Chapter 3: PAB - External Environment

Question 1

Refers to influences that come from within the business, including those factors over which the business has some degree of control

Answer 1

Internal Environment

Question 2

Consists of macro and operating factors and refers to the influences that come from outside of the business, which includes those factors have little control

Answer 2

External Environment

Question 3

Refers to the surrounding conditions in which the business operates. It can be divided into two board categories: internal and external

Answer 3

Business Environment

Question 4

Refers to specific outside stakeholders with whom a business interacts in conducting its business

Answer 4

Operating Environment

Question 5

This is made up of the broad conditions and trends in the economy and society within a business operates

Answer 5

Macro Environment

Question 6

What are among the main elements that make up the internal Environment

Answer 6

Employees
Mangers
Location
Legal structure

Question 7

What are the four main stakeholders of the Operating Environment?

Answer 7

Customers
Competitors
Supplies
Special interest groups

Question 8

What are the main factors that make up the macro environment?

Answer 8

Political and legal influences 
Societal attitudes 
Economic conditions 
Technical issues
Global issues 
Corporate Social Responsibility issues

Question 9

It is a business’s mist important resource. Businesses must provide a work environment that maximise its satisfaction to achieve high levels of output.
These are the people working for a business who expect to be paid fairly, trained properly and treated ethically in return for their contribution to product.

Answer 9

Employees

Question 10

These are the people who have responsibility for successfully achieving the objectives of the business.
The skills and expertise of the management team in coordinating the business’s resources largely determine whether the objectives of the business are achieved.

Answer 10

Managers

Question 11

Business will determine whether or not the business is visible and accessible to potential customers, this is considered an asset to the business and can lead to high levels of sales and profits.

Answer 11

Location

Question 12

One of the main decisions that the business owner needs to make is the most appropriate

Answer 12

Legal business structure

Question 13

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

Answer 13

Customers

Question 14

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

Answer 14

Competitors

Question 15

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

Answer 15

Supplies

Question 16

The groups of people who attempt to directly influences or persuade a business to adopt particular policies or procedures, including lobby groups, business associates and unions

Answer 16

Special Interest Groups

Question 17

The laws or regulations made by parliaments and courts which affect how business operate and behave

Answer 17

Political & legal influences

Question 18

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

Answer 18

Societal attitudes

Question 19

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

Answer 19

Economic conditions

Question 20

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

Answer 20

Technological issues

Question 21

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

Answer 21

Global issues

Question 22

The pressures on a business to take into account in its operations the broader social welfare of the community

Answer 22

Corporate social responsibility issues

Question 23

It is essential that business owners have a sound knowledge of the laws that will affect their business and operations when they are planning their business.
State some of the Key Legal & Government Regulations

Answer 23

Laws related to establishing a business
Laws related to location
Health regulations
Employment regulations 
Taxation laws

Question 24

This refers to the shared principles and morals of a group of people or society - ideals about what is good or bad and necessary.
These can be reflected in the way people behave, the way they treat others and what they prioritise.

Answer 24

Values and Beliefs

Question 25

Why should a business owner plan for Societal Attitudes?

Answer 25

Society's attitudes about what is right or wrong are constantly changing and this affects the ways in which the businesses plan and the way they are managed.

Question 26

It is a general direction in which people's attitudes or behaviours in society is developing or changing.

Answer 26

Trends

Question 27

State what can/is affected by "Trends"

