CHAPTER 3: POLITICAL AND LEGAL FACTORS 5.

Governments can influence firms through legislation and

AFFECTING BUSINESS policy decisions in all sections of the economy including
Law and Order, Schools, Construction, Defense, Town
1. Which of the following types of new legislation would Planning, Oil, Gas, Coal and Nuclear Power, Agriculture,
provide greater employment opportunities in large Planning Permission and Foreign Policy
companies? Is this statement true or false?
A. New laws on health and safety A. True
B. New laws to prevent discrimination in the workplace B. False
C. New laws making it more difficult to dismiss
employees unfairly 6. When an organisation carries out an environmental scan, it
D. New laws on higher compensation for employer analyses which of the following?
breaches of employment contracts A. strengths, weaknesses, opportunities and threats
B. political, economic, social and technological factors
2. Which set of environmental factors does a lobby group C. strategic options and choice
intend to directly influence? D. inbound and outbound logistics
A. Political
B. Technological 7. Peter Wong was dancing on his desk one lunch time and
C. Demographic tripped, injuring himself. Who is responsible for the
D. Economic accident?
A. Peter
3. When examining the external environment organisations B. Peter's employer
might use PEST analysis. What does PEST stand for? C. Both Peter and his employer
A. Political, Environmental, Social and Technical
B. Physical, Environmental, Social and Technical 8. Which type of organisation would have the retail prices it
C. Physical, Emergent, Strategic and Turbulent charges to personal consumers subject to close scrutiny by a
D. Political, Economic, Social and Technical regulator?
A. A multinational corporation
4. Which of the following best describes PEST analysis? B. A multi-divisional conglomerate (a large corporation
A. Internal analysis that has acquired several other firms engaged in
B. Micro analysis different industries)
C. External analysis C. A national utilities company (national or local
D. Macro analysis monopolies)
D. A financial services provide

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9. Employing lobbyists to put the organisation's case to
ministers or civil servants is a legitimate method of 14. An employee does not have an obligation to comply with the
influencing governmental policy in the interests of a health & safety act – it is only the obligation of the
business. Is this statement true or false? employer. Is this statement true or false?
A. True A. True
B. False B. False

10. Which of the following is data protection legislation

primarily designed to protect? 15. Jack started a new job today. He is 16 years of age and has
A. All private individuals and corporate entities on no intention to continue his studies. This is his first job with
whom only regulated data is held a building contractor. At 7am sharp he was at the plant
B. All private individuals on whom only regulated data hoping to have some explanation regarding this job. None of
is held the sort happened, he found himself at a construction site
C. All private individuals on whom any data is held with some other older colleagues in less than half an hour.
D. All private individuals and corporate entities on At around 3.30pm his boss arrived on site and started
whom any data is held shouting at him since he was not wearing neither a safety
shoes nor a helmet. To make it worse, none of the other
11. The current legislation covering the data protection in the employees were wearing such equipment though they had
UK is: been instructed by the company in various occasions.
A. The Data Protection Act of 2001
B. The Data Protection Act of 1998 Section A: As regards to Jack's case – who is the one to be
C. The Data Protection Act of 2003 blamed?
A. Jack
12. Personal data shall be accurate and, where necessary, kept up B. The other employees
to date. Does this statement comply with Data Protection C. The employer
Act (UK)?
A. Yes Section B: As regards to the other employees' case – who is
B. No the one to be blamed?
A. Jack
13. The process of backing up data and keeping copies off-site in B. The other employees
a fire-proof box is an example of data protection? C. The employer
A. True
B. False

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16. Peter buys an electronic keyboard from his local catalogue 20. Health and safety regulations cover a range of workplace
store. He pays €199 for it. He returns to the store the next health and safety issues. Which of the following is covered
day complaining that, although the main keys work, none of by regulations?
the pre-set rhythm bottoms seem to function. He demands A. Handling of chemicals
an immediate refund. The sales assistant refuses to give him B. Computers
a refund or take back the goods, and instead gives him a card C. Pregnancy
with the name and address of the manufacturer, suggesting D. All of the above
that Peter contacts them to obtain a refund or a replacement.
(a) Was the sales assistant legally justified in refusing to 21. Which of the following would a transport company monitor
give a refund (Y/N) – no under the Political heading as part of a PEST analysis?
(b) Give briefly a reason for your answer A. Tracking systems to monitor driver hours/anti-theft
devices/developments in tyre technology
Contracts of sale are between the buyer and seller, not B. State of the economy/oil price movements/a rise in
between the buyer and the manufacturer interest rates
C. Fuel tax/congestion charges in cities/plans to build
17. Environmental analysis is relevant when undertaking the new roads
strategy making process. Is it true or false? D. Predicted car numbers and usage/public concerns
A. True over safety
B. False
22. Constructive dismissal occurs when an organisation no
18. An individual who is the subject of personal data is a data longer needs an employee and therefore terminates their
_______________ contract. Is this statement TRUE or FALSE?
A. Mining A True
B. Subject B False
C. Figure
23. Under typical employment protection legislation, which of
19. Under which component of PEST analysis would an the following would be classified as an ‘unfair’ reason for
organisation analyse the media through which segments of the dismissal of an employee?
the youth market access new digital music products? A The employee was a member of a trade union
A. Political B The employee was guilty of misconduct
B. Economic C The employee’s job became redundant
C. Social D The employee had a lack of qualifications or capability for
D. Technological the job

