Influences in the Business Environment

Question 1

What is an external influence in business?

Answer 1

Factors which cannot be controlled by businesses, but affect their operations

Question 2

List the 10 external influences in a business environment

Answer 2

• Economic
• Financial
• Geographic
• Social
• Legal
• Political
• Institutional
• Technological
• Competitive situation
• Markets

Question 3

Question: What are the impacts of high inflation on borrowing, investment, and customer spending?

Answer 3

Answer: High inflation leads to rising prices, which increase the cost of borrowing, hinder major investment, and reduce customer spending.

Question 4

Question: How does low inflation encourage investment and consumer spending?

Answer 4

Answer: Low inflation results in falling prices, which decrease the cost of borrowing and encourage major investment and consumer spending.

Question 5

Question: What happens to a country’s exports when its currency is depreciating?

Answer 5

Answer: When a country’s currency is depreciating, its exports become cheaper for foreign buyers, leading to increased exports.

Question 6

Question: Explain the relationship between exchange rates and the cost of imports.

Answer 6

Answer: A depreciating currency increases the cost of imports because it takes more of the local currency to buy the same amount of foreign currency, making imports more expensive.

Question 7

Question: Describe the impact of decreasing interest rates on consumer spending and business expenses.

Answer 7

Answer: Decreasing interest rates encourage consumer spending by lowering borrowing costs and reduce business expenses by decreasing interest payments on loans.

Question 7

Question: How does increasing interest rates affect customer spending and business expenses?

Answer 7

Answer: Increasing interest rates reduce customer spending due to higher borrowing costs and increase business expenses due to higher loan interest payments.

Question 8

Question: How can increased government expenditure influence consumer spending?

Answer 8

Answer: Increased government expenditure may lead to higher taxes, reducing consumer disposable income and resulting in less spending.

Question 9

Question: What are the effects of decreased government expenditure on income and employment?

Answer 9

Answer: Decreased government expenditure can slow income and employment growth, leading to reduced consumer spending.

Question 10

Question: During the expansion phase of the economic cycle, what happens to consumer confidence and business output?

Answer 10

Answer: During the expansion phase, consumer confidence and spending rise, and business output increases, leading to higher income and growth for businesses.

Question 11

Question: Explain how a contraction phase affects consumer confidence and business output.

Answer 11

Answer: In a contraction phase, consumer confidence and spending decline, and business output decreases, resulting in lower income and challenging conditions for businesses.

Question 12

Question: How can geographic location influence a business’s opportunities for expansion and profit?

Answer 12

Answer: Geographic location affects the availability of natural resources and opportunities for business expansion. For instance, Australia’s location within the Asia-Pacific has allowed businesses to expand, increase sales, and profit from trade with other Asian nations.

Question 12

Question: How does an aging population impact businesses?

Answer 12

Answer: An aging population, like in Australia, results in a shortage of skilled employees and an increased demand for age-related services such as health and aged care.

Question 13

Question: What are the benefits of globalisation for businesses?

Answer 13

Answer: Globalisation offers benefits such as increased competition, access to expanded markets, better labor availability, cheaper materials, and flexibility in choosing business locations.

Question 14

Question: How can evolving social influences impact businesses?

Answer 14

Answer: Evolving social influences, such as rising female participation and increased cultural diversity, can impact consumer behavior and require businesses to adapt to changing customer preferences.

Question 15

Question: What is one aspect of environmental concern that affects businesses?

Answer 15

Answer: Growing consumer awareness about the environment leads to an increased demand for ethical practices, which businesses need to consider in their operations.

Question 16

Question: How do social trends influence businesses?

Answer 16

Answer: Social trends influenced by celebrities, new research, government policy, social media, and individual taste can shape consumer preferences, affecting businesses’ product development and marketing strategies.

Question 17

Question: What are some areas covered by legislation that businesses must comply with?

Answer 17

Answer: Businesses are obligated to comply with legislation related to taxation, industrial relations, occupational health and safety, equal employment opportunity, anti-discrimination, and environmental protection.

Question 18

Question: Why is it important for businesses to comply with laws?

