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Chapter 2

1.4 Political factors – the ‘P’ in PEST

The policies chosen by government will have an impact on organisational
performance.

Examples of government policy

Fiscal policy Monetary policy Supply-side Green policy/
 The  Manages policy externalities
government’s economy  Aims to improve  Negative
taxation and through control supply of externalities are
spending plans of money resources in the the costs of
 Impact on supply, e.g. economy, e.g. production
organisational using interest investment in experienced by
performance – rates employee society, e.g. car
e.g. taxation  Impact on training or low emissions. The
policy will organisational employee taxes government
impact performance –  Impact on may impose
profitability e.g. interest organisational green policies.
rates will impact performance –  Impact on
borrowing cost e.g. staff organisational
productivity performance –
linked to skills e.g. imposed tax
and training will impact
profitability

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