Unit 3: Factors That Impact Business Activities Pg 23-36 Flashcards
Explain the nature of the internal environment using SWOT analysis.
SWOT - #Is a tool for auditing an organisation and its environment. #It is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a business venture. #It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. #It is the first stage of planning and helps marketers to focus on key issues.
Describe the complexity of the external business environment using PEST analysis.
#Affects operations greatly, business org does not function alone, wider system, people who are involved in biz make decisions daily. #The decisions are influenced by what is going on in the wider economic environment and successful business monitors the feedback that it receives from the environment regarding its product and practices.
Explain the role of the government in encouraging or restricting business activities.
E p l p
As an Entrepreneur
#Provides goods and services for all citizens to benefit employment, education and training policies. #The Government provides services through its own department or its agencies. #Some floods and services are provided by the Government as it felt that all citizens benefit from them, either directly or in directly, eg. Healthcare and education. #Some goods and services from which the society benefits can only be provided adequately if they are funded and organized at the national level, eg. The armed forces and the police force. #Provides goods and services for all citizens to benefit employment, education and training policies.
Explain the relationship between demand and supply
Quantity demanded is the amount of product people are willing to buy at a certain price.
Law of demand states that: The higher the price of a good, the less people will demand that good.
Quantity supplied is the amount of a certain good that producers/suppliers are willing to supply at a certain price.
Law of supply states that: The higher the price, the higher the quantity supplied.
Explain the economic factors that affect businesses.
Dtggie
Trade Cycles
What happens in a Slump (recession)?
2. Trade Cycles - The economy fluctuates, going through trade cycles of slumps and booms. What happens in a Slump (recession)? Output falls Firms lay off workers Wages and prices fall Unemployment increases Firms stop investing Prosperity falls Firms do badly
Explain the social factors that affect businesses.
Social environment
What are the two characteristic of the social environment affect business operations?
Characteristics of population, e.g. Size, race, age.
Cultural influences and changing trends.
Explain the technological factors that affect businesses.
Technological environment
Changes in technology have impact on business operations:
A) New methods of processing
B) Shorter product life cycle
Explain how worker unions affect business environment.
Worker unions
Associate of workers. In whole or in part. Have substantial impact.
To be involved in bargaining, bargaining with employers, on behalf of the workers regarding/about the terms and conditions of employment and reduce wage inequality.
Unions reduce wage inequality because they raise wages for low-and middle-wage workers, blue-collar workers, and workers who do not have a degree.
Advantages of unionized workers. Fringe benefits Employer-provided, Health insurance Health benefits Vacations Holiday.
State the purpose of doing a SWOT and PEST analysis.
SWOT is used to analyze internal environment.
PEST is used to analyze external environment.
Explain the roles of Government.
As a Entrepreneur ….
As a Planner …
As a Legislator …
As a Promotor ….
Explain why the Government will adjust interest and tax rates.
To prevent inflation
What are the major changes you see in the age structure of Singapore’s population?
What sort of opportunities does it present for business?
#Bigger demand for the products that older people need. #Fewer people available to work #Fewer working have to support a large population.
Adult diapers manufacturers will see an increase in revenue and production.
Analyze the consequences for a business organisation in the event of changing trends.
Higher marriage age - The matchmaking agencies will benefit in the social environment as the higher aged singles to seek for their spouse.
Smaller families, birthrate falling - With lesser children, people will buy out higher quality products.
Increased standard of living - An increase of sales in higher quality products such as high-end furnitures.
Levels of education and training - high-end businesses will have you headhunted because you have higher education and more training.
Explain the role of the government in encouraging or restricting business activities.
e P l p
As a Planner There are many ways in which we can see the Government planning for the future through the following/different policies. #Employment policy #Education and training policy #Regional policy #International policy #Industrial relations policy
Explain the role of the government in encouraging or restricting business activities.
e p L p
As a Legislator #Government can affect the business and economic activities through legislative actions and economic policies. #Business need to know the laws of the country that is being conducted. #The structure of government and administration in a country and its sources of law, court system and legal profession are very important when determining whether the country is suitable for engaging in business ventures. #All business carried out s In Singapore must be registered with the Accounting & Corporate Regulatory Authority either under the Companies Act or the Business Registration Act or sometimes both.
Explain the role of the government in encouraging or restricting business activities.
e p l P
As a Promoter #The Government, though many of its activities, promotes the interest of business and provides it new opportunities, be it new innovations, new products, new services and technology. #It involves bringing in talent, investors and business all over the world INTO Singapore as well as promoting local business OUTSIDE so as to firmly esablish a strong position in the global economy.
Explain the economic factors that affect businesses.
Dtggie
Government’s Role and Objective
3. Government's Role and Objective: Job of government To manage the economy so that: There is minimum unemployment. People have more money to spend, which will then result in higher demand for goods and services. (high disposable income)
Explain the economic factors that affect businesses.
Dtggie
Government’s action through Interest and Tax Rates
- Government’s action through Interest and Tax Rates
What does a government do during a recession(slump)?
Interest Rate Low interest rate Deter people from saving Encourage spending Lower cost of borrowing Help firms to get over hard times Encourage CPF cut.
Tax Rate
Lower tax rate
People/firms will have money to spend
What does the government do during a boom?
Interest rate Increase interest rate Discourage people from spending Increase savings Raise cost of borrowing Discourage borrow
Tax rate
Increase tax rate
People will have less money to spend.
Explain the economic factors that affect businesses.
Dtggie
Inflation rates
What is inflation?