Answer 18

Answer: Businesses must comply with laws to avoid fines, lawsuits, shutdowns, and reputational damage. Legal compliance also ensures businesses fulfill their responsibilities to stakeholders.

Question 19

Question: How can political changes impact business confidence?

Answer 19

Answer: Political changes, such as shifts in government policies or leadership, can lead to uncertainty and affect business confidence.

Question 20

Question: Provide an example of a political influence related to labor market reforms.

Answer 20

Answer: Labor market reforms, such as decentralization of wage determination and free trade policies, can impact businesses’ labor costs and access to international markets.

Question 21

Question: What are the obligations of businesses to government at a State Level

Answer 21

State: Provision of employee entitlements, including workers compensation and OHS requirements, payment of payroll taxes, abiding by relevant state legislation and pollution controls.

Question 21

Question: What are the obligations of businesses to government at a Federal Level

Answer 21

• Federal: Payment of taxes (e.g., company tax and GST),
• provision of employee superannuation,
• observance of customer regulations, and
• abiding by relevant legislation.

Question 22

Question: What are the obligations of businesses to government at a Local Level

Answer 22

Local: Control over approving new developments, alteration to existing building applications, fire regulations, parking regulations, and size/location/shape of business signs.

Question 23

Question: What is the role of the NSW Environment Protection Authority?

Answer 23

Answer: The NSW Environment Protection Authority is the primary environmental regulator for NSW. It aims to improve environmental performance and waste management through various programs and initiatives.

Question 24

Question: What is the role of NSW Fair Trading?

Answer 24

Answer: NSW Fair Trading is a consumer protection agency in NSW. It provides information and assistance to all consumers to ensure fair and ethical business practices.

Question 25

Question: What is the role of the Australian Securities and Investments Commission?

Answer 25

Answer: The Australian Securities and Investments Commission monitors market integrity and provides consumer protection in areas such as payment systems and financial services, including investment advice.

Question 26

Question: What was the main aim of trade unions?

Answer 26

Answer: Trade unions aimed to improve working conditions and pay rates for employees.

Question 27

Question: Why has union membership declined over the past 20 years?

Answer 27

Answer: Union membership declined due to factors such as new legislation outlawing compulsory unionism, changes in work patterns (increased part-time and casual work), and the prevalence of workplace agreements.

Question 27

Question: What is the role of trade and industry associations?

Answer 27

Answer: Trade and industry associations are national bodies representing larger groups of employers. They lobby the government on specific issues and provide collective representation for businesses.

Question 28

Question: Provide examples of trade and industry associations.

Answer 28

Answer: Examples of trade and industry associations include the Australian Chamber of Commerce and Industry, National Farmers’ Federation, and Australian Industry Group.

Question 29

Question: What are some examples of technological advancements that have impacted businesses?

Answer 29

Answer: Examples include robotics, telecommunications, and internet/e-commerce.

Question 30

Question: How have rapid advances in information technology (IT) affected business operations?

Answer 30

Answer: Rapid IT advances have reduced communication delays and enabled interactions between suppliers and customers over great distances.

Question 31

Question: How can businesses benefit from appropriate technology?

Answer 31

Answer: With appropriate technology, businesses can increase efficiency, productivity, create new products, and improve the quality and range of products and services.

Question 32

Question: Why do businesses aim to achieve a sustainable competitive advantage?

Answer 32

Answer: Businesses seek a sustainable competitive advantage to capture a larger portion of the market compared to their competitors.

Question 33

Question: Define a monopoly in terms of the number of competitors and concentration.

Answer 33

Answer: A monopoly exists when one firm holds complete concentration in an industry, having no competitors.

Question 34

Question: What is an oligopoly, and how does it differ from other competitive situations?

Answer 34

Answer: An oligopoly occurs when a small number of larger firms control a market, giving them greater influence. It differs from other situations due to limited competition.

Question 35

Question: Describe monopolistic competition and provide an example.

Answer 35

Answer: Monopolistic competition involves a large number of buyers and sellers in a particular market. Retail shops and clothing stores are examples.

Question 36

Question: What characterizes a perfect competition market?

