Task 2 Examination Of 3 Political Social And Legal Factors

Topics: Tax, Income tax, Consumer protection Pages: 4 (1657 words) Published: March 13, 2015
Examination of 3 Political, Social and Legal factors that is likely to effect on River Island's business both in UK and in Germany:

Political factors - are factors which are concerned with the involvement of a country's government within the economy.

1) Tax Policy: it is a set of policies which the government policymakers design to define who pays taxes, what is being taxed and at what tax rates. For a retail business like River Island, the company must pay National Insurance, Corporation Tax on taxable profits, Value Added Tax - VAT on good and services, Pay As You Earn - PAYE paid to HMRC for employee’s income. It is very important for River Island's finance department to calculate and keep records of all taxes paid with any given financial year. If taxes are not paid or recorded, the company could face fines from the government. Businesses in Germany on the other hand pay corporate tax, including trade tax and solidarity tax.

2) Political stability: is a state of peace within a country which is formed by government activities and government decisions to keep the best interests in mind for the general public and to stabilize the country's economy. For example, if the UK government decides to increase or decrease tax rates (Fiscal Policy), it could affect River Island's profits. Inflation rates also affect the prices of goods and services sold by River Island. According to www.bavaria.org website, Germany is a federal democracy and has improved its political stability since the Second World War. The country offers a very high level of reliability for businesses. Areas such a Bavaria, a very productive state in Germany, small towns and county’s work together closely for the better interest of businesses. This environment would be ideal for business such as River Island to establish and grow.

3) Environmental law: these set of laws and regulations are concerned with the effect to which human activities like good production, transportation, usage...
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