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business > U1 AoS 3 Notes > Flashcards

U1 AoS 3 Notes Flashcards

1
Q

external environmental factors affecting business planning

A

macro environment - operating environment

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2
Q

Overview of the external (operating and macro) environment

A
  • The surrounding conditions in which the business operates are called the business environment.
  • This is divided into two broad categories: internal and external.
    -The external environment is then divided into 2 categories: Operating and Macro
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3
Q

operating environment

A

-The operating environment is made up of stakeholders (suppliers, competitors, customers, special interest groups) external to the business which have a direct impact on the operation of the business.
-The business has less control over these factors than internal environment factors.

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4
Q

operating environment stakeholders and description

A

CUSTOMERS- The people who purchase goods and services from the business, expecting high quality at competitive prices.

SUPPLIERS- The businesses or individuals that supply materials and other resources that the business needs to conduct its operations.

COMPETITORS- Other businesses or individuals who produce and sell rival, or competing, goods or services to the ones offered by the business.

SPECIAL INTEREST GROUPS- The groups of people who attempt to directly influence or persuade a business to adopt particular policies or procedures, including lobby groups, business associations and unions

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5
Q

Macro environment

A

-Macro environment refers to the broad forces, conditions and trends in the economy and society within which the business operates.
- Changes in the macro environment can affect all businesses however the business has no control over these factors.

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6
Q

macro environment stakeholders

A
  • Legal and government regulations
  • Societal attitudes and behaviour
  • Economic conditions
  • Technological considerations
  • Global considerations
  • corporate social responsibility considerations.
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7
Q

macro environment stakeholders and description P1

A

Legal and government regulations:
The laws or regulations made by parliaments and courts, which affect how businesses operate and behave

Societal attitudes and behaviour:
The factors relating to changes in the attitudes, behaviour, tastes and lifestyles of communities on a local, national and international scale

Economic conditions:
The set of influences that relate to economic activity, including interest rates, wages, unemployment, exchange rates and inflation

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8
Q

macro environment stakeholders and description P2

A

Technological considerations:
The issues related to the growing use of tools, techniques or systems

Global considerations:
The pressures that arise as a result of businesses operating in worldwide markets and competing on a global scale

Corporate social responsibility considerations:
The pressures on a business to take into account environmental considerations to ensure broader social welfare

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9
Q

KEY LEGAL AND GOVERNMENT REGULATIONS
Legislation and government regulation

A

-Society expects owners to abide by the laws made by parliament and local councils.
-In Australia, each level of government (federal, state and local) imposes its own direct and indirect regulations to which all businesses must adhere.

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10
Q

federal government obligations include:

A

-payment of taxes for employees (earning above the minimum taxable income level) and for businesses with company tax and GST.
-provision of employee superannuation.
-observance of customs regulations
-abiding by relevant legislation that would affect business operations.

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11
Q

state government obligations include

A

-provision of employee entitlements, including workers’ compensation, work health and safety (WHS) requirements, award rates of pay and entitlements.
-payment of payroll taxes
-abiding by relevant state legislation (e.g. health, trade practices, employment)
-abiding by pollution controls

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12
Q

local governments (city, municipal and shire councils) have control over the following business activities:

A

-approving new development and alteration ( to an existing building) applications
-fire regulations
-parking regulations (e.g. provision of parking by new businesses)
-signs, location and shape of business signs

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13
Q

Laws related to establishing a new business

A

-It is essential that business owners have a sound working knowledge of the laws that will affect their operations when they are planning their business.
-Businesses that do not obey the law risk losing customers and their reputation, being fined, or losing the right to continue trading.