Answer 36

Answer: In a perfect competition market, there are a large number of small firms selling similar products. Price differentiation is a key strategy.

Question 37

Question: Define ease of entry in the context of business competition.

Answer 37

Answer: Ease of entry refers to the ability of individuals or groups to establish businesses within a specific industry.

Question 38

Question: How does the ease of entry vary among monopoly, oligopoly, and monopolistic/perfect competition?

Answer 38

Answer: In a monopoly, no competitors can enter due to the firm's control over resources. Oligopolies have difficult entry, while monopolistic/perfect competition markets offer easier entry due to smaller, affordable businesses.

Question 39

Question: Differentiate between local and foreign competitors based on location and competition.

Answer 39

Answer: Local competitors operate within the same market and deal with similar variables. Foreign competitors are located overseas and compete with local businesses in Australia.

Question 40

Question: How can a business's marketing strategies be influenced by competitors?

Answer 40

Answer: Businesses may adopt marketing measures based on their competitors' strategies, such as using social media and TV advertising for greater exposure.

Question 41

Question: What factors determine the type and extent of marketing strategies a business employs?

Answer 41

Answer: The size of the market, business, number of competitors, and nature of products influence the type and extent of marketing strategies.

Question 42

Question: How have financial markets evolved in Australia, particularly in terms of globalization?

Answer 42

Answer: Financial markets have become more global since the deregulation of the Australian financial market in 1983, allowing foreign banks like ING, HSBC, and ARAB BANK to operate in Australia.

Question 43

What are the internal influences in a business?

Answer 43

* Products * Location * Resources * Management and business culture

Question 44

Question: How does the type of goods and services produced affect a business's internal operations?

Answer 44

Answer: The type of goods and services produced impacts factors like physical space requirements, especially for manufacturing, which depends on the size of the goods.

Question 45

Question: How does the influence of the product manifest in the structure of a business?

Answer 45

Answer: The influence of the product is reflected in the type of business, whether it's a service provider, manufacturer, or retailer. For instance, the structure of a clothing manufacturer differs from that of a clothing retailer.

Question 46

Question: How does the size of a business relate to the range and type of goods and services produced?

Answer 46

Answer: The size of a business is influenced by factors like the range and type of goods and services produced, the level of technology used, and the volume of production. Larger businesses produce more, affecting their internal operations.

Question 47

Question: Why is a good location considered an asset for a business?

Answer 47

Answer: A good location leads to higher sales and profits for a business, making it an advantageous asset.

Question 47

Question: Explain the importance of visibility for different types of businesses.

Answer 47

Answer: Retail businesses need visibility to attract customers, often being located in prime shopping areas. In contrast, manufacturing companies don't rely on visibility and may choose low-visibility spaces suitable for production.

Question 48

Question: How does the cost of location vary based on business type?

Answer 48

Answer: Businesses located in busy areas incur higher lease or purchasing costs. Manufacturers may opt for larger, cheaper, low-visibility sites. Online stores, unaffected by location, don't face this cost factor.

Question 49

Question: What is the significance of proximity to suppliers for businesses?

Answer 49

Answer: Businesses requiring significant raw materials for production benefit from being located close to suppliers, reducing the cost of transporting these materials.

Question 50

Question: How does proximity to customers impact different types of businesses?

Answer 50

Answer: The importance of proximity to customers varies; retail businesses benefit from being close to customers, while manufacturing or wholesaling businesses might find it cheaper to transport products to customers.

Question 50

Question: Describe the role of proximity to support services for businesses.

Answer 50

Answer: Support services assist core business operations. Small businesses often rely on external services, while larger businesses provide their own or outsource. Technological advancements have reduced the importance of physical proximity to such services.

Question 51

Question: How have businesses responded to rapid technological advances and increased global competition in terms of their management structure?

Answer 51

Answer: Businesses have adopted flatter organizational structures with fewer levels of management. This enables quicker adaptation to changing consumer needs and market conditions by reducing the number of decision-makers.

Question 51

Question: What are the key categories of resources that businesses combine to produce goods and services?

Answer 51

Answer: The categories of resources include Human Resources, Informational Resources, Physical Resources, and Financial Resources.

