1. nature of business- Influences in the business environment

Question 1

What are the 2 types of influences in the business environment?

Answer 1

The business environment refers to the surrounding conditions in which the business operates and can be
divided into two broad categories: . 1. external
2. internal
3. stakeholders

Question 2

define internal influences

Answer 2

The internal environment includes those factors over which the business has some degree of
control, such as products, location, resources, management and business culture.

Question 3

define external influences

Answer 3

The external environment includes those factors over which the business has little control, such as
government policy, technology, economic conditions and social attitudes.

Question 4

what are some internal influences on businesses?

Answer 4

products
location
management
resources
business cultural

Question 5

what is the influence of product and how does it influence

Answer 5

What is the influence?
product range, type of product (good/service) and volume of products.

How does it influence?
The more diverse the product range, the more impact on range of inputs required.
larger the physical product, the more impacts on warehousing

Question 6

what is the influence of location and how does it influence

Answer 6

What is the influence?
visibility, proximity to suppliers, customers, and support services

How does it influence?
*Can affect total sales and how expensive it is to run
*The higher the visibility to customers, generally the more expensive the rent
*The further away from suppliers, generally the more expensive the transportation costs

Question 7

what is the influence of resources and how does it influence

Answer 7

What is the influence?
Internal resources available to the business to operate. human, information, physical, and financial resources.

How does it influence?
types of resources influence the efficiency.
has limited physical or human resources = outsource

Question 8

what is the influence of management and how does it influence

Answer 8

What is the influence?
Refers to the organizational structure within a business.

*Traditional structures have a hierarchical, highly layered management.

*Flatter organisation structures have fewer levels of management.

How does it influence?
1. traditional- improves efficiency, but not innovation or adaption.
2. flatter- allows businesses to adapt quickly.

Question 9

what is the influence of business culture and how does it influence

Answer 9

What is the influence?
Values, ideas, expectations, and beliefs shared by members of the organizations.

How does it influence?
*Enhances productivity.
*manager who does not understand a business’s culture may experience failure.

Question 10

what are the 10 external influences?

Answer 10

1. economic
2. financial
3. geographical
4. social
5. legal
6. political
7. institutional
   8 technological
   9 competitive advantage
8. markets

Question 11

external influence: economic

Answer 11

Economic
Refers to the fluctuations from peaks to booms.
The economic cycles influence a business’s capacity to compete

Boom/Peak:
 Wages + salaries increase.
 low level of unemployment
 businesses operate at full capacity.

Recession:
 cost-cutting must occur.
 contracting economy
 consumer spending + confidence falls

Question 12

external influence: Financial

Answer 12

Financial
refers to financial sector.
example = banks

• as interest rates increase, businesses will become more cautious.
• Due to globalisation, no large Australian businesses to use only domestic financial institutions

Question 13

external influence: geographical

Answer 13

Geographic
Australia is said to be an isolated market that seeks to become more integrated with Asia.
demographic changes = ethnicity, age, sex, impact businesses

globalisation = decreases the cost of manufacturing
globalisation = can cause job loss

Question 14

external influence: Social

Answer 14

Social
refers to the changing tastes and preferences of consumers.

positive = providing job training to unemployed people
negative = influences what to stock

Question 15

external influence: Legal

Answer 15

Legal
refers to implications of laws by state and federal government

trade practises corporation Act 2001
Industrial relations, Anti-discrimination act 1977

Question 16

external influence: political

Answer 16

refers to the operation of the governments throughout the nation

Question 17

external influence: institutional

Answer 17

refers to the organisations that influence businesses behaviour

Question 18

external influence: technological

Answer 18

Technological
relates to the growing use of tools, techniques or systems by businesses to solve problems or to serve a purpose in production.

• new communications technology allows information to be rapidly transmitted to an increasing number of consumers with a spread that makes communication instantaneous

Question 19

external influence: competitive Situation

Answer 19

forces businesses aim to produce the best product at a low cost

• competitive advantage = ‘edge’ businesses have over competitors

Question 20

external influence: markets

Answer 20

Three different types of markets
1. Financial
2. Labour
3. consumer

Financial = makes easier for businesses to access overseas funding

Labour = increased demand for skilled workers

Consumer = allows businesses to sell to global markets

Question 21

define what stakeholders are

Answer 21

• A stakeholder is defined as any group or individual who has an invested interest in; or is affected by, the operation of a business.
• Stakeholders can be classified as INTERNAL or EXTERNAL.

Internal stakeholders are: owners, shareholders and employees (managers and workers)

External stakeholders are customers, competitors, the society/community/ general public, the environment and future generations.

Question 22

Environment:

Answer 22

• Growing pressure for businesses to adopt ecologically sustainability.
• Business have learned new processes/procedures/strategies.

Question 23

Employees:

Answer 23

*Vital to organisations = they manufacture/produce the product
*Influence businesses since quality of product depends on their skill.

Question 24

Managers:

Answer 24

*Major influence on businesses
*Responsibility of running a profitable/successful organisation
*Approach/leadership = major impact

Question 25

Consumers:

Answer 25

*Consumer = powerful stakeholder in external operating environment
*Consumers are the reason why businesses exist.
*Businesses respond to the wants and needs of consumers.

Question 26

Society:

Answer 26

*Has responsibility to the general community.
*Socially responsible businesses will participate in a range of community projects + activities.

Question 27

Owners/Shareholders:

Answer 27

*May be owned by sole trader, partners, and a number of shareholders.
* The owner is personally invested in the business.
*Shareholders purchase shares in a company.