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P3 what factors are considered political?

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November 8th 2015 AN ACCA USER 120 Points

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Political factors under PEST analysis is separated into Political and Legal factors under PESTEL analysis. PESTEL factors can be classified as opportunities and threats in a SWOT (Strength, Weakness, Opportunities and Threats) analysis.Source Linked.

Political factors: Political factors deal with the public. Political factors are government policies and administration practices. Political environment includes - political stability/instability, changing governance policies, government rules and regulations on trade regulations. In some cases, political factor can have a positive local perspective and the same can have a negative global perspective and vice versa. For example: government policy to provide subsidies to local companies can discourage global free trade policy. Here the essence is to identifying threats imposed by changing political environment and use organisation's strength to overcome threats. Eg; Transfer pricing for a global firm, if applicable.

Legal factors: Law gives rights and responsibilities. Laws, rules and regulations change over time. Law gives freedom and as well it sets limits and hurdles. Legal environment within a territory may or may not match global legal environment. It influences the way business operate. Legal factors includes, taxation law, employment law, environment law, basic human right, minimum wage act, safety regulations and many more. Organisations should identify opportunities and threats within changing legal environment. Eg; may include tax avoidance if practicable.

November 15th 2015 AN ACCA USER 8,730 Points
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