It occurs when the general level of prices are rising and leads to increasing cost of living.
This give problems to businesses and people with fixed income.
What are problems of inflation?
Business have problems of rising cost of raw materials and labour cost.
Goods become more expensive and less competitive
Demand for our exports decrease/fall.
Explain the economic factors that affect businesses.
Dtggie
Exchange rates
Why are companies concerned with exchange rates?
- Exchange rates-the value of your country’s currencies/ dollars in terms of other currencies
Why are companies concerned with exchange rates?
Because they buy raw materials from abroad/overseas and
They sell goods overseas and changes in the exchange rates will affect their revenue.
Explain the social factors that affect businesses.
Characteristics of population
Characteristics of population
Demographics segment people according to facts about them as member of the population.
Eg. Gender, age, size of their family, their income, where they live.
Size: A rising population may mean more demand for the goods and services needed.
Gender: Male and female buy difference products and services.
Explain the social factors that affect businesses.
Cultural influences and changing trends
Cultural influences and changing trends
One of the most significant demographic changes is the aging population.
Implications of business:
Bigger demand for the products that older people need/buy.
Fewer people working
Fewer people working to support a larger population.
Other social change;
relate to different ways in which people live their lives and their changing needs and wants.
Eg.
Higher marriage age
Smaller sized families, birthrate falling.
Increasing ethic mix
Increased leisure time
Greater car ownership
Increased standard of living.
Levels of education and training.
The environment
Infrastructure
Changing values
Changing patterns of work (more part-time, weekend, home, flexible and unsocial hours of working)
Explain the social factors that affect businesses.
Worker union
Worker unions
Associate of workers. In whole or in part. Have substantial impact.
To be involved in bargaining, bargaining with employers, on behalf of the workers about the terms and conditions of employment and reduce wage inequality.
Unions reduce wage inequality because they raise wages for low-and middle-wage workers, blue-collar workers, and workers who do not have a degree.
Advantages of unionized workers. Fringe benefits Employer-provided, Health insurance Health benefits Vacations Holiday.
Explain the technological factors that affect businesses.
A. New methods of processing
New methods of processing
Development progress often takes for of a major breakthrough.
Learn new techniques for production.
Many business expect to replace their plant and equipment every few years and allow for this in their future plans.
Certain jobs will cease to exist as semi-skilled and unskilled jobs in both factory and office are automated and computerized.
However, there will be an increase in demand for other hi-tech skill. Eg. IT workers to operate the new technology.
Explain the technological factors that affect businesses.
B. Shorter product life cycle
Shorter product life cycle
The life of a product is the period over which it appeals to customers.
To prolong the life cycle of a product, an organisation may inject new life into the growth period of the product by adjusting the ingredients of its marketing mix.
Ways of altering the marketing mix to inject new life into the product might include: 4p(s) of marketing
Product - changing or modifying the product to keep ahead of the competition.
Place - altering distribution patterns to create more attractive retail outlets for consumers. Eg. An IKEA catalogue to enable shoppers to buy goods by mail order from their own hme.
Price - changing prices to bcome more competitive, such as the price reduction of movie tickets on weekdays to combat the drop in sales due to pirated VCD MOVIES.
Promotion - Promotional campaigns through methods such as advertising, special offers, ‘buy 1 get 2 free’ promotion, trial offers.
SWOT.
Internal Factors!!
SWOT.
Strengths and Weaknesses are internal factors.
Eg. Loyal employees, strong company brand and a vibrant research department are internal strengths
SWOT.
EXTERNAL FACTORS.
SWOT.
Opportunities and Threats are external factors.
Obsolete equipment and high labour turnover are perceived as weaknesses for the company.
Explain the economic factors that affect business.
Exchange Rates.
What happens when our currency strengthens against other countries?
What happens when our currency strengthens against other countries?
Our exports from overseas will be cheaper for us
Our exports to overseas will be more expensive
Expensive exports = lower demand
Explain the economic factors that affect business.
Exchange Rates.
What happens when our currency weakens against other currencies?
What happens when our currency weakens against other currencies?
Exports to overseas will be cheaper
goods are attractive to foreigners as they seem cheaper.
Our imports from overseas will be more expensive.
Explain the economic factors that affect businesses.
Trade cycle
What happens in a boom?
What happens in a boom? Output rises Employment increases Business booms Prosperity rises.
- Government actions through Interest Rates and Tax Rates
NOTE:
Note: High interest rates may result in a strong dollar and the country’s exports may become uncompetitive, through imports will be cheaper. People will be encouraged to save money because the return on their investments will be high. This is one of the measures used by the Government to curb inflation.
Exchange Rates
NOTE:
Note: The major problem for business is that the rate fluctuates. Therefore, projected profits on an international transaction may disappear if the exchange rate moves against them between the time the deal is agreed to and payment is finally made.
“STRONG DOLLAR: The dollar can be exchanged for a larger amount of foreign currency. HIGH IMPORTS/LOW EXPORTS” ‘increased price, country’s goods are less competitive.’
“WEAK DOLLAR: The dollar can be exchanged for a small amount or decreasing amount of foreign currency. High exports/low imports.”
Exchange Rates
STRONG DOLLAR
“STRONG DOLLAR: The dollar can be exchanged for a larger amount of foreign currency. HIGH IMPORTS/LOW EXPORTS” ‘increased price, country’s goods are less competitive.’
Exchange Rates
WEAK DOLLAR
“WEAK DOLLAR: The dollar can be exchanged for a small amount or decreasing amount of foreign currency. High exports/low imports.”
