Chapter 1.7 Test. Flashcards
What is PELTS?
Political, Economic, Legal, Technological and Social changes.
Political changes.
In Australia each level of government enforces its own direct and indirect regulations, to which all businesses must obey. Some political influences could act as encouragements, such as government grants, encouraging businesses to expand. Influences may also force a business to review its activities. For example if taxes become too high.
What is one important political influence?
The policy of free trade.
What is free trade?
Free trade policies mean that the barriers to trade are removed.
What is a tariff?
A tax imposed on imported goods, usually to protect locally produced suppliers of similar items.
What occurs if tariff rates are lowered?
Some businesses will be unable to compete with the cheaper imported item and will go out of business.
Economic forces.
Economic forces influence a business’ capacity to compete and customers’ willingness and ability to spend.
What information on economic growth provide businesses with insight into economic trends?
Inflation trends, average weekly earnings, consumer confidence, interest rates, consumer spending and unemployment.
What does ‘boom’ mean?
High periods of growth in the economy.
What does ‘bust’ mean?
Recession.
Legal forces.
Laws on taxation, industrial relations, occupational health and safety, equal employment opportunity, anti-discrimination and protection of the environment have been introduced. These changes in legislation have a major impact on businesses.
Technological forces.
Change in technology leads to the development of new products or processes and is a major factor in the creation of opportunities for businesses. To survive businesses must monitor and adapt rapidly to new products and changes in technology. If a business fails to detect and adopt new technology, it may result in products and businesses rapidly becoming no longer in use.
Social forces.
Social forces are changes that may impact the success of a business.
What are demographics?
A social factor that should be considered by businesses. Demographics are the characteristics of the human population.
What are businesses required to do?
Businesses are required to effectively manage a diverse range of employees and cater for their specific needs.