Answer 27

``` Consumer demand Work - employees, suppliers Human population Family - friendly workplaces Employees' specific needs ```

Question 28

This refers to the multiple of individual differences that exist among people in the workplace.

Answer 28

Workplace Diversity

Question 29

This refers to the set of influences that relate to economic activity, including interest rates, wages, unemployment, exchange rates and inflation

Answer 29

Economic Conditions

Question 30

Why should a business owner take economic conditions into consideration when planning?

Answer 30

Economic forces have an enormous impact on both the business and customers. They influence a business's capacity to compete and customers willingness and ability to spend

Question 31

Referring to Economic Conditions: what would happen, if the economy had a downturn?

Answer 31

It will most likely mean that customers are not spending as much. Reduced spending equals to reduced opportunities for businesses

Question 32

Referring to Economic Conditions: what would happen, if the economy was booming?

Answer 32

When the economy is booming, lower levels of unemployment and raising incomes are likely to increase the overall spending in the economy. Meaning there are more opportunities for businesses and business owners may plan to expand as sales and profits increase

Question 33

Is the price charged or paid for the use of money that has been deposited or borrowed.

Answer 33

Interest rates

Question 34

Why should a business owner take that number of different interest rates from different financial sources, into consideration when planning?

Answer 34

Changing interest rates can significantly affects a business's planning. Any loan repayments that the business has will be affected by falling or increasing interest rates, as will the opportunities to obtain finance. For example: a high interest rate will reduce the likelihood of a business making a large profit, which will undoubtedly influence the business owner's planning

Question 35

Is the percentage of income or value of a good, service or asset paid as tax

Answer 35

Tax rates

Question 36

Why should a business owner take Tax Rates into consideration when planning?

Answer 36

Tax rates of certain activities may affect the decisions a business owner makes when planning the business. For example: an activity that offers tax reductions may prove to be an attractive option when in the planning stage.

Question 37

This refers to how businesses and customers are feeling about the economy

Answer 37

Business and Consumer confidence levels

Question 38

Referring to Business and Consumer confidence levels: what would happen, if the economy was booming?

Answer 38

E

Question 39

Referring to Business and Consumer confidence levels: what would happen, when consumer confidence is high?

Answer 39

Consumers will generally be optimistic about their financial condition, particularly their ability to find and maintain employment, and they are more likely to make purchases.

Question 40

Referring to Business and Consumer confidence levels: what would happen, if a business owner if feeling positive about the future, or if they since that consumer confidence is high.

Answer 40

Then it is likely to be reflected in the decisions that they make during the planning stages of a business. Therefore they could plan to expand the business, take on more debt or employ more workers.

Question 41

These refers to the issues relating to the growing use of tools, techniques or systems by a business to solve problems or serve a purpose.

Answer 41

Technological issues

Question 42

Why should a business owner take Technological issues into consideration when planning?

Answer 42

When a business owner is planning a business, they will need to consider the benefits and limitations of technology. The planning stage must incorporate the opportunities that developments in technology provide.

Question 43

Why should a business owner take Global issues into consideration when planning?

Answer 43

When planning a business, business owners need to consider global issues. These issues include overseas competitors and markets, offshoring labour, exchange rates, protection of intellectual property at a global level and online sales

Question 44

It is the effect of hi-tech communication, lower transport cost and unrestricted trade and financial flows Turing the world into a single market producing a more integrated global economic system

Answer 44

Globalisation

Question 45

In relation to Global issues: State the challenges and opportunities for businesses

Answer 45

The major challenge that many businesses face is that they now find them selves competing at a global scale. Globalisation also allows businesses to buy and sell goods no services internationally, opening the door to increased profits and a level playing field.

Question 46

In relation to Global issues: How could business owners undertake planning for overseas competitors and markets?

Answer 46

Business owners planning to compete overseas competitors know that they must build a competitive advantage based on the strengths of the business, as well as by reducing costs and improving the quality of the product.

Question 47

It is the practice of moving some of a business's processes or services to the same or another business located overseas

Answer 47

Offshoring

Question 48

In relation to Global issues: why should a business owner take Offshoring into consideration when planning?

Answer 48

The opportunities offered such as lower costs in labour and transportation, labour resources and economic conditions is something that the business owner needs to consider in the planning stage to which benefits the business

Question 49

It is the prove of one country's currency expressed in terms of another country's currency. Essentially, it determines how much of ones currency has to be given up in order to buy a given amount of a different currency.

Answer 49

Exchange rates

Question 50

State the factors of which exchange rates are influenced by:

Answer 50

``` Interest rates The rate of inflation The balance of trade Political stability The general state of economy The quality of a country's governance ```

Question 51

It is important to ensue that competitors do not copy and creations of the mind that a business has developed, as these can provide a competitive advantage. This can be done by the use of:

Answer 51

Patents Trademarks Copyright

Question 52

It is an exclusive right granted for any device, substance, method or process that is new, inventive and useful. This is legally enforceable and gives the owner exclusive rights to the use of the invention for commercial purposes for the life of the . . .