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14
Q

laws related to establishing a new business

the areas of law business owners should be aware of:

A

-Laws related to location
-Health regulations
-Employment regulations
-Taxation laws -(A business owner will need to plan to comply with tax laws)
-Trade practices and consumer protection - (consumers have the right to purchase goods that are of good quality and fit for the purpose for which they were bought. These rights are part of the contract between the retailer and the consumer.)
-Environmental protection legislation

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15
Q

Societal attitudes and behaviours

A

-Societies attitudes and behaviours may affect the planning stage of a business.
-Societies attitudes are the ideas, values and beliefs held by people in a particular society.
- Behaviour relates to the actions that express these ideas, values and beliefs.
-Societal attitudes and behaviours are constantly changing.

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16
Q

Values and beliefs

A

-Values and beliefs can be reflected in the way people behave, the way they treat each other and what they prioritise.
-Values and beliefs determine what people do, what they wear, what and how they eat and where and how they live.
-These attitudes will need to be considered by the business owner during the planning stage.

Societies attitudes about what is right and wrong are constantly changing and this affects the ways in which businesses plan and the way they are managed. For example:
-Pressure to remove single use plastic bags
-Sustainable seafood
-Pressure to be more corporately socially responsible

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17
Q

trends

A

-a trend is the general direction in which people’s attitudes or behaviour in society is developing or changing.
-One trend businesses should consider when planning relates to demographics.
-Demographics are the characteristics of the human population.
-For example in Australia we have an ageing population, knowing this might provide an opportunity when planning, especially in healthcare.
-Another trend that may affect a business in the planning stage is the demand for businesses to provide family-friendly workplaces.
-They may want flexible working hours or childcare on site.

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18
Q

economic conditions

A

-Economic conditions refer to the many influences that relate to economic activity in a country and include interest rates, wages, unemployment, exchange rates and inflation.
-Economic forces influence a business.
- The level of economic activity changes from periods of growth to recession and back.

19
Q

Phases of the business cycle

A

-all of the economies in the world go through fluctuations, experiencing upturns and downturns.
-expansion, contraction, peaks, troughs

-When an economy is in a downturn it will likely mean that customers are not spending much. Reduced spending means reduced opportunities for businesses.
-Information on economic growth, inflation, average weekly earnings, consumer confidence amongst other things provide businesses with insight and the possibility to predict possible threats and opportunities for business activity in the planning stage.

20
Q

economic conditions P1
expansion, contraction

A

EXPANSION key features:
-increasing consumer spending
-business expectations increasingly optimistic
-increasing business investment
-sales and profits rising
-unemployment falling

CONTRACTION key features:
-decreasing consumer spending
-business expectations increasingly pessimistic
-decreasing business investment
-sales and profits falling
-unemployment rising

21
Q

economic conditions P2
peaks, troughs

A

PEAKS key features:
-wages and salaries at high levels
-business operating at full capacity
-sales and profits at highest levels
-low level of unemployment
(difficult to sustain)

TROUGHS key features:
-wages and salaries at low levels
-business operating at below full capacity
-sales and profits at lowest levels
-consumer spending at lowest levels
-high level of unemployment

22
Q

economic conditions
interest rates

A

-An interest rate is the price charged or paid for the use of money.
-It is used to calculate the proportion of a loan that is charged as interest to the borrower and is typically expressed as an annual percentage of the total amount loaned or deposited.
-Changing interest rates can affect a business’s planning.
-Any loan repayments that the business has will be affected, as will the opportunities to obtain finance.
-Interest rates can also have an effect on consumer spending.
-Lower interest rates mean that consumers have more money to spend.

23
Q

economic conditions
employment levels

A

-The ABS defines people as ‘employed’ if they work one hour or more in a specified week.
-Employment levels fluctuate with the phases of the business cycle.
-During an expansion, employment levels will typically rise.
-During an economic contraction, employment levels will fall

24
Q

economic conditions
tax rates

A

-A tax rate is the percentage of income or value of a good, service or asset paid as tax.
-A business must pay income tax and company tax.
-The owner of a business would need to take into consideration the tax rates and ensure they plan for these extra costs.

