Influences in the business environment Flashcards
Business ( corporate ) culture
The values, ideas, expectations and beliefs shared by members of the organisation.
business environment
refers to the surrounding conditions in which the business operates. It can be divided into two broad categories: external and internal.
Complementary business
One that sells a similar range of goods and services.
deregulation
the removal of government regulation from industry, with the aim of increasing efficiency and improving competition.
Ecologically sustainable
When economic growth meets the needs of the present population without endangering the ability of future generations to meet their needs.
economic cycles
(or business cycles) the periods of growth (‘boom’) and recession (‘bust’) that occur as a result of fluctuations in the general level of economic activity.
External environment
Includes those factors over which the business has very little control.
financial resources
the funds the business uses to meet its obligations to various creditors.
Globalisation
The process that sees people, goods, money and ideas moving around the world faster and more cheaply than before.
human resources
the employees of the business; generally its most important asset.
Information resources
The knowledge and data required by the business, such as market research, sales reports, economic forecasts, technical material and legal advice.
internal environment
includes those factors over which the business has some degree of control.
Market concentration
Refers to the number of competitors in a particular market. There are four main types of market concentration.
monopolistic competition
where there is a large number of buyers and sellers in a particular market (e.g. local retailing shops)
Monopoly
Complete concentration by one business in the industry.
oligopoly
where a small number of larger firms have a greater control over a market (e.g. car manufacturers)
Perfect competition
Where there is a large number of small firms that sell similar products. They are unable to differentiate products from each other and so can only use price as a way of achieving market share.
physical resources
the equipment, machinery, buildings and raw materials used by the business.
Regulations
Rules, laws or orders that businesses must follow.
stakeholder
any group or individual who has an interest in, or is affected by, the activities of a business.
Support services
The activities needed to assist the core operations or prime function of a business.
sustainable competitive advantage
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.
What are the external influences on a business?
Economic, financial, geographic, social, legal, political, institutional, technological, competitive situation, markets.
The external environment includes…
Those factors over which the business has very little control.
The internal environment includes…
Those factors over which the business has some degree of control.
What do ECONOMIC influences on a business relate to? ( external influence )
The economic environment, which is dependent on changes in economic growth. These are characterised by boom and recession periods in the economic cycle.
What do MARKET influences on a business relate to? ( external influence )
Global and domestic financial markets which influence the cost of borrowing money and therefore directly affect the level of investment by a business.
What are the 3 major GEOGRAPHICAL factors that affect business activity? ( external influence )
- Australia’s geographical location within the Asia - Pacific region. 2. Changing demographic factors. 3. The process of globalisation.
What do SOCIAL influences on a business relate to? ( external influence )
Changes in fashion and consumer culture, which in turn affect business sales and profits.
What are 3 social issues that have has a significant impact on business practices? ( external influence )
- growing awareness of the environment. 2. Growing desire for family-friendly workplaces. 3. Growing belief that workplaces must cater for workplace diversity.
What do LEGAL influences on a business relate to? ( external influence )
The regulations within which a business must operate.
What do POLITICAL influences on a business relate to? ( external influence )
State and federal government polices, including free trade policies and the process of deregulation.
What do INSTITUTIONAL influences on a business relate to? ( external influence )
Include government, regulatory bodies and other groups such as trade unions and employer associations.
What do TECHNOLOGICAL influences on a business relate to? ( external influence )
New technological advancements and how technology can be used within a business to increase business productivity and communication.
What do COMPETITIVE SITUATION influences on a business relate to? ( external influence )
Local and foreign competition, marketing strategies, and gaining sustainable competitive advantage.
What do the internal influences on a business include?
Product, location, resources, management and business culture.
What do PRODUCT influences on a business relate to? ( internal influence )
The good or service that a business is offering. Branding, packaging, logos, etc.
What do RESOURCE influences on a business relate to? ( internal influence )
Human Resources, information resources, physical resources and financial resources.
What do LOCATION influences on a business relate to? ( internal influence )
The visibility, cost, proximity to suppliers and customers is all relating to the location of the business and will impact sales and profits.
What do MANAGEMENT AND BUSINESS CULTURE influences on a business relate to? ( internal influence )
Unwritten or informal rules that guide how people in the organisation behave.
What are the 4 essential elements of a business culture?
Values, symbols, rituals, and heroes.