Answer 52

Patent

Question 53

This is a right granted over a letter, word, phrase, number, logo, picture or packaging that a business will use to represent its products and services.

Answer 53

Trademark

Question 54

It is a free automatic protection of original works such as written, music, films, broadcasting and computer programs. It is generally obtained automatically without the need of registration or other formalities.

Answer 54

Copyright

Question 55

Large number of businesses now sell products to consumers directly over the internet. When a business owner is planning they will need to consider the options of selling through a physical store, an online store or both.

Answer 55

Online sales

Question 56

State the opportunities that online sales present:

Answer 56

Means of opportunities - worldwide Websites - professional - crash problems Customer purchases

Question 57

Refers to managing a business in such a way that the broader social welfare of the community, including its employees, customers, suppliers and the environment is taken into consideration when making business decisions.

Answer 57

Corporate Social Responsibility

Question 58

Why would a business owner consider being CSR, and what are the benefits of this towards the business?

Answer 58

Businesses that take their CSR seriously are often rewarded with improved business performance. Customers will purchase products from socially responsible businesses. Planning to incorporate social responsible practices can result in the business becoming more competitive

Question 59

How can a business be Socially Responsible?

Answer 59

Ensure that a fare price is paid for all materials Minimise waste and pollution Protect the health and safety of customers Become involved in the community Deal and develop the skills of employees

Question 60

This refers to the economic, environmental and social performance of a business

Answer 60

Triple Bottom Line

Question 61

These are the people who purchase goods and services from a business, expecting high quality at competitive prices

Answer 61

Customers

Question 62

In relation to customers: what does a business owner need to plan for?

Answer 62

Businesses must respond to the needs of customers, making sure that the right (high quality with competitive prices) product is delivered at the right time. They will take this into account when their planning their business.

Question 63

These are the businesses or individuals that offer rival goods or services

Answer 63

Competitors

Question 64

In relation to competitors: why does one need to be aware of its competitors?

Answer 64

Not only do businesses need to be aware of existing competitors, but they also have to monitor the environment for potential newcomers. Businesses must respond to any change in the actions of competitors.

Question 65

This is the ability of a business to develop strategies that ensue it has an 'edge' over competitors.

Answer 65

Competitive advantage

Question 66

These are those businesses or individuals that supply the materials and other resources that the business needs to conduct its opportunities.

Answer 66

Supplies

Question 67

What are the key concepts to a business's Suppliers?

Answer 67

Good relations - guarantee efficiency Multiple supplies - less difficulties and price rises Reliable network - advantage

Question 68

It is a range of suppliers from which the business purchases materials and resources.

Answer 68

A Supply Chain

Question 69

In relation to Sustainability and the Supply chain: why do you need to consider it in the planning stage?

Answer 69

When in the planning stage the business must consider where the resources it obtains for production are sourced and how they reach the business. In doing so, the business owner not only asses the location of the business in terms of distance to suppliers, but also the efficiency of delivery, rate of stock, etc. And fully fulfil business needs

Question 70

These are the groups of people who attempt to directly influence or persuade a business to adopt particular polices or procedures

Answer 70

Special interest groups

Question 71

These are the special interest groups that promote environmental issues to the public, government and businesses

Answer 71

Environmental Lobby groups

Question 72

These are the organisations that support businesses through the provision of training and education programs, advice and information.

Answer 72

Business associations

Question 73

These are the organisations formed by employees in an industry, trade or occupation to represent them in efforts to improve wages and working conditions.

Answer 73

Unions