25
Q

economic conditions
Business and consumer confidence levels

A

-This refers to how businesses and customers are feeling about the economy.
-When consumer confidence is high consumers will generally be optimistic about the financial condition, their ability to find and maintain employment and are more likely to make purchases.
-If a business owner is feeling positive about the future then this is likely to be reflected in their decisions in the planning stage of a business.
-For example if business and consumer confidence is high it is possible that a business owner will plan to expand the business, take on more debt or employ more workers.

26
Q

technological issues

A

-Technological issues relate to the growing use of tools, techniques or systems by businesses to solve problems or to serve a purpose in operations.
-With appropriate technology, businesses can increase efficiency and productivity, create new products and improve the quality and range of goods and services.
-To survive businesses must monitor and adapt rapidly to technological innovations.

27
Q

Developments in technology

A

-Hi-tech robotics has improved productivity, reducing operating costs and eliminating many boring and repetitive tasks.
-The cost of communications has decreased and tools are becoming easier to use.
-The internet, mobile phones, interactive video are helping to open up the global marketplace.
-The development of technology has brought about many benefits however it has led to a decrease in the number of employees required.
-It has also meant the product lifecycle has become shorter.
-When a business owner is planning a business they will need to consider the benefits and limitations of technology.

28
Q

The future of business technology

A

-It is impossible to predict the future but it is expected that over the next 5-10 years we will live with more internet connected devices.
-This will generate a lot of data/information and opportunities for business owners.
-Robots and computers may replace more workers and many businesses will take advantage of 3D printing and wearable technology.
-More people will make use of autonomous vehicles.

29
Q

global issues

A

-Globalisation means that businesses now operate in a worldwide market.
-The whole world can be considered a single market.
-This presents both challenges and opportunities for businesses.
-When planning a business the owner needs to consider many global issues including overseas competitors and markets, offshoring labour, exchange rates, protection of intellectual property at a global level and online sales.

30
Q

GLOBAL ISSUES
Overseas competitors and markets

A

-When undertaking business planning an owner must take into account the possibility that they will face competitors from overseas.
-Business owners planning to compete against overseas competitors know that they must build a competitive advantage based on the strengths as well as improving quality and reducing costs.
-It’s important to have a good knowledge of all competitors and stay informed of their rivals’ strategies and their strengths and weaknesses.
-When planning to sell to overseas markets business owners need to consider the different requirements of these markets, such as customs and cultures.
-Business owners will also need to consider transportation and distribution, conversion of currency, taxes, marketing and packaging requirements.

31
Q

GLOBAL ISSUES
Offshoring labour

A

-Offshoring refers to the practice of moving some of the business’s processes or services to another business located in another country.
-Businesses usually do this to take advantage of lower costs, including labour and transportation.
-Some examples of offshoring include Telstra’s call centres and Qantas who offshore their maintenance on planes.
-Offshoring is contentious as it usually means a loss of jobs in Australia and sometimes exploitation of foreign workers.

32
Q

GLOBAL ISSUES
Exchange rates

A

-An exchange rate is the price of one country’s currency expressed in terms of another country’s currency.
-For example if the AUD/USD is $0.77 this means that one Australian dollar is worth 77 US cents.
-Any changes in the exchange rate will affect businesses.
-A fall in the value of country’s currency will usually make exports cheaper and imports more expensive.

33
Q

GLOBAL ISSUES
Patenting, copyrights and trademarks.

A

-It is important for businesses to protect their intellectual property on a global level through the use of patents, trademarks and copyright.

34
Q

GLOBAL ISSUES
Online sales

A

-when planning a business the business owner will need to consider the options of selling through a physical store, an online store or both.
-Online sales presents many opportunities for businesses.
-Some advantages of online sales include a reduction in costs as they are not required to pay rent for premises and the business reaches are wider market.
-Disadvantages may be if the technology crashes and the costs involved in ensuring that the website is professional and up to date.

