Business Environment are marketing words describing variables and circumstances that influence a company’s capacity to develop and maintain effective customer relationships. The personal and social environment of an organization is defined as everything that surrounds it.
If an organization fails to consider the features of the environment under which it functions, it is unlikely to fulfil its objectives. Businesses that do not study the surroundings or environment are more likely to fail since the environment is constantly changing.
PESTEL: Political Factors, Economic Factors, Social Factors, Technological Factors, Environmental Factors and Legal Factors.
Affects of political an legal factors in an organization
The norms and laws of the external environment in which all companies must operate are determined by a country’s political system and government policy. As a result of these processes , rules and regulations, the economic, social, and political conditions in which organizations must operate will be created.
The government will update these regulations and frameworks from time to time, causing firms to change how they operate. As a result, government policy has a significant impact on the organization. They will have an impact on how firms make decisions about,
- What things or services to supply
- How to provide these services and goods
- Where to provide them.
Regional government: enact laws that apply specifically to their own territory; similar rules may or may not apply in other areas.
National Government: has greater legal power than any local government – Makes laws that apply to all of its country’s regions and residents – But has no power and authority over any other country.
Supranational Government: is made up of a number of member countries and a governing board made up of members from each single nation.
Laws which effects a business/ business environment
1 Employees protection law: This regulation assures that organizations provide equal chances to all employees, regardless of gender, ethnicity, or religion. It also necessitates, businesses have a formal code of behavior that all employees adhere all the times in order for the workplace to be welcoming.
Types of employees termination
Retirement: It can be forced or voluntary; in recent years, the tendency has shifted toward voluntary retirement, with businesses looking to hire younger personnel and promote experienced individuals inside the company. Of course, this has meant that they must pay enough remuneration to employees who wish to retire freely.
Resignation: People quit for a variety of reasons, therefore they should be handled with caution. In any instance, the company should give employees the opportunity to express their concerns. This can be verified by doing exit interviews to learn more about why people leave.
Dismissal: Dismissal of an individual, including situations where a contract term has expired without renewal or when an employee has been fired for violating contract terms, should be handled with caution. The duration of ongoing service with the employer determines the legal minimum period of notice must be given.
Wrongful dismissal: Wrongful dismissal occurs when an employee is fired without cause. Failure to provide the contractually required notice period is one example (think the condition did not clear summary dismissal)
Unfair dismissal: This is when an employer fires an employee for no apparent reason. The employer is required by law to demonstrate that the dismissal was justified. ex: an employee could have been fired unfairly for informing higher-ups about possible wrong doing within the company.
Redundancy: Dismissal because of redundancy may occur if the company had ceased operations or if those specific jobs were no longer necessary inside the company. Employees should be provided a notice of redundancy with compensation to facilitate or encourage a smooth transition.
Direct and Indirect discrimination
Direct discrimination: When you are treated in a different way and sometimes worse than someone else for specified reasons, this is known as direct discrimination. According to the Equality Act, you have been treated unfairly.
Indirect discrimination: when a practice, policy, or guideline applies to everybody in the similar way, but has a negative impact on certain people more than others.
Ex: a minimal height requirement for a position where height is not required to carry out the work.
2 Data protection and security law
Every person’s right to privacy includes the ability to govern the use of details about them, such as financial or health-related data. The following are the Data Protection Principles:
- Personal data should only be obtained for legitimate reasons
- Data should be meaningful and not excessive for that purpose
- Personal data should be accurate and up-to-date
- Data should be stored for no more than is necessary; and data should always be kept securely and not released to any third party without the employee’s consent.
3 Health and safety
Employers in most countries are required by law to create a safe working environment for their employees. Accidents and diseases not only cost money, but they also damage a company’s reputation.
4 Consumer Protection
A consumer or customer is the person who purchases products and services that a company offers. Consumer rights or protection laws are aimed to safeguard buyers from being duped into purchase decisions based on false details or information. It also assures that in the event of a mistake, there are rules in place to hold firms liable for their conduct.
Consumer protection laws assure that,
- Consumers receive accurate and available details regarding the product or service for which they are paying.
- Businesses must guarantee for the standards of material.
- Personal information about customers should be kept private.
- No unreasonably high payment obligations should be imposed on consumers.
- While paying bills, consumers should be able to evaluate pricing and standards of quality of similar items.
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Must read FBT other notes
Chapter 1: Business Organization| F1/FBT ACCA notes
Chapter 2: Business Organization| F1/FBT ACCA notes