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2.5.2 Legislation

A) The effects on businesses of:

Consumer protection – Businesses have to comply with a range of legislation that protects consumers such as the consumer protection act and the data protection act. This is likely to increase costs for businesses due to the fact that they need to put in place measures to make sure their goods are of satisfactory quality. However, by doing so it is likely to keep customers happy and as a result of this help to build businesses reputation.

Employee protection – The main legislation that will have the biggest impact on businesses is the national minimum wage act. This will cause an increase in the cost of wages for those businesses hiring low skilled employees. However, it may help to motivate employees thus increasing their productivity. Therefore, the minimum wage could lower costs to some extent.

Environmental protection – This is likely to increase the costs that businesses face due to the fact that they will have to dispose of wastage properly. This can often be a long and expensive process and may force some businesses to change their production process entirely.

Competition policy – This is legislation that’s designed in order to prevent monopolies and collusion. This may restrict businesses that are trying to grow inorganically or those that grow organically but are a monopoly. 

Health and safety –This is likely to increase the businesses costs due to the fact that they will have to provide all employees with the basic safety equipment. However, it will also reduce the amount of accidents that take place at work which is likely to reduce the risk of damaged reputation as well as long term employee absenteeism. 

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