chapter 3: influences of the business environment Flashcards
what are types of business environments
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
list the external influences in business enviro
economic, financial, geographic, social, legal, political, institutional, technological, competitive situation, markets
what are the economic influences
recessionary cycles - consumers more cautious –> decreased consumer spending –> decreased profits –> workers retrenched
boom cycle - consumers confident –> increased spending –> increased profits –> increased employment
what are the financial influences
due to deregulation of aus financial system, banks are not restricted to domestic financial institutions but also international interest rates
what are the geographic influences
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
what are the social influences
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.
what are the 3 main social issues
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
what are the legal influences
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)
what are the policitical influences
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
what are the institutional influences
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
what are the tachnological influences
appropriate tech can improve efficiency and producitivyt, create new products, reduce op costs, reduce repetitive tasks, reduce comms delays and more
what are the compettitve situation influences
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
define market concentration and define the diff types of markets
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
define ease of entry and identify the ease of entry into the four market types
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
list the internal influences in a business enviro
products, management, location, resources, business culture
outline what features marketing strats dependent on
size of market
size of bus
no# of competitors
nature of product
what ae the market influences
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
what are the product infleunces
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
what are location influences
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
list the factors of location
visibility, cost, prox to suppliers/customer/support services
features of visibbility
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
features of cost
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
features of proximity
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
what are the resource influences
four main resource available:
- human resources
- information resources
- physical resources
- financial reosurces
