Political and legal factors stimulating change

Whatever the change it is important for the organisation to be able to see it, however this is not always possible, sometimes it is possible for the organisation to be able to anticipate the change and this allows the organisation to plan ahead and develop a new management programme. Anticipated change is when an organisation can foresee the future development either inside or outside the organisation, thus allowing them to plan their response in advance. Unanticipated change occurs mainly due to external changes which cannot always be foreseen.

For example, changes in consumer taste, interest rate movements or exchange rate fluctuations are all factors which are hard for the organisation to influence or foresee. Political and legal factors stimulating change. It is stated that Governments seek to control the business environment in order to meet a range of objectives. These include stability and predictability, health and safety, equity and fairness, the promotion of international trade and the efficient use of resources.

For the government to be able to maintain this goal it is going to need to change its policies and it is important that the businesses within this market are aware of these changes and keep are able to keep up with them Change can be forced on an organisation by a number of situations. These can be divided into two categories, external to the firm and internal. The main external factor affecting the running of a company or firm is government policy.

This includes the way the government manages the economy and the legislations they pass related to business activity. Managing the economy – Half of the total national expenditure is accounted for by public expenditure through central and local government. Changes in the direction of the spending of this money can therefore have huge effects on the economy and in the firms within it. The government's role as manager of the economy means that there will always be pressure exerted on business operations in a variety of ways such as fiscal and monetary policy.

Changing legislation – In most cases the law is a constraint, such as in the limiting of monopolies and restrictive practices, also in the laying down of restrictive standards to be met in producing consumer goods, the government can also help in the firm's operation, such as allowing tax concessions on new investments. As the law is rarely static, all firms have to be sure to be able to adapt to changes in the law that concern them. This is very important to companies that trade outside of their own national boundaries, this is because legislation in other countries is different.

It may be possible to export a product from the ones own country but the receiving country will receive the product if it is in accordance to their legislations. Thus, if the company did not realise that the receiving company had changed their legislation their product would not be allowed to be sold in the other country until it complied with their legislations. Government also introduces legislation to cover areas of concern such as health and safety, consumer protection and control of monopolies, it is important for firms and businesses to keep up with the changes in legislation or else they can risk getting shut down.

Government intervention can be seen in the case where both The Hongkong and Shanghai Banking Corporation and the Standard Chartered Bank wanted to purchase the Royal Bank of Scotland in 1981 when UK Mergers and Monopolies Commission ruled against both bids stating that the UK market would become too dominated by such a strong banking power reducing the levels of competition. Laws are passed by Acts of Parliament and by previous judgements made in courts. Businesses must work within the law to maintain their reputation and to avoid legal penalties.

The government plays a major role in the shaping of the UK market in which businesses operate. It does this by implementing legislations which affect business. Almost all areas of business activity are affected by law, including marketing, production, financial activities, the employment of people and the establishment of the business itself. Some of these legislations include: Health and Safety, which requires firms to insure safe working conditions and suitable safety equipment for employees.

An obligation for each employee to understand and observe the safety rules, any firm with more than five employees must have a written safety policy on display and an union appointed safety representative who can inspect the premises at any time. Health and Safety imposes significant constraints on businesses, if businesses are found in breach of health and safety they can be shut down immediately or given a severe warning and a date by which to correct any faults.

Employment Protection, this promoted the well being of every employee, various Acts have been passed protecting the rights and obligations of workers. Some of these Acts include Equal Pay Act 1970, Sex Discrimination Act 1975, Race Relation Act 1976 and the Disability Discrimination Act 1995. It is important for business to keep up to date with these Acts and to abide by them or else they can risk getting fined and taken to court by any individual employee who feels they have been unfairly dismissed or treated.

Consumer protection Act, laws are passed to protect consumers from unfair business practices. Various acts are passed to protect consumers, most importantly being the Fair Trading Act 1973 and the Food Safety Act 1990. All firms supplying goods and services are affected by this legislation, this legislation ensures that the goods supplied ensure customer satisfaction with an increased emphasis upon quality control however it often leads to an increase in production costs.