Internal and External Influences on Businesses Flashcards
What are the external influences on a business?
Legal
Political
Institutional
Financial
Social
Technological
Geographical
Market
Economic
competitive situation
how does the economy influence a business?
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
Draw and explain business cycle
outline the recessionary cycle
evidence of contracting economy
rising unemployment
decreasing economic growth cautious customers
reduced spending
profits fall
cost cutting occurs- employees being cut
outine the boom cycle
evidence of a rising economy
rising employment
economic growth
customer confidence
customer spending
profits increasing
increased production and help needed
What is referred to when discussing the financial influence on a business
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)
what is referred to when discussing the geographical influence on businesses
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
What is referred to when discussing the social influence on a business
-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
What is referred to when discussing the legal influence on a business
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
What is referred to when discussing the Political influence on a business
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
what are the 4 current political issues affecting businesses
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
What are the 3 Institution influences to businesses
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
what are 3 influences of each level of government
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
what are regulatory bodies set up for?
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
what is the role of NSW Environmental Protection Authority (EPA)
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
what is the role of NSW fair Trading
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
what is the role of Australian Competition and Consumer Commission (ACCC)
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
what is the role of the Australian Securities and Investments commission (ASIC)
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
What is referred to when discussing the technological influence on a business
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
What is referred to when discussing the competitive situation influence on a business
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
what is sustainable competitive advantage?
when a business is sustainable they capture a larger portion of the market
what are the 4 factors influencing business competitively
ease of entry into a market
marketing strategies employed by competitors
number of competitors
local and foreign competition
what is market concentration and the 4 types
market concentration refers to the size and number of firms within an industry
monopoly
oligopoly
monopolistic competition
perfect competition
what are the features of a monopoly business and an example
only business in the market, no competition. Ability to set price without customer influence
e.g
AUS POST, SYDNEY TRAINS
