Internal and External Influences on Businesses

Question 1

What are the external influences on a business?

Answer 1

Legal
Political
Institutional
Financial
Social
Technological
Geographical
Market
Economic
competitive situation

Question 2

how does the economy influence a business?

Answer 2

refers to economic activity in a country region or globally

interest rates, wages, unemployment levels, exchange rates and inflation can influence a businesses capacity and customers ability and willingness to spend

Question 3

Draw and explain business cycle

Question 4

outline the recessionary cycle

Answer 4

evidence of contracting economy
rising unemployment
decreasing economic growth cautious customers
reduced spending
profits fall
cost cutting occurs- employees being cut

Question 5

outine the boom cycle

Answer 5

evidence of a rising economy
rising employment
economic growth
customer confidence
customer spending
profits increasing
increased production and help needed

Question 6

What is referred to when discussing the financial influence on a business

Answer 6

deregulation of financial system- started in 1983- opens financial system to more competitors

dept financing- influenced by interest rates- interest rates increasing means businesses are more cautious about taking more debt, and interest rates decrease businesses can take on more debt

globalisation of worlds financial markets means Australian businesses don’t have to only use domestic financial institutions for raising finance (global financial transactions)

Question 7

what is referred to when discussing the geographical influence on businesses

Answer 7

Australia’s geographical location within the Asia- pacific region
and the economic growth within asian nations such as china

changing demographic factors
- population
- sex/gender
- age
- income
- cultural background
- family size

the process of globalisation
goods, people and money moving around world faster and cheaper with help of technology

Question 8

What is referred to when discussing the social influence on a business

Answer 8

-changes to fashion an culture
-growing awareness of environment
-desire for family friendly workplaces
-growing belief in importance for diverse workplace

capacity to affect business sales and profits

Question 9

What is referred to when discussing the legal influence on a business

Answer 9

laws and legislations-legal obligations of businesses

it is owed to stakeholders that a business has at least a sound knowledge of laws and that they abide by them

laws are made on
-taxation
-health and safety
-industrial relations
-equal employment opportunity
-protection of environment

e.g under the Public Health Act of 2010 Health minister was granted permission to take action to reduce risks of COVID-19

Question 10

What is referred to when discussing the Political influence on a business

Answer 10

who is doing or changing the laws
element of politics in most major issues that impact businesses

e.g policy of free trade is a political influence that breaks barriers to trade such as tax levied on imported goods

Question 11

what are the 4 current political issues affecting businesses

Answer 11

taxation
goods and service tax
company tax cuts

environmental management
reducing carbon emissions
banning plastic bags

social reforms
payed parental leave
equal pay
workplace diversity

labour market reforms
changed to penalty rates
free trade policies

Question 12

What are the 3 Institution influences to businesses

Answer 12

government:
federal, state, local

regulatory bodies:
Australian Securities and Investments commission
Australian Competition and Consumer Commission
NSW fair Trading
NSW Environmental Protection Authority

Other:
Employer associations
Trade and Industry associations
Trade unions

Question 13

what are 3 influences of each level of government

Answer 13

federal
payment of tax
provision of employee superannuation
observance of customs regulations

state
payment of payroll taxes
abiding pollution controls
work health and safety

local
approving new development
fire regulations
parking regulations

Question 14

what are regulatory bodies set up for?

Answer 14

to monitor and review the actions of businesses and consumers in relation to issues and the appropriate legislations

this ensures business conduct themselves fairly in relation to consumers, community and other businesses

Question 15

what is the role of NSW Environmental Protection Authority (EPA)

Answer 15

Primary environmental regulator for NSW
governed by the protection of the environment administration act of 1991
uses programmes and initiatives and offers advice and incentives for businesses to improve environmental performance

Question 16

what is the role of NSW fair Trading

Answer 16

NSW consumer protection agency

provides information and assistance to consumers and businesses on fair and ethical practice

services such as business license info, product safety standards

Question 17

what is the role of Australian Competition and Consumer Commission (ACCC)

Answer 17

an indépendant statutory authority

administers the competition and consumers act of 2010
-monitoring anti competitive and unfair market practices such as blocking competitors from entering the market
-product safety and liability
-misleading and deceptive advertising

operates nationally

Question 18

what is the role of the Australian Securities and Investments commission (ASIC)

Answer 18

Monitors Market integrity

provides consumer protection in payment systems and financial services such as investment advice

ensures businesses comply with industry standards and codes of practice

Question 19

What is referred to when discussing the technological influence on a business

Answer 19

increases efficiency and productivity
creates new products and improves quality and range of products and services
reduces operating costs and eliminated boring and repetitive tasks
info rapidly transmitted
if slow to exploit technology businesses may fail and competition will get ahead and have more market share

Question 20

What is referred to when discussing the competitive situation influence on a business

Answer 20

businesses fighter to be the market leader and win customer loyalty

increases work productivity and quality of good and services at the lowest cost for business

Question 21

what is sustainable competitive advantage?

Answer 21

when a business is sustainable they capture a larger portion of the market

Question 22

what are the 4 factors influencing business competitively

Answer 22

ease of entry into a market
marketing strategies employed by competitors
number of competitors
local and foreign competition

Question 23

what is market concentration and the 4 types

Answer 23

market concentration refers to the size and number of firms within an industry

monopoly

oligopoly

monopolistic competition

perfect competition

Question 24

what are the features of a monopoly business and an example

Answer 24

only business in the market, no competition. Ability to set price without customer influence
e.g
AUS POST, SYDNEY TRAINS

Question 25

what are the features of a oligopoly business and an example

Answer 25

small number of large businesses that dominate the market. stay in control of the market through money in advertising
e.g
WALT DISNEY

Question 26

what are the features of a monopolistic business and an examples

Answer 26

large number of buyers and sellers
goods and services differentiate by packaging, advertising, quality

e.g clothing brands

Question 27

what are the features of a perfect competition business and an example

Answer 27

Large number of small businesses that sell the same or similar products
only way of market share is through price competition
e.g
fruit vegetable growers

Question 28

What are the internal influences on s business

Answer 28

Product
Location
Management
Business Culture
Resources

Question 29

Product factors and Influence

Answer 29

product range, type of product (good or service) and product volume

larger the product- more impact on warehousing

the larger the business the more product influencing internal structure and operations

the more diverse the larger range of inputs required

Question 30

Location Factors are Influence

Answer 30

visibility, proximity to suppliers, customers and support services and cost of location

can effect sales and how expensive to run (rent)
rent higher the more visible to customers it is
the further from suppliers the more costly transportation costs

Question 31

Management factors and influence

Answer 31

organisational and managerial structure within business

traditional structure
improving efficiency but not innovating or adapting to change
flatter structure

flatter structure
allows businesses to adapt quickly to meet changing consumer needs and market conditions- fewer managers to approve decisions

Question 32

Business culture factors and influence

Answer 32

values, ideas, expectations, beliefs

strong culture improves productivity as employees are more positive about their work

manager who doesn’t understand business culture may fail and experience employee dissatisfaction

Question 33

Resource types and influence

Answer 33

Human Resources- employees, management

physical resources- equipment, machinery, buildings

financial resources- funds the businesses use to meet obligations

information resources- market research, sales reports

influences:
correlates with efficiency
limited physical or human resource may outsource
access to information resources influences meeting customer needs