chapter 3: influences of the business environment

Question 1

what are types of business environments

Answer 1

business enviro - the surrounding conditions in which the business operates (divided into internal and external)
external enviro - factors which business has little control
internal enviro - factors which business has some degree of control

Question 2

list the external influences in business enviro

Answer 2

economic, financial, geographic, social, legal, political, institutional, technological, competitive situation, markets

Question 3

what are the economic influences

Answer 3

recessionary cycles - consumers more cautious –> decreased consumer spending –> decreased profits –> workers retrenched

boom cycle - consumers confident –> increased spending –> increased profits –> increased employment

Question 4

what are the financial influences

Answer 4

due to deregulation of aus financial system, banks are not restricted to domestic financial institutions but also international interest rates

Question 5

what are the geographic influences

Answer 5

aus and our trading partners geographic location can influence opportunities for expansion, sales and profits
aus demography: due to aus aging population, the labour force has shrunk
globalisation: buying and selling b/w nations

Question 6

what are the social influences

Answer 6

rapid identification to changes in taste, fashion and culture can lead to sales and profit opps and bus growth. failure can threaten bus stability and viability.

Question 7

what are the 3 main social issues

Answer 7

growing awareness of enviro - rewards bus for adopting envirolly sustainable practices

provision of family-friendly workplaces - bus support families provide childcare and flexible hours

belief for workplace diversity - related to gender, age, language, ethnicity, cultural background,
disability, sexual orientation and religious belief

better retain employees and attract them
can increase morale, creativity, productivity, competitive edge

Question 8

what are the legal influences

Answer 8

costly and time-consuming to comply with regulations
bus owners must have a good understanding of the law to accept legal responsibilities they owe to stakeholders

eg taxation, industrial relations, work health and safety, equal employment opps, anti-dsicrim and protection of enviro
competition and consumer act 2010
ACCC (aus comp and consumer commission)

Question 9

what are the policitical influences

Answer 9

major politica; change can lead to bus uncertainty or confidence

current political issues:
- labour market reforms eg free trade policies
- social reforms eg equal pay
- taxation eg GST
- environmental management eg plastic ban

Question 10

what are the institutional influences

Answer 10

3 types: gov, regulaotry bodies and other
gov - federal state and local
reg bodies - NSW fair trading, ASIC, ACCC
other - employee associations, trade unions, ASX

Question 11

what are the tachnological influences

Answer 11

appropriate tech can improve efficiency and producitivyt, create new products, reduce op costs, reduce repetitive tasks, reduce comms delays and more

Question 12

what are the compettitve situation influences

Answer 12

bus aims to acheive sustaiable competitive advantage in order to capture larger portion of the market

no# of competitors
ease of entry
marketing strats by competitors
local and foreign competition

Question 13

define market concentration and define the diff types of markets

Answer 13

market conc refers to the no# of compeitiors in a particular market

four main types:
monopoly - complete concentration by one firm
oligopoly - small no# of larger firms that dominate market
monopolistic comp- large no# of buyers and sellers
perfect comp - large no# of small firms selling same thing with slight differentiations

Question 14

define ease of entry and identify the ease of entry into the four market types

Answer 14

refers to the ability of an individual to establish a business ina particular indus

perfect and monopolistic comp - easy to enter (affordable)
oli - difficult to enter cos businesses more established
mono - possible cos only one business has control

Question 15

list the internal influences in a business enviro

Answer 15

products, management, location, resources, business culture

Question 15

outline what features marketing strats dependent on

Answer 15

size of market
size of bus
no# of competitors
nature of product

Question 15

what ae the market influences

Answer 15

due to the easing of capital, international financial flows have expanded rapidly over last 3 decades. it is now much easier to access overseas share markets and purchase equity in foreign companies

changes in labour markets
- due to political barriers, flow of ppl b/w countries is now more restricted

changes in consumer markets
- influenced by changes in global markets and tech

Question 16

what are the product infleunces

Answer 16

the main product influences are:

type of goods and services
- the physical size of goods –> require structures to organise
- range of products - the larger the range the more internal impact –> expand ops

reflected in type of bus (ie service, manufacturer or retailer)

size of bus - the larger the bus the more goods produced

Question 17

what are location influences

Answer 17

location can determine failure or success cos it affects:
- sales
- how expensive
- how a bus operates

bad location is a liability that adversely affects sales and profits. esp important for bus that need constant flow of people (the passing trade/passing consumer traffic)

locating next to complementary business may be beneficial

Question 18

list the factors of location

Answer 18

visibility, cost, prox to suppliers/customer/support services

Question 19

features of visibbility

Answer 19

if bus not visible, cuatomers may not make effort to find the bus –> optimum customer flow not achieved

