IGCSE Business Studies

Section A
Chapter 11 - Government Influences on Businesses
Legislation and other controls

Miss Mareem
 Learning Objectives

• Understand the concept of how

government influence businesses through
legislation and controls.
 Consumer Protection

• Exploiting consumers by using Anti – competitive

practices or restrictive practices such as:

• Increasing Prices
• Restricting Consumer Choice
• Raising barriers to entry
• Market Sharing
Consumer Protection
 Competition Policy
• Encourage the growth of small firms – this will increase
competition and consumers will benefit from good quality
and low prices.

• Lower barriers to entry – this will encourage more firms to

join the market therefore increasing competition.

• Introduce anti competitive legislation – mergers of large

corporations and takeovers are restricted to avoid
monopolies from forming.
 Health & Safety Legislation
• To protect workers from dangerous machinery.

• Workers should be provided with proper safety equipment's and

clothing.

• A reasonable workforce temperature is maintained for workers.

• Proper hygienic conditions and washing facilities are provided.

• Workers get adequate breaks between shifts.

Employees Protection legislations

Government may pass laws to protect the interest of employees such as:

• Laws against unfair discrimination at work and when applying for jobs.

• There is no unfair discrimination on the basis of Race, religion, sex, age,

or colour.

Ensure fair wages for the employees

• In many countries, government makes it mandatory to have a written
contract of employment. It contains the details of the wage rate;
working hours, deductions (if any) and other necessary details regarding
working conditions. Minimum wages paid to different types of workers
are also determined by the government.
 Environment protection
• In the recent years government across the globe have
passes legislations to control business activities from
harming the environment.

• This includes setting limits to the pollution, making it

mandatory for businesses to treat their wastes etc.
Destruction of wildlife habitats, traffic congestion and
wasted resources.

• Environmental legislation – if business fail to comply with

environmental legislations they could be fined or closed
down.
 Taxes & Subsidies

• Taxation can be used to reduce pollution. Business are heavily

taxed if they produce harmful emissions into the air.

• Government can offer grants, tax allowance and other

subsidies as incentive to reduce pollution and encourage
greener practices. Like large supermarket using recyclable
shopping bags or paper bags rather than plastic bags.
 Government Influences & Business
Objectives

• Government often influences location of business through

• Encourage businesses to become socially responsible.
• Planning controls involve restricting the business activities
that can be undertaken in certain areas.
• Provide regional assistance to businesses which involves
encouraging them to locate in underdeveloped regions of the
country.
Task