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24. Consider the following statements: 27. Which of the following are typical rights of individuals with
respect to data stored about them in data protection
1) A political system can be defined as ‘a complete set legislation?
of institutions, political organisations and interest
groups, the relationship between those institutions (i) Right of subject access – individuals are entitled to be
and the political rules and norms that govern their told whether the data controller holds personal data
functions.’ about them
2) Nationalisation of an industry often involves (ii) Right to prevent processing for the purposes of direct
government selling some of its assets in a bid to marketing
promote competition. Which of these statements (iii) Right to take action to rectify, block or erase personal
is/are correct? data through application to the courts
(iv) Right to require the data controller to reconsider a
A (1) only decision made on a purely automated basis
B (2) only
C Both A. (i) and (ii) only
D Neither B. (ii), (iii) and (iv) only
C. (i), (ii) and (iii) only
25. Supra-national sources of legal authority include: D. (i), (ii), (iii) and (iv)
A United Nations resolutions
B US legislation 28. Consider the following two scenarios.
C UK Government legislation (i) A wants to request his personal credit report from a
D UK High Court decisions credit file company for free, using typical data
protection legislation.
26. Data Protection legislation, such as The Data Protection Act (ii) A receives a large amount of unsolicited (junk) mail.
in the UK, typically focuses on: Using the data protection act, he wishes to have these
A issues concerning data held about incorporated entities marketing activities blocked. In which of these
B rights of the individual with regards to withholding scenarios would typical data protection legislation
information about oneself support A?
C the way data about the individual is to be obtained, used
and stored A. (i) only
D aligning the information requirements between different B. (ii) only
countries C. Both
D. Neither

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29. Which TWO of the following are responsible for an Which of these statements is/are correct?
employee’s health and safety in the workplace? A. (1) only
B. (2) only
(1) The employer C. Both
(2) The internal auditor D. Neither
(3) The employee
(4) The health and safety advisor 32. To be valid, a simple contract must clearly indicate that both
parties intended to create a legally binding relationship. Is
this statement TRUE or FALSE?
A. True
B. False
A. (1) and (2)
B. (1) and (3)
C. (3) and (4)
D. (1) only

30. Which of the following is NOT a typical requirement of sale

of goods legislation?
A. The seller must have legal title to the goods being
sold
B. Goods sold must be fit for purpose
C. Item descriptions must be accurate
D. Goods must be reasonably priced

31. Consider the following statements:

(1) All contracts must be signed by all relevant parties in

order to be binding.
(2) Consumer legislation typically only covers purchase of
goods.

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MULTI TASK QUESTIONS
Question 1
(a) PH is a company that runs train services between several
major cities in country B. It is currently undertaking a
strategic planning exercise for its future operations and has
decided to analyse its external environment using a PEST
analysis.
This analysis has uncovered a number of major issues within
Country B that PH needs to plan for, including:
A Country B’s government has announced additional
expenditure on motorways and roads
B Residents of country B are becoming more
environmentally conscious
C New internet systems are available that will simplify
the process of booking train tickets
D New health and safety regulations are being planned
for all rail operators in country B
E Increased congestion on the roads of country B as
residents travel more
F Additional one-off taxes on rail operators are being
proposed in country B to help pay for road upgrades
G Rise in the cost of repairs to trains due to a shortage
of skilled labour in country B
H New systems are to be introduced to help improve the
efficiency of train arrivals and departures
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Required:
Write down which four of the above statements would be
most likely to be classified as ‘Political’ factors within a
PEST analysis by selecting FOUR of the letters from A-H.
(0.5 marks each, total = 2 marks)
Question 2
PH has recently had a number of problems with employees taking
the company to court after leaving their jobs. To ensure that the
company is not guilty of any wrongdoing, it has investigated four
recent leavers and discovered the following:
Employee 1 was employed as part of PH’s IT department. The
department was recently reorganised and PH felt that this worker’s
role was no longer needed.
Employee 2 had originally been contracted to work 15 hours a week.
Her manager at PH had recently insisted that she had to work 25
hours a week, which led to the employee resigning. Employee 3
recently joined a trade union. Her manager stated that this made her
‘a troublemaker’ and dismissed her.
Employee 4 was dismissed for no longer having the technical
competence for his job (which had recently been significantly
changed in a reorganisation of PH’s operations). Employee 4 had a
three month notice period in his contract, but his manager told him
he was only going to be given two weeks’ notice.
PH is aware that employees may face various types of dismissal,
including:
A Wrongful dismissal
B Constructive dismissal
C Redundancy
D Unfair dismissal C Neither

Required: i) Sarah
Identify which of the above types of dismissal applies to each ii) Trevor
employee by writing ONE letter (A, B, C or D) next to each of the iii) Umberto
following: iv) Vanessa
(i) Employee 1
(ii) Employee 2 (b) Are the following statements about redundancy true or false?
(iii) Employee 3
(iv) Employee 4 i) In the event of redundancy, an employee with one
year’s continuous employment is entitled to
Question 3 compensation
ii) Redundancy can occur where an employer ceases to
A company has recently dismisses employees in the following carry on business in a particular location.
circumtances.

Sarah was dismissed following disciplinary proceedings, although

she was guilty of negligence, and was not given her contractual
period of notice by the company.
Trevor was dismissed from the company immediately after
committing an act that was found to be grossly negligent.
Umberto, a relatively new employee who was showing a lot of
promise, was dismissed after telling management that he had joined
a trade union.
Vanessa, having previously being rated as one of the best
performing employees in the company, was dismissed after
management discovered she was pregnant.

(a) For each of the following situations, classify whether the

dismissal is:

A Unfair
B Wrongly