35
Q

Corporate social responsibility issues

A

-CSR is the ability of a business to go above and beyond what is required by law.
-No longer are businesses only focussed on profit at all costs but rather they recognise that environmental and social performance are also important.
-Businesses that take their social responsibilities seriously are often rewarded with improved business performance.
-Customers are more inclined to buy products from socially responsible businesses.
-A disadvantage is that to be socially responsible costs money in the short term.

36
Q

Corporate social responsibility issues

A business can be socially responsible by doing the following activities:

A

-Donating to charity
-Sponsoring a community project
-Looking after the environment such as waste minimisation, pollution minimisation, recycled packaging, installing solar panels
-Providing employees with wages over and above the award rate

37
Q

CORPORATE SOCIAL RESPONSIBILITY ISSUES
Environmental considerations

A

It is important to ensure that the business’s production process will not have a serious or negative impact on the environment.

38
Q

CORPORATE SOCIAL RESPONSIBILITY ISSUES
Planning the production of goods and services in a way that benefits society

A

-The business should also ensure that production does not have a serious or negative impact on community health and social conditions.
-For example sourcing local supplies rather than from overseas and how the product will be packaged and marketed.

39
Q

customers and competitors
CUSTOMERS

A

-Customers are the reason that businesses exist. They buy a business’s goods or use its services, expecting high quality at competitive prices.
-Business owners need to plan to produce high quality products otherwise they will not be in business for too long.

-Consumers are increasingly putting pressure on businesses to be environmentally aware.
-Examples include recycling, environmentally friendly packaging, reduced packaging and lower factory emissions. Consumer put pressure on the big supermarkets to ban single use plastic bags.

-Customers are becoming more health conscious and this has forced some businesses to change their products or practices.
-Many restaurants and cafes offer healthy food and provide options for people with a variety of dietary requirements. Consumer pressure has forced McDonalds to offer customers healthier options.

40
Q

customers and competitors
COMPETITORS

A

-Competitors are the businesses or individual that offer rival goods or services.
-Businesses need to be aware of existing competitors as well as any potential new comers.
-For example the launch of Virgin Blue (now Virgin Australia) caused Qantas to significantly change the operations of their business such as marketing, introducing Jetstar and frequent flyer points. Netflix and pay tv have changed the way free to air tv channels operate.
-From a planning point of view the awareness of competition can stimulate the necessity for efficiency in production.

41
Q

Suppliers and special interest groups
SUPPLIERS

A

-A business’s suppliers provide the resources that are needed for use in the production process.
-For example, raw materials, equipment, machinery, finance and information.
-Good relations with suppliers are important to guarantee the efficient running of the business.
-Having a number of suppliers means a business is less vulnerable to supply difficulties.

42
Q

Suppliers and special interest groups
THE SUPPLY CHAIN

A

-A supply chain is the network of suppliers from which the business purchases resources.
-It starts with sourcing of the natural resources, followed by manufacturing activities and then moves on to storage facilities and then to the consumer.
-The supply chain needs to be well managed because production of the business’s good or services depends on resources.

-During the planning stage a business must consider where the resources it obtains for production are sourced and how they reach the business.
-Businesses today expect their suppliers to behave in a socially responsible manner.

43
Q

Suppliers and special interest groups
SPECIAL INTEREST GROUPS

A

-Special interest groups are groups of people who attempt to convince a business to change or adopt particular policies or procedures.

COMMON GROUPS THAT ATTEMPT TO INFLUENCE BUSINESS DECISION-MAKING AND PLANNING ARE:

Specific issue groups:
- focus on one specific area such as the environment or youth unemployment.

Business associations:
- organisations that support businesses through training and education programs, advice and information. For example the ACCI

Unions:
- represent employees in many workplaces. Unions work to prevent anything that diminishes employee rights, safety or conditions.

Consumer groups:
- Lobby groups that monitor a business’s performance. For example Choice.

business (9 decks)

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