political and legal change 3.7.4 Flashcards
what is competition law
Competition law is designed to encourage competition in within markets to ensure consumers have a choices, like certain laws to try and prevent exploitation of monopoly power.
Other aspects of competition law are:
- preventing companies agreeing to work together to the detriment of consumers by operating a cartel
- monitoring companies in strong positions who could potentially abuse their power
- ensure that take overs and mergers do not break the rule of thumb (market share doesn’t go over 25%)
Any external growth like mergers and takeovers that may be detrimental to consumers in any way are referred to the CMA who investigate the impacts of the proposed deal.
what are its effects of competition law
The impact of this legislation on strategic decision making is that few companies will bother with mergers that would lead to a excess 25% market share which constrains a firms strategic plans, forcing them to enter new markets organically which can increase risk
what is employment law
It designed to prevent the exploitation of employees by businesses. Therefore the major areas include pay, working conditions (holidays, physical working conditions, right to trade unions), discrimination, maternity leave,
what are the effects of employment laws
could cause offshoring to avoid employment laws In certain countries, or shifting to more capital intensive labour
what is environmental law
These exist to try and and minimize the negative impacts of business on the natural environment, preventing pollution (disposal of waste), the way products are packaged, recycling legislation.
What are the effects of environmental law
being more environmental can help business better satisfy the needs of consumers and even charge higher prices for it, but can also mean that your cost rise due to not being able to take the cheapest route
what is the impact of the political and legal environments on strategic decision making
can use the changing political and legal environment to predict any opportunities created by them. This will be through a change in law that brings round a high demand for a new product, E.g China brings in a clean air act that brings in high demand for electric cars and fire places.
why is competition a good thing for consumers
firms will want to provide a better service than their competitors, which will be achieved through better quality products at lower prices
what is protectionism
policies of protecting domestic industries against foreign competition by means of tariffs, subsidies, import quotas, or other restrictions or handicaps placed on the imports of foreign competitors. Protectionist policies have been implemented by many countries despite the fact that virtually all mainstream economists agree that the world economy generally benefits from free trade.
what is green tax
Tax paid by businesses that is incorporated into their prices which is then paid by consumers for products or services that are not environmentally friendly. Intended purpose of the green tax is to offset the negative impact resulting from the use of non-green products and services.
