redule reliance on UK based- HR. Strategic options can include offshoring operations to countries where wages are lower
5
Q
What are the key factors of environmental laws?
A
Exist to minimise the negative impacts of businesses on the natural environment. E.g. pollution
6
Q
What are the effects of environmental laws?
A
- Additional costs
- First movers benefit from ‘greener image’ and can tap into niche markets for environmental friendly consumers
7
Q
What are the key factors of tax laws?
A
- Value added tax (VAT): An indirect tax on suppliers in a market. The standard rate of VAT in the UK is currently 20%
- Corporation tax: Is tax on profit. Limited companies must pay tax on its proft
8
Q
What are the effects of laws governing tax?
A
VAT helps create more work for accounants. Ensuring VATs are recorded, handed over to HMRC and claimed back
