Chapter 3 - Influences in the business environment

Question 1

What are the two categories the business environment is divided into?

Answer 1

The business environment is divided into two categories - External and internal

Question 2

What is the external environment?

Answer 2

The external environment includes those factors over which the business has very little control.

Question 3

What is the internal environment?

Answer 3

The internal environment includes those factors over which the business has some degree of control.

Question 4

What are the 10 external influences on the business environment?

Answer 4

The 10 external influences on the business environment are: Economic, financial, geographic, social, legal, political, institutional, technological, competitive situation, and markets.

Question 5

What are economic influences (external)?

Answer 5

Economic influences refer to the many factors that relate to economic activity in a country, region or the world and include interest rates, wages, unemployment, exchange rates and inflation.

Question 6

What is the economic cycle (business cycle)?

Answer 6

The economic cycle refers to the period of growth and recession that occur as a result of fluctuations in the general level of economic activity.

Question 7

What are the 4 main economic conditions is the economic cycle?

Answer 7

Peak, Trough, Expansion, Contraction.

Question 8

What are financial influences?

Answer 8

Financial influences refer to the impact of financial markets on business.

Question 9

What is deregulation?

Answer 9

Deregulation is the removal or government regulation from industry, with the aim of increasing efficiency and improving competition.

Question 10

What are the participants in the financial markets?

Answer 10

The participants in the financial markets include financial institutions (e.g. banks), non-financial institutions, and insurance companies.

Question 11

What are geographic influences?

Answer 11

Geographic influences refer to the effects climate, natural resources, topography, physical infrastructure and location have on a business.

Question 12

What are the three geographical factors that affect business activity?

Answer 12

Three geographical factors that affect business activity are Australia’s geographic location within the Asia-Pacific region, changing demographic factors and globalisation.

Question 13

What is globalisation?

Answer 13

Globalisation is the process that sees people, goods, money and ideas moving around the world faster and more cheaply than before.

Question 14

What are social influences?

Answer 14

Social influences are the ideas, values and beliefs held by people in a particular society, that have an affect on businesses.

Question 15

What are the three social issues that have had a significant impact on business practices?

Answer 15

These include the growing awareness on the environment, the growing desire for businesses to provide family-friendly workplaces and the growing belief that businesses must cater for workplace diversity.

Question 16

What are legal influences?

Answer 16

Legal influences are the regulations within which a business must operate. It is a legal requirement for business to comply with the law.

Question 17

What are political influences?

Answer 17

Political influences are the state and federal government policies, and include free trade policies and the process of deregulation.

Question 18

What are the three main institutional influences on business?

Answer 18

These include government, regulatory bodies and other groups such as trade unions and employer associations.

Question 19

What are the three different levels of government in Australia?

Answer 19

Federal, state and local.

Question 20

What is a regulatory body?

Answer 20

A regulatory body is one that is set up to monitor and review the actions of businesses and consumers in relation to certain issues and the appropriate legislation.

Question 21

What are technological influences?

Answer 21

Technological influences relate to the growing of tools, techniques, or systems by businesses to solve problems or to serve a purpose in operations. They may increase productivity and communication in business.

Question 22

What do we mean by the competitive situation influences on business?

Answer 22

This refers to each business aiming to be the ‘market leader’, which can benefit the business.

Question 23

What are the 5 Internal influences on business?

Answer 23

The 5 internal influences on business are products, location, management, resources, and business culture.

Question 24

What are the main product influences?

Answer 24

The main product influences are the type of goods and services, the type of business, and the size of the business.

Question 25

What are the four location factors?

Answer 25

The 4 location factors are visibility, cost, proximity to customers, and proximity to suppliers.

Question 26

What are the four main resources available to a business?

Answer 26

Human resources, information resources, physical resources, and financial resources.

Question 27

What are management influences?

Answer 27

Management influences refer to the way a business is managed.

Question 28

What is business culture?

Answer 28

Business culture is the values, ideas, expectations and beliefs shared by members of the organisation.

Question 29

What are stakeholders?

Answer 29

Stakeholders are the people and groups that has an interest in, or is affected by the activities of a business. In short, they are anyone who interacts with the business in any way.

Question 30

What are the main stakeholders of a business?

Answer 30

The main stakeholders of a business are Owners/shareholders, managers, employees, customers, society/general public, and the environment.