Syllabus: AQA - AS and A Level Business
Module: 3.7 Analysing the Strategic Position of a Business (A-level only)
Lesson: 3.7.4 Analysing the External Environment to Assess Opportunities and Threats: Political and Legal Change

Introduction

This article supports the delivery of Section 3.7.4 of the AQA A-level Business specification, which focuses on analysing political and legal changes as part of the external environment.

It helps students explore how shifts in government policy, regulation, and legislation impact business decisions and performance. As a key topic in the broader theme of strategic analysis, it supports students’ ability to evaluate risk and opportunity in dynamic market conditions — a critical skill for business success and workplace readiness.

This section aligns with Enterprise Skills’ focus on commercial awareness, decision-making, and workplace readiness, while contributing directly to Gatsby Benchmark 4 (linking curriculum learning to careers).

Key Concepts

Students are expected to understand and apply the following as outlined in the AQA A-level Business specification:

• Impact of political and legal change on decision making at both strategic and functional levels.

• Types of political influence, including government support for enterprise, deregulation, and infrastructure investment.

• Legal frameworks affecting businesses, such as:

  • Competition law (e.g. CMA regulations),

  • Labour law (e.g. minimum wage, health and safety),

  • Environmental law (e.g. emissions targets, sustainability reporting).

• The role of regulators and their influence on sectors such as finance, energy, or telecoms.

• International trade policy, tariffs, and post-Brexit regulation shifts.

• Students must be able to evaluate how these external forces create opportunities or threats for organisations, supported by up-to-date examples.

Real-World Relevance

Political and legal changes affect businesses of all sizes and across sectors. Recent examples bring this topic to life:

• Post-Brexit Trade Agreements: Businesses navigating new customs regulations and trade barriers with the EU — especially affecting SMEs in manufacturing and logistics.

• National Minimum Wage Increases: Retailers and hospitality firms adjusting cost structures and pricing strategies in response.

• Green Legislation: Auto manufacturers such as Ford and Vauxhall adjusting production plans to meet UK emissions targets and preparing for the 2035 ban on new petrol and diesel vehicles.

• AI Regulation: Technology firms responding to the UK’s pro-innovation approach to AI policy, potentially gaining competitive edge through early compliance.

These examples demonstrate why students must evaluate political and legal forces as dynamic strategic variables, not just static constraints.

How It’s Assessed

AQA typically assesses this topic through extended written responses (10-, 16-, or 25-mark questions) requiring:

• Analysis of the business environment in context

• Application of relevant legislation or political factors

• Evaluation of strategic responses and trade-offs

Command words to watch include:

• Analyse – break down the impact of specific changes

• Evaluate – judge the effect on the business’s success or strategy

• Assess – consider the relative importance of political vs legal issues

Data response questions may present a case study with a recent political or legal issue, asking students to recommend strategic actions.

Teachers should encourage structured responses using PEEL paragraphs (Point, Evidence, Explanation, Link) and the contextual use of legislation for high marks.

Enterprise Skills Integration

This unit is ideal for building real-world decision-making skills.

Through activities such as:

• Scenario analysis: Students assess how a business should respond to a new environmental tax or wage increase.

• Regulatory mapping: Matching business functions with relevant laws.

• Debate and role play: Simulating government lobbying or board-level decision-making in response to policy shifts.

These approaches build:

• Strategic thinking (evaluating long-term implications),

• Stakeholder awareness (balancing compliance and profitability),

• Problem-solving (adjusting operations in real time),

• Workplace confidence (understanding real constraints organisations face).

Enterprise Skills’ business simulations and Skills Hub tools provide mapped activities aligned to this exact content, helping reinforce learning through employer-validated experiences.

Careers Links

Understanding political and legal factors is essential across sectors — not just for future business managers but also for:

• Policy analysts

• HR professionals

• Compliance officers

• Sustainability managers

• Operations and logistics roles

These careers require monitoring external changes, interpreting legislation, and adjusting internal processes — exactly the skillset this unit develops.

Mapped to Gatsby Benchmark 4, this topic provides a natural link between curriculum and careers. Embedding real case studies and employer videos (via Skills Hub Futures) can also meet Benchmarks 5 and 6.

Teaching Notes

Common pitfalls to address:

• Students confusing political trends with economic factors (clarify distinction).

• Over-reliance on generic examples (e.g. “Brexit”) — push for sector-specific application.

• Lack of evaluation — many stop at description.

Recommended approaches:

• Use current affairs clips to spark discussion on regulation (e.g. CMA news, government announcements).

• Assign groups to different sectors (e.g. transport, retail, tech) and analyse upcoming legal changes.

• Use Skills Hub simulation tools to build scenario-based learning with measurable outcomes.

Extension activities:

• Invite a local councillor or business leader to discuss how politics affects local enterprise.

• Students draft a policy briefing note for a fictional CEO about an upcoming legal change.

Final tip: Link this unit explicitly to assessment — show students how this knowledge can help them excel in 25-mark evaluative questions and in real job roles alike.