Unit 26 Government objectives (Business Studies)

Unit 26 Government objectives (Business Studies)

Case

VIS provides a range of insurance services including for cars and electrical products. Recently, the company plans to change the organizational structure because there are many customer complaints. Therefore, employees will be trained.

Open Ended

How can higher taxation affect the company?

Effects

• Reduced Demand (lower sales) (k) for insurance (app)

• Increased costs (Lower profit) (k) so less money for training (app)

• May have to increase prices (k) leading to more customer complaints. (app)

CASE

John owns a successful restaurant business. He set up 10 years ago. The business has a chain of 5 restaurants located in the centre of the main city. The business is in country B which has had high levels of economic growth of the past 5 years. John is considering to open a new restaurant with a takeaway service.

Question

Consider how the following changes might affect the success of the new business.

Open Ended

When the economic cycle in country B moves from boom into recession

Effects of economic cycle in country Z (boom to recession)

• Lower incomes

• Unemployment increases

• Less demand for restaurants and takeaway food

Open Ended

When government in country B lowers income tax

Effects of lowering income tax

• Increased disposable income

• Increased demand for restaurant

Open Ended

When new legal controls so all packaging for takeaways must be able to be recycled

Effects of using recyclable packaging

• Increased costs

• Higher prices

• Changes in packaging may affect food

Open Ended

When new legal controls that all menus must contain full information on the ingredients used

Effects of making all menus have full information on the ingredients used

• Increased cost because of reprinting menus

• Increased demand if healthy food ingredients listed