In this assignment, I will describe how external factors (political, legal, and social) are impacting upon the activities of a business. My chosen business is McDonalds and I will be explaining how the issues affect in both UK and India.
McDonalds – is the world’s largest chain of fast food restaurants. They mainly serve hamburgers, cheeseburgers, chicken products, French fries, breakfast items, soft drinks, milkshakes and desserts. They also have options such as salads, apples, milk, and Snack Wraps on the menu.
These are the laws and regulations affecting the business. Some of the other factors may include: freedom of information, data protection, employment law and copyright etc.
UK and India’s Legal Factors
Health and safety – In the UK and India, the health and safety law is very important for each individual or employees especially in the workplace, to prevent injury, death and illness. This affects some businesses especially in India because they need to have all equipment for health and safety which will cost them a lot to fill it up.
Food Hygiene – In both countries, McDonalds has to be very hygienic in order for the business to stay open and successful. The impact of an unhygienic restaurant would be catastrophic for the company’s image.
Recruitment and Selection Law – All workers must be treated equally. For example In UK, you cannot dismiss a worker for being pregnant. There should be proper warning before dismissing a worker otherwise it will be treated as unfair dismissal. The Government makes it mandatory to have a written contract of employment. It contains the details of the wage rate; working hours, and other necessary details regarding working conditions. The National Minimum Wage in UK is currently £6.31 while in India; the minimum wage is 118 rupees per day or about £1.50 which is very low compare to UK. In contrast to the UK, India can employ individuals aged fewer than 16 and the child labour in India has a poor image as children are often left unpaid.
These are the aspects of population like for example; immigration, age of population, taste and fashion, belief, individual’s personality, attitudes and lifestyle.
UK Social Factors
Immigration – This has negative impact upon the social factors in UK. A long time ago, there wasn’t that many people living in the UK, however, in the 21st century, a lot of people from different part of the world started to migrate and live in UK. The major impact is on population. It has an advantage such as a lot of people are skilled to be employed in the business. However, some migrants might be illegal entrants or maybe visa over stayers.
Ageing Population – The demographics in UK illustrate that the numbers of older people are increasing. McDonalds can benefit from this ageing population as they can increase the range of their hot drink products in order to target and meet the needs of older people. McDonalds can sell more healthy products such as fruits and salads.
Lifestyle – Businesses are always affected by the lifestyle as people have different fashions, tastes, ethics, beliefs etc. As UK is a multi-cultural country, McDonalds needs to provide different selections of foods from different cultures such as in India McDonalds do not sell any beef products as it is prohibited in their religion.
India Social Factors
High population growth – In India, due to high population, people have a hard time to find a job, as a result of this people don’t have enough funding for their daily expenses.
High degree of corruption level – Corruption is a major issue that adversely affects its economy in India. The causes of corruption in India include excessive regulations, complicated taxes and licensing systems so they add extra cost to the business.
Bollywood popularity – Bollywood is the nickname for the Indian film industry. It became very popular as Indians are in love with movies.
Political factors are factors that deal with the public. For example; EU membership, taxation government support for business, infrastructure (roads), skills, business ethics (corruption).
UK Political Factors
EU membership – McDonalds will need to act in accordance to the European regulations. One of the regulations is the working hours where workers must only work for no more than 48 hours.
Taxation – McDonalds is affected by the government taxes, such as income taxes and business rates as it is a large business, meaning that a lot of tax is taken away from their profits. And McDonalds will have to pay tax. Tax has an impact on McDonalds as it will be taken off their annual profit which will result in less diligence for shareholders.
India Political Factors
Infrastructure – India isn’t modernized unlike UK; the technology systems are much less advanced which could affect the business ability to produce, to sell, expand, and demand. The roads are not well established. And if McDonalds in India have poor machinery, poor buildings and facilities, then it won’t benefit the business and won’t be able to expand.