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Business Studies > external influences in the business environment > Flashcards

external influences in the business environment Flashcards

1
Q

define the business environment

A

refers to the surrounding conditions in which the business operates, it can be divided into two broad categories: external and internal

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2
Q

define the external environment

A

includes those factors over which the business has very little control

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3
Q

define the economic/business cycle

A

the periods of growth (boom) and recession (trough) that occur as a result of fluctuations in general level of economic activity

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4
Q

define GDP

A

(gross domestic product) total of all goods and services sold in a country in a year

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5
Q

list the external influences

A

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

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6
Q

what are the characteristics of a boom (peaks)

A

high levels of wages and salaries
business operating at full capacity
highest sales and profits
low level of unemployment
consumer spending at highest levels

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7
Q

what are the characteristics of a recession (trough)

A

low levels of wages and salaries
business operating below full capacity
lowest sales and profit
high level of unemployment
consumer spending at lowest levels

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8
Q

what polices/interventions do the government use to achieve economic stabilisation

A

fiscal policy (money-budget, tax)
monetary policy (interest rates)
prices and incomes (wages)
external policy (exchange rates, protection and trade policies)

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9
Q

how is the business influenced by economic factors?

A

as described in the characteristics of a boom and recession

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10
Q

define deregulation

A

the removal of government regulation from industry, with the aim of increasing efficiency and improving competition

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11
Q

define increased international speculation

A

the act of conducting a financial transaction that has substantial risk of losing value but also holds the expectation of a significant gain or other major value

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12
Q

what are the recent changes experienced in global financial markets?

A

deregulation, communication technology, increased international speculation, refinancing of debts

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13
Q

how can changes and global and domestic financial markets impact a business?

A

it will influences the cost of borrowing money and therefore directly affect the level of investment by a business

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14
Q

define globalisation

A

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

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15
Q

what are the main geographical influences on Australian businesses?

A

proximity to trading partners, changing demographic factors, the process of globalisation

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16
Q

why would a business respond to social changes

A

changing your business in response to social influences (changes within society) e.g. fashion and culture, can lead to increases in sales and profits

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17
Q

what are the three current social influences on a business?

A

growing environmental awareness, work/life (family-friendly) improvements, workplace diversity

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18
Q

how can legal influences impact a business

A

legal influences are the regulations (legal framework) within which a business must operate and work around

19
Q

what do businesses have a legal responsibility towards

A

employees, shareholders, consumers, government

20
Q

what government policies impact Australian business? and how?

A

the process of privatisation and deregulation impact them in the utilities and financial sectors
as well as taxation, market reforms, social reforms and environmental management

21
Q

what political influences are on a business

A

they are derived from state and federal government policies and include trade policies and the process of deregulation

22
Q

what institutions influence businesses

A

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

23
Q

how does technology influence a business

A

it can increase efficiency and productivity, create new products, improve the quality and range of goods and services, ease marketing strategies

24
Q

define sustainable competitive advantage

A

refers to the ability of a business to develop strategies that will ensure it has an ‘edge’ over its competitors for a long period of time

25
Q

what must business with competitors aim to achieve

A

sustainable competitive advantage

26
Q

define number of competitors

A

size and number of firms within an industry

27
Q

define ease of entry

A

ability of a person(s) to establish a business within a particular industry

28
Q

define local competitors

A

those who produce or sell a good or service in the same market

29
Q

define foreign competitors

A

those businesses located overseas or offshore, they can sell their goods and services in Australia (competing with local businesses) but also can sell their products overseas (to grow a business)

30
Q

what does the success of a business and its ability to sustain a competitive advantage depend on?

A

number of competitors, ease of entry, local and foreign competitors, marketing strategies used

31
Q

what variables must local competitors deal with?

A

labour costs, transport costs, the economy, cost of stock/raw materials

32
Q

What determines ease of entry

A

market concerntration

33
Q

define and give examples of monopoly

A

one business dominates the market e.g. australian post

34
Q

define and give examples of duopoly

A

two businesses dominate the market e.g. quantas/virgin

35
Q

define and give examples of oligopoly

A

a few competitors (typically four) e.g. CommBank, BANK, AUZ, Westpac

36
Q

how does the competitive situation influence a business

A

it influences a business on whether they succeed (they are the best business) or fail (other businesses are better) due to entering a market with other business

37
Q

define and give examples of monopolistic competition

A

similar products but all slightly differentiated e.g. glassons, cotton on, H&M, universal, sportsgirl

38
Q

define and give examples of perfect competition

A

large number of small business that sell products that are the same or similar e.g. fruit and vegetables

39
Q

in market concentration, which is the easiest competitors to enter

A

it is very difficult to enter monopoly market whereas easier to enter monopolistic competition but must must advertise their differentiation

40
Q

what markets are changing regularly

A

financial/capital markets, changing labour markets, changing consumer markets

41
Q

why is financial/capital markets changing

A

-access to the share markets (domestic and global) is easier
-changes in the global market can affect domestic markets

42
Q

why is labour markets changing

A

-flow of migrants is now more controlled
-rise in outsourcing/offshoring

43
Q

why is consumer markets changing

A

-access in technology means more consumer shop globally
-new consumer markets have emerged, particularly China and Japan

43
Q

what must business with competitiors aim to achieve

A

sustainable competitive advantage

Business Studies (14 decks)

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