Nature of a business: influences in the business environment Flashcards
list the 10 External influences
- economic
- financial
- geographic
- social
- legal
- political
- institutional
- technological
- competitive situation
- markets
SLIP GET CM
External influence - Economic
The economy is the measurement of business activity that takes place in Australia it can be measured through the business cycle.
- economic impacts are the largest impact on a business
- when the economic business cycle is in a boom a business will expand their operations
- in a recession they will reduce production or staff
External influence - Financial
Refers to the circulation, flow and distribution of cash in the economy
- the GBC in 2010 has made it increasingly difficult source funds. They have been forced to either pay more for the borrowings or accept smaller amounts
- slowing down business investment and growth
External influence - Geographic
Refers to local, national and global businesses.
- borders are being removed as trade increased
- the internet has enabled businesses to purchase and sell worldwide
- there are global opportunities for businesses to expand and boost profitability
- local businesses need to be aware that consumers may purchase their goods online
External influence - Social
Refers to the beliefs and practices of the Australian community
- businesses must be aware of the movements or changes occurring within society to ensure their own practices are viewed positively
- Businesses are expected to follow and acknowledge the beliefs and practices of the community in order to boost consumer demand
- if beliefs and practices of modern society are not followed a business may become boycotted
External influence - Legal
Refers to the legislation that the government made to protect society.
- Businesses are expected to obey legislative laws just as anyone else would
- Businesses must spend money to ensure they comply with the law (legal structure)
External influence - Political
Refers to the operation of the governments throughout the nation.
- each government (party) have policies that they bring in. These will affect and have ramifications on consumers and businesses alike.
- increased taxes can force price increases on goods and services
External influence - Institutional
Refers to the organisations that influence business behavior (governments, regulatory bodies and others)
- governments by nature introduce laws to protect the needy disadvantaged and consumers which can create restrictions on how businesses conduct their operations
External influence - Technological
Technology influences business sales and costs through innovative and driven companies who will use it to their benefit.
- A business that is innotave can create new markets as consumers can we willing to buy a product that is more advanced
- technology can influence cost and production of a business saving time and labour
External influences - Competitive situation
(monopoly, oligopoly and monopolistic)
The majority of markets have an element of competition.
Structure of markets:
Monopoly: One cooperation that dominates the market. Large enough to prevent other companies from entering the market Eg: Aus post
Oligopoly: A small group of large companies that dominate the market.
Eg: coles and Wollies
Monopolistic Competition: The most common form of market in Australia where a large number of small businesses exist that are slightly different.
Eg: Alana Maria and Love Isabelle
External influences - Markets
(list three markets and describe)
There are three markets that most effect business operations these include the financial market, labour market and consumer market.
Financial market: Refer to the flow and availability of money. The continuing deregulations have allowed businesses to source funds globally. However this can lead to a worldwide crisis if gone wrong.
Labour Market: Not as free as the financial market but it is becoming increasingly global. Growth areas of China and the Middle East are attracting labour worldwide.
Consumer Market: Online shopping has transformed the consumer market. Businesses can no longer assume domestic consumers will create demand.
List the five internal influences
Products, location, resources, management and business culture
Pl mb r
Internal influences - Product
Refers to the type of good or service that a business provides
- All businesses have a core product or service that determines their existence
Eg a petrol stations product would be petrol - the type of products will determine their hours f operation, structure and layout of the business and the number and skill of the staff
Internal influences - Location
The position of a business in a locality or region. Convenience and visibility are important factors
Convenience: Refers to the ability of customers to access the business
Visibility: Refers to the ability of the customers to see the business and know where to find it
Internal influences - Resources
The resources of money, labour and physical ones (land and machinery can affect a business)
- The amount of available funds will determine the level of production, location, staffing and marketing
