PESTEC - Political Impacts

Changing Laws and Legislation: Increasing minimum wage

• Positive Impact

• Negative Impact

Answer explanation

Negative. Organisations will have higher wage costs which in turn will result in lower profits.

Changing VAT rates: The government increase VAT to 25%

• Positive Impact

• Negative Impact

Answer explanation

Negative. By increasing VAT rates, this will increase a product or service's selling price. If the selling price increases, this can put customers off purchasing products which will reduce sales.

What percentage is the UK VAT rate currently?

Changing Laws and Legislation: The government could introduce environmental protection laws that will give law abiding organisations positive CSR.

• Positive Impact

• Negative Impact

Answer explanation

Positive. Organisations that abide by such a law would be seen as behaving in an environmentally friendly way and in turn would gain positive Corporate Social Responsibility. This can attract potential customers to the business.

Public Spending on Infrastructure: Public spending improves certain areas. If you were a Glasgow based business, would you directly benefit from Edinburgh's improved infrastructure (tram network)?

• Yes

• No

Answer explanation

No, you wouldn't. An issue with public spending on infrastructure is that only the area that was improved will see the benefit.

REMEMBER: Opportunity cost means that the cost of spending money on one area is that it can't be spent in another.

Public spending on infrastructure: A new multi-storey car park is built in Aberdeen City Centre with low parking rates.

• Positive Impact

• Negative Impact

Answer explanation

Positive. This will encourage people to come into the city centre more often and will benefit businesses in the area as they will experience higher footfall.

Changing corporation tax: The UK government change corporation tax to 17%

• Positive Impact

• Negative Impact

Answer explanation

Positive. The current rate for UK corporation tax is 19%. By lowering it to 17%, organisations won't have to pay as much tax on the profits they make and in turn, would increase profit.

Public spending on infrastructure: The opening of the AWPR/Aberdeen City Bypass

• Positive Impact

• Negative Impact

Answer explanation

Positive. The bypass can make it easier to travel. This is good for businesses when ordering supplies that need to reach them.