business test Flashcards
(40 cards)
Define external environment
The external environment refers to all external factors that can influence a business’s operations and planning.
Includes macro and operating environments.
Define macro environment
The macro environment encompasses broader societal factors that affect all businesses, such as economic, political, and cultural conditions.
It includes trends and changes that impact the industry as a whole.
Identify the factors in the macro environment
- Economic factors
- Political factors
- Social factors
- Technological factors
- Environmental factors
- Legal factors
These factors collectively influence business strategies and decisions.
Define operating environment
The operating environment consists of specific external elements that directly impact a business’s operations, such as suppliers, customers, and competitors.
It is more immediate compared to the macro environment.
Distinguish between the macro and the operating environment
The macro environment includes broad societal factors, while the operating environment consists of specific elements that directly affect a business’s operations.
Understanding both is crucial for effective business planning.
Define legal and government regulations
Legal and government regulations are laws and guidelines established by authorities that businesses must follow to operate legally and ethically.
Compliance is essential for avoiding legal issues.
Explain why it is important for businesses to comply with legal and government regulations
Compliance is crucial to avoid legal penalties, enhance reputation, and ensure smooth operations.
Non-compliance can lead to fines, lawsuits, and operational disruptions.
Identify and explain the five areas of law and regulations applicable to businesses
- Employment laws and regulations
- Environmental legislation
- Industry regulations
- Council regulations
- Taxation requirements
Each area has specific legal obligations that businesses must fulfill.
Provide an example for the five areas of law and regulations applicable to businesses
- Employment laws: Fair Labor Standards Act
- Environmental legislation: Clean Air Act
- Industry regulations: Food Safety Modernization Act
- Council regulations: Local zoning laws
- Taxation requirements: IRS tax codes
Each example has specific legal obligations for businesses.
Define societal attitudes
Societal attitudes are the shared beliefs and values held by a group of people that influence their behaviors and decisions.
They can vary significantly between different cultures and communities.
Define societal behaviours
Societal behaviours are the actions and reactions of individuals and groups influenced by societal attitudes.
These behaviours can affect market trends and consumer preferences.
Explain the impact that societal attitudes and behaviour can have on business planning
Societal attitudes and behaviours influence consumer decisions, market demand, and brand perception.
Businesses must adapt to these changes to remain relevant.
Define societal trends
Societal trends are patterns of change in societal attitudes and behaviours over time.
Recognizing these trends helps businesses anticipate and respond to market changes.
Provide examples of current trends and explain how businesses can respond to these trends
- Sustainability: Implement eco-friendly practices
- Health consciousness: Offer healthier product options
- Digitalization: Enhance online presence
Adapting to trends can improve competitiveness.
Define economic conditions
Economic conditions refer to the state of the economy at a given time, including factors like inflation, employment rates, and consumer confidence.
They influence business operations and planning.
Explain why it is important for business owners to consider current and anticipated economic conditions
Understanding economic conditions helps business owners make informed decisions regarding investment, pricing, and resource allocation.
Anticipating changes can enhance strategic planning.
Define interest rates
Interest rates are the cost of borrowing money, expressed as a percentage of the loan amount.
They affect consumer spending and business investment.
Define employment levels
Employment levels indicate the number of people employed in the economy, reflecting economic health and consumer spending power.
High employment levels usually correlate with increased consumer demand.
Define tax rates
Tax rates are the percentages at which income, sales, or property is taxed by government authorities.
They impact consumer spending and business profitability.
Define consumer confidence
Consumer confidence is the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation.
High confidence typically leads to increased spending.
Analyse the impact of interest rates on businesses and business planning
High interest rates can reduce consumer spending and increase borrowing costs, while low rates can stimulate investment and spending.
Business owners should adjust their strategies based on interest rate trends.
Analyse the impact of employment levels on businesses and business planning
Higher employment levels can lead to increased consumer spending, while lower levels can decrease demand for goods and services.
Businesses must adapt their offerings based on employment trends.
Analyse the impact of tax rates on businesses and business planning
Higher tax rates can reduce profitability and consumer spending, while lower rates can encourage investment and growth.
Businesses should plan for changes in tax legislation.
Analyse the impact of consumer confidence on businesses and business planning
High consumer confidence can lead to increased spending and investment, while low confidence can result in reduced demand.
Monitoring confidence levels is essential for business strategy.