Question 51

Question: What advantage does a flatter organizational structure offer to businesses?

Answer 51

Answer: A flatter structure allows for faster adaptation to changing conditions due to reduced layers of management, leading to quicker decision-making and increased responsibility among individuals.

Question 52

Question: Provide examples of Human Resources within a business.

Answer 52

Answer: Examples of Human Resources include employees at various levels, from players to cleaners, who contribute to the business's operations.

Question 52

Question: What does Informational Resources encompass in a business context?

Answer 52

Answer: Informational Resources involve knowledge and data necessary for the business, such as market research and sales reports.

Question 53

Question: Illustrate Physical Resources with examples.

Answer 53

Answer: Physical Resources comprise equipment, machinery, buildings, and raw materials essential for the business. Examples include trucks and musical equipment.

Question 54

Question: Explain the role of Symbols in business culture.

Answer 54

Answer: Symbols are events or objects that represent important aspects of the business, helping to reinforce its values and identity.

Question 54

Question: Provide an example of a component of business culture.

Answer 54

Answer: Values, as a component of business culture, include shared beliefs like honesty, hard work, teamwork, and quality customer care.

Question 55

Question: What does Financial Resources refer to?

Answer 55

Answer: Financial Resources encompass the funds a business employs to meet its obligations to creditors, including elements like budgets and grants.

Question 56

Question: Define business culture and its components.

Answer 56

Answer: Business culture encompasses shared values, ideas, expectations, and beliefs within an organization. Components include Values, Symbols, Rituals, Rites and Celebrations, and Heroes.

Question 57

Question: What are Rituals, Rites, and Celebrations within business culture?

Answer 57

Answer: These are routine behavior patterns that are part of everyday business life, including gatherings and events that emphasize the company's values and shared experiences.

Question 58

Question: How can management contribute to developing and maintaining business culture?

Answer 58

Answer: Management plays a role in developing business culture by training employees, reinforcing values, and rewarding staff for aligning with the desired cultural traits.

Question 58

Question: How are external stakeholders different from internal stakeholders?

Answer 58

Answer: External stakeholders are entities outside of the business who are concerned about or impacted by its performance. They can include government, customers, society, employer associations, unions, creditors, the environment, and customers.

Question 59

Question: Define the term "stakeholder" in the context of a business.

Answer 59

Answer: A stakeholder is any group or individual with an interest in or affected by a business's activities. Businesses are expected to act ethically and prioritize the interests of all stakeholders.

Question 59

Question: What are some examples of responsibilities that businesses have towards shareholders?

Answer 59

Answer: Businesses must hold annual general meetings where shareholders can voice concerns and ask questions. They must also ensure a sustainable and fair return on investments, providing a share of profits and dividends.

Question 60

Question: What defines internal stakeholders in a business context?

Answer 60

Answer: Internal stakeholders include individuals or groups within the business who have a vested interest in the company's activities, such as managers, employers, and employees.

Question 61

Question: Outline the responsibilities businesses have towards managers.

Answer 61

Answer: Businesses should educate managers about ethical responsibilities and legal requirements, offer job-specific training, provide fair income (pay), and ensure they have sufficient resources to perform their roles effectively.

Question 62

Question: What responsibilities do businesses owe to employees?

Answer 62

Answer: Businesses should provide fair pay, proper training, and skill enhancement opportunities. They must maintain a safe working environment, treat employees fairly, provide for their needs, and abide by anti-discrimination laws.

Question 62

Question: Explain the responsibilities towards consumers.

Answer 62

Answer: Businesses should offer safe, functional, and quality products that are environmentally friendly and ethically sourced. They must stay updated with consumer trends to meet needs and treat consumers fairly.

Question 63

Question: How can businesses demonstrate responsibility towards society?

Answer 63

Answer: Businesses can show concern and protection for the environment by participating in community projects and activities, including fundraisers that benefit society.

Question 64

Question: What responsibilities do businesses have towards the environment?

Answer 64

Answer: Businesses should develop and adopt ecologically sustainable operating practices and policies, demonstrating a commitment to protecting the environment.