Specification Topic: Political & legal environment

Q1 State and explain whether the following scenarios would have a positive or negative
impact on businesses based in the UK

Scenario Positive or Negative Impact AND WHY…

1.1 The UK Government Negative. The business will have to pay more tax on their
announces an increase in the profit, leaving them with less retained profit to reinvest.
corporation tax rate in line with
EU averages

1.2 The current government has Positive. This will increase the amount of disposable
increased the tax free income employees have therefore they are more likely to
allowances for all employees spend. Therefore demand should increase, increasing
based in the UK business revenue.

1.3 The Department of Positive. Apprentices will have more in the way of
Education has increased its relevant skills for the job, meaning the business’ training
funding towards costs will reduce.
apprenticeships here in the UK

1.4 The Government announces Negative. This means businesses will have to pay salaries
plans to minimise the number to employees and entitle them to sick pay, holiday leave
of zero hour contracts being etc. This means the can no longer only pay employees per
given by firms to employees hour worked.

What’s your opinion? Do you agree or disagree with the statements below? Explain why in
Q2
the space given

2.1 Statement 1: Tighter environmental regulations imposed on UK firms will reduce their
ability to be competitive

I agree with this because businesses will have to pay more environmental costs (such as
green tax) which will have to be offset by prices. This means that they cannot competitively
price products in the same way.

2.2 Statement 2: The government’s continued support of small to medium businesses will
benefit every business

I disagree with this because larger businesses will be disadvantaged if small and medium
businesses are supported. This means they will have to pay more tax and face tighter
competition. They also face regulations on how much more they are able to expand.

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Specification Topic: Political & legal environment

Identify how businesses would feel supported by each of the following government
Q3
policies…
3.1 Government policy Companies know what the rules are, and they are fair for
relating to enterprise: everyone. Competitors cannot undercut you.

3.2 Government policy A business may feel supported in the sense that its pricing work
relating to regulators: and feedback is done for them.
3.3 Government policy
Infrastructure is key to many businesses operations. Therefore,
relating to
regulated infrastructure will support businesses in the LT.
infrastructure:
3.4 Government policy
Businesses will feel supported because they may get subsidies to
relating to the
go green.
environment:
3.5 Government policy
Domestic businesses will feel supported because foreign
relating to international
businesses cannot undercut them for cheaper.
trade:

Q4 True or False… (and why?)

Statement True or False ... (and why?)

4.1 Membership of the EU allows for

free movement of people (for labour
True. Because it’s EU law.
purposes) between all member
countries

4.2 Cartels are agreements between

the government and market leaders to False. Cartels are big groups that control all the
not engage in anti-competitive market in a certain area. (EG: drug lords in WM).
behaviour

4.3 The Competition and Markets

Authority supports new businesses False. CMA regulate competition and enforce
with grants when entering competitive competition laws.
markets

4.4 The term ‘free market’ means an

True. Because there are no tariffs or quotas on
economy or sector where government
movement of goods between free markets.
intervention is minimal

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Specification Topic: Political & legal environment

© Tutor2u Limited 2016 www.tutor2u.net