PESTEC- Political Flashcards
What are the 5 political factors?
Changing laws and legislation
Changing income tax rates
Changing VAT rates
Changing corporation tax
Public spending on infrastructure
What’s a positive impact of changing laws and legislation?
The government could introduce environmental protection laws and policies such as ‘Zero Waste Scotland’ and, by complying, organisations will be seen in good light. This is good PR and can attract potential customers.
What’s a negative impact of changing laws and legislation?
The government could increase the minimum wage so that organisations have higher wage costs. This will result in a lower profit of the year.
What’s a positive impact of changing income tax rates?
The government could reduce taxes (money collected by the government to fund public spending), such as income tax. This will give customers a higher disposable income. This means customers will be more likely to buy products.
What’s a negative impact of changing income tax rates?
The government could increase income tax. This will give customers a lower disposable income. This means customers would be less likely to spend money on a business’s products, unless it is essential. This will reduce sales overall.
What’s a positive impact of changing VAT rates?
The government could lower VAT. This is a tax on goods and services. Reducing the VAT rate will make products more affordable for customers, increasing sales for a business.
What’s a negative impact of changing VAT rates?
The government could raise VAT. This will increase the selling price which could put customers off purchasing products and reduce sales.
What’s a positive impact of changing corporation tax?
Many types of businesses, such as limited companies, have to pay a tax on their profits (corporation tax). The government could lower the rate of corporation tax which would mean less money is taken from the business and given to the government, which would increase profits.
What’s a negative impact of changing corporation tax?
The government could raise the rate of corporation tax which means more money would be taken from the business and given to the government, which would reduce the profit of the organisation.
What’s a positive impact of public spending on infrastructure?
The government could decide to fund the development of infrastructure. Examples include building new motorways, car parks, tram networks, and so on. This will increase the likelihood of attracting customers for businesses in these areas.
Public spending also creates jobs, which gives people wages and enables them to spend money on other goods and services.
What’s a negative impact of public spending on infrastructure?
Public spending is a contentious issue as it only improves certain areas. For example, the Edinburgh tram network greatly improved Edinburgh’s infrastructure; however, businesses in Glasgow saw no benefit. This is known as ‘opportunity cost’ i.e. the cost of spending money on one area is that it can’t be spent in another.
What is the competition policy?
Competition and Markets Authority (CMA).
It aims to investigate markets and enforce competition policy in order to promote competition for the benefit of consumers.
What are the 5 reasons for promoting competition?
Prices are kept low for consumers.
Products and services are high quality.
Customer service is good.
Entire markets improve and grow, creating jobs and raising GDP.
Healthy markets can attract foreign investment.
What are the 4 impacts of the competition policy?
Cartels
Mergers
Anti-competitive behaviour
Consumer protection
What’s the impact of cartels?
Organisations cannot participate in cartels. This means colluding with other organisations to fix prices to make higher profits. If found guilty of participating in cartels, owners or management can be fined or even sentenced to prison.
