Organisations are influenced by 3 elements consisting of social, political and legal factors. These factors affect both the organization and stakeholders. Pestle analysis is used within a organisation to evaluate the conditions in which they are working in.These factors are used to institute conclusions and formulate subsequent approaches. It is particularly used to discern threats within related markets and the expansion and drop within the market.
The use of the political factor is crucial as political solidity is convenient for organisations to run smoothly. Political parties being elected to office is constantly changing and so manifestos are made public allowing organisations to recognise alterations that are likely to take place which can influence the organisations such as River Island and Ealing, Hammersmith and West London college. Political factors are able to affect both organisations pessimistically and favourably in areas such as taxes. Tax rates are changed constantly to assist the parliament to increase income.
The raise in taxes can come at a great disadvantage to organisations such as River Island as the higher the taxes the less customers purchasing products. Another political factor which affects River Island is the alterations to pensions. Due to these alterations employees at River Island will need to retain money as a contribution to their pensions.Political factors also affect Ealing, Hammersmith and West London in areas to do with government fund.
Schools as a whole are provided with funding for students under the age of 18 and so if it was determined by the government to minimise the amount of revenue schools are presented with then this will lead to an affect on the schools budgets. Another political factor which affect Ealing, Hammersmith and West London is the ofsted inspections that take place. Inspections are taken place in order to see whether a school is struggling or is up to standard. If they are found to be struggling on educational terms then they are provided with support from the government. Social factors can be vital for a organisation’s success. One key social factor that affects organisations such as River Island is technology.
An example of this would be smartphones as advertising could be used via location to inform them of any sales that might be taking place which can be used to uplift sales within River Island. Technology also impacts colleges such as Ealing, Hammersmith and West London College as most schools use technology to teach pupils. This comes at a great advantage to pupils and teachers as there is less paper work as everything is digital and makes it easier to make assignments for example turnitin. And lastly legal factors which influence organisations such as River Island could consist of importing and exporting restrictions. These impact the business as importing and exporting in areas such as availability and price. Raw materials and labour costs are cheaper in other countries so organisations take the advantage of this to construct and manufacture their products abroad in order to save them money.
If this was to change then businesses such as River Island would have to manufacture their products here costing ten times as much. M2 Political factors that could affect Ealing, hammersmith and West London college include the raise in university tuition fees. Due to an raise in university tuition there is an inflated request for the studying of a btec course and apprenticeships. Due to this the number of students studying a btec course are higher and so the more amount of students the more amount of teachers/ lecturers are needed. This puts the college in risk of having to hire more staff which takes time as they are needed to be seen if they have the right skills for the job. However River Island are impacted by political factors through the rate of VAT. if the vat is put at a high rate it is a disadvantage to many organisations such as River Island as their supply chain.
Due to this they will need to find cheaper suppliers which is time consuming as well as cause delays for products causing them to lose sales as products will not be available to customers in order for them to purchase them. Another political factor that affects Ealing, Hammersmith and West London as a college is the training courses that the government provide. They provide a variety of training courses which are accessible through numerous training arrangement. This benefits Ealing, Hammersmith and West London as the more skilled staff are the more effective they are able to perform at their job.
And finally another political factors which affects both Ealing, Hammersmith and West London college is government approaches weather that may be receiving direct government funding or paying taxes. For colleges such as Ealing, Hammersmith and West London college they receive funding by the government for students and so they are able to make budgets according to that. However organisations such as River Island pay corporation tax which is paid on the profit the organisation make. If this tax was to be reduced by the government organisations such as River Island will be able to obtain additional profit and put it towards other areas of their business such as expanding. One main legal factor that impacts a business is is modification of laws. Areas such as increasing the education duration impact organisation such as Ealing, Hammersmith and West London college and River Island as it diminishes the pool of employees and generates extra opportunities for individuals who opt out form education.
This means that organisations such as River Island will not be able to get inexpensive work from children the age of 16 years old. This leads them to having to amend their plan some of which including offering more part time jobs in order to increase the amount of employees they will also not be able to employ employees of a younger generation and pay them a minimised amount of money which leads to only being able to employ staff of above 18 and pay them the same amount as an average employee. Another legal factor that affects both Ealing, Hammersmith and West London college is the alterations within National Minimum Wage as organisations are need to ensure that they are paying their employees depending on the amount of hours they are at work.
Likewise, both organisations are impacted by the act of sales of products which manages the sales of products purchased and sold. This contract enables products to regulate a level of adequate quality for the amount customers are willing to purchase it for. And finally social factors that affect River Island includes fashion trends and the interests of customers.
Due to fashion trends constantly changing within the business industry River Island are prone to keep up with those changes. Similarly, River island also are in need to keep up with their customers likes and interest in order to order their supplies according to their customers demand. This increases their sales as if customers interests are provided in their stores they are more likely to purchase them. D2 Changes in the economic environment influence an organisation greatly. Organisations are constantly adjusting to keep at the same rate with adjustments within social, legal and political factors.
Due to this to keep at the identical pace with these alterations organisations such as River Island need to plan a way in which they can conform to them. Economic modifications in the future can impact River Island as an organisation as they will need to assess that there will be a greater demand for their products as they will be less expensive during the recession phase and will therefore need to be willing to make less profit as customers will be less able to buy expensive products during this phase. This could bring many disadvantages to River Island as due to customers are receiving less income they might be unable to keep their loyalties with River Island and so therefore might start to purchase their products from their competitors. There are a numerous amount of political and legal modifications that could arise within the organisation which can both increase and decrease the amount of profit an organisation makes. Political amendments also signify that organisations are required to focus on what changes the government are planning to make to preserve a proficient scheme for the organisation.
Since the UK is part of the EU organisations such as River Island would have to reflect on both laws. These laws include areas such as taxes and National Minimum Wage. another major one is the freedom of trade and movement within the EU. This puts organisations such as River Island in predicaments in which they need to increase their advertising as well as increase their excellence in customer service. This means that the cost going towards their advertising has to increase in order to keep their sales and costs at a high scale.A major political factor which is the most commonly spoken upon is the EU referendum which is due to have a huge impact on organisations such as River Island. The vote has many outcomes such as trading.
This impacts numerous business as if the EU are unable to pay for the importing and exporting of good then a trade cost is due which increases payments for organisations. Not only trade costs but other areas are do to increase such as the price of goods, inflation and reduction of jobs. Social amendments also impact the organisations in sectors such as fashion trends and customers likes and interests. These two factors are constantly changing and therefore is vital for organisations such as River Island to be aware of these changes and therefore adhere to them in in order to keep their customers satisfied as well as keeping the sales high. When the demand of such fashion trends is heard through the social market the supplies from specific organisations rises in order to adhere to those demands which gives organisations the opportunity to make huge sales and profit.
In conclusion the impact of political, social, economical and political have both negative and positives outcomes. They are able to raise profit and sales for organisations but also bring a loss of jobs as well as customer neglection. Organisations such as River Island therefore need to be made aware of these changes in order to apply them to their organisation and come to terms with how they are able to work these policies and modifications.