A business wanting high visibility should:
- locate in prime shopping are
- shopping are
- main street

A business concerned with manufac may choose:
- low visibility location
- advertise location to appropriate customers

Question 20

features of cost

Answer 20

leasing or purachsing a central location in a busy shopping centre will be more $$ than a location with lower levels of passing consumer traffic

if bus relies on passing consumer traffic and maximum exposure - cost is unavoidable

if bus does not rely on passing customer traffic –> search for low cost site esp if related to manufac

given rapid changes in tech: many bus online to communicate with base thru internet
fastest growing avenue for sonumser sales

Question 21

features of proximity

Answer 21

prox to suppliers - transport cost if bus reliant on bulky raw mats –> locate closer to supplier
if bus does not have bulky mats, prox to supplier not a major concern

prox to customers - retailer must be convenient however many may decide to be more cost effective to transport to consumer

prox to support services - activities needed to assist the core ops or prime function of a bus
- small bus: seek external services
- med-large bus: provide their own services internally
prox to support not major cos tech

Question 22

what are the resource influences

Answer 22

four main resource available:
- human resources
- information resources
- physical resources
- financial reosurces

Question 23

what are the management influences

Answer 23

rapid advances in tech + signif pressures from increased competition (globalisation) = more bus flattening structures (fewer levels of managemnt)
acheives:
- collaborative workplaces and cohesive, inclusive business culture
- decentralised
- flexible vs rigid structure

Question 24

what are the business (corporate) culture influences

Answer 24

values, idea, expectations and beliefs
can be shown thru goals and policies or informally thru employee behaviour, dress and language

managers must understand and appreciate bus culture to initiate change in procedures
bus with healthy, well-developed and strong culture more likely to succeed
employees develop sense of belonging

Question 25

what are the elements (4) of business culture

Answer 25

four essential elements:
- values: business’ basic beliefs
- symbols: events of objects representative of smth important to bus
- rituals, rites and celebrations: regular social gatherings
- heroes: role models

Question 26

what are the culture and organisational structures

Answer 26

formal business:
- bureaucracy, live authority, hierarchical management structures and define job titles
- emphasise accountability and conform to culture of loyalty

less formal business:
- flatter management structures, less dpeartmentalisation and fewer defined spans of control
- exhibit highly flexible, innovative and risk taking cultures

Question 27

what is managements roles in developing a business culture

Answer 27

ensure staff member are given sufficient training to reflect values of a bus
for change in bus culture to be successful and sustainable:
- senior management act as role models
- reinforce the values
- rewarding appropriate behaviour
- recruit staff who fit values

Question 28

what are the stakeholders influnece of a bus

Answer 28

any group or individ who has an interest or is affected by the activities of a bus

bus recognised that they increase chance of success when they pursue goals that align with the interests and expectations of their main shareholders by being good corporate citizens

Question 29

what are shareholders influence of a bus

Answer 29

shareholders have shares in a company (partial ownership, voting rights (direct influence) and have a duty to hold (annual meeting to voice concern and ask questions to board of directors)

shareholders benefit by gaining portion of the profits (dividends) and making capital gain if value of a bus’s shares increase

shareholders desire immediate returns on profits putting pressure on managers thus influencing growth or long term expansion of a compnay

Question 30

what are the managers influence of a bus

Answer 30

management has repsonsibility of running a profitable or successful organisation. Managers should understand:
- ethical and socially responsible activities
- complex legal issues
- policies and procedures to reinforce them
- leadership styles and their affect on employees and their productivity –> affect culture and employee morale

Question 31

what are the influences of employees

Answer 31

qualty of product depends on employees skills and commitment to the process
when they are valued, paid fairly, trained properly and treated ethically they become more valuable –>more inclined to meet customer expectations cos they get what they want

Question 32

what are the influence of customers

Answer 32

customer is powerful stakeholder in external operating enviro. as they have become more aware, they are prepared to seek compensation if treated unfairly ie prepared to:
- mount publicity campaigns abt bus that don’t act responsibly or ethically
- eg consumer backlash
- influence businesses to be more envirolly aware

Question 33

influence of society

Answer 33

increasing expectatiosn to direct concerns to:
- enviro
- using too many valuable land resources
- showing disregard for carbon emissions
- waste disposal or pollution

Question 34

influence of enviro

Answer 34

growing pressure for bus to adopt ecologically sustainable operating practices:
- climate change
- destruction of natural enviro
through comms and training, bus can ensure all employees and contractors are envirolly aware