outcome 3-External business environment and planning Flashcards
(20 cards)
What is the external environment?
The external environment consists of factors that the business cannot directly control but which affect its operations.
there are two external environments
Macro Environment
Operating Environment
What is are the similarities and differences between macro and operating environment?
Similarities
Both macro and operating environments are external to the company, meaning businesses cannot directly control the factors within them.
Both influence a company’s strategies, operations, and overall performance.
Differences
Factors outside of the business which they have no control over, that will impact the planning of a business. For example, if interest rates go up, this will mean an increase in any loan repayments. while Factors outside of the business which they have little control over, that will impact the planning of a business. For example, if suppliers go on strike, this could impact the delivery of your raw materials.
examples of macro
Legal and Government Regulations
Societal Attitudes and Behaviours
Economic Conditions
Technological Considerations
Global Considerations
Examples of operating
Suppliers
Customers
Special Interest Groups
Competitors
What laws must entrepreneurs comply with?
range of laws and regulations that a entrepreneur must comply with when starting a business.
legal and government regulations, including:
Health Regulations
Employment Regulations
Tax Laws
Consumer Protection Laws
Environmental Protection Laws
examples:
Health and Safety:
Workplace Health and Safety Act 2011 (WHS Act): Requires employers to ensure a safe working environment and conduct regular safety audits.
Anti-Discrimination:
Fair Work Act 2009 (Anti-Discrimination Provisions): Protects employees from discrimination based on race, gender, religion, and other factors.
Tax Laws:
Income Tax Assessment Act 1997: Businesses must pay taxes on income, and comply with GST registration and payment requirements.
What is it’s impact on business planning?
, legal and government regulations are essential to business planning. Businesses must proactively understand and comply with these regulations to ensure they operate legally, ethically, and sustainably, fostering trust with stakeholders and contributing to a fair and competitive market.
What are societal attitudes and trends? How do they impact business planning?
Societal attitudes:
The ideas, values and beliefs held by people in a particular society. These change over time
They affect how individuals live, work, consume products, how businesses operate and how stakeholders view the business in which they have an interest.
Societal trends:
A trend is the general direction in which people’s attitudes or behaviour in society is developing or changing
Trends can be driven by changes in demographics
How do they impact business planning?
Businesses are influenced by societal factors such as values, beliefs, and current trends. These factors can shape consumer behavior, affecting how businesses plan, market, and operate their products and services.
What are customers?
Customers: the people who purchase goods and services from a business, expecting high quality at competitive prices.
How do customers effect business planning?
Customers are the reason that businesses exist. No customers = no business, that means businesses must respond to the needs of customers, making sure that the right product is delivered at the right time.
What are competitors?
Competitors: other businesses or individuals who offer rival, or competing goods or services to the ones offered by the business.
How do they effect business planning?
Businesses need to be aware of existing competitions and also have to monitor the environment for potential newcomers. Businesses must respond to any change in the actions of competitors.
What is a supplier and a supply chain? How do they impact planning?
Suppliers: those businesses or individuals that supply the materials and other resources that the business needs to conduct its operations (eg: raw materials, equipment, machinery, finance, information).
Supply chain:
Supply chain: the range of suppliers from which the business purchases materials and resources.
How do they impact business planning?
When planning a business, it is important that business owners choose appropriate suppliers, which are individuals or businesses that provide the resources required to produce goods and services.
Suppliers directly affect businesses as they provide the inputs that are used to produce an output.
During business planning, a business owner should research which businesses can supply the business with its desired resources. If a business owner selects trustworthy and reliable suppliers, this can positively affect a business’s reputation, customer satisfaction, and sales.
sourcing cosiderations
When planning a business, owners should consider where they will source its products from. They should consider the following factors:
Time to arrive at location
Shipping costs
Social responsibility
Access to resources
Legal regulations
What are special interest groups?
Special interest groups are organisations or a group of people that seek to influence laws, policies, or behaviours to benefit a specific cause.
these include:
Environmental lobby groups
an organization that advocates for environmental protection and conservation by influencing public policy and decision-making
Business organization:
Organizations that support businesses through the provision of training and education programs, advice and information. They advocate strongly for their members.
Unions:
Unions: organizations formed by employees in an industry, trade or occupation to represent them in efforts to improve wages and working conditions.
In order to ensure positive outcomes for the business, they should ensure they are working closely with the unions
How do they impact business planning?
Influencing policy, consumer behavior, and public perception, potentially creating both opportunities and challenges. Businesses need to understand and engage with these groups to mitigate risks and capitalize on potential benefits.
what are economic conditions?
Economic conditions are those characteristics of an economy that may impact decisions that a business makes.
How do Interest rate affect business planning:
It is the amount a lender charges the borrower and is shown as a percentage of the principal. Many businesses will borrow money to start a business. This needs to be paid back, usually on a monthly basis. influencing borrowing costs, investment decisions, and overall financial strategy. Businesses must carefully monitor interest rate trends to make informed decisions about financing, investment, and overall financial management
How do employment levels impact business planning:
Employment levels refers to the number of people who are working in an economy. They affect business planning
as low employment rates means they do not have a chance to be picky and may not always have the highest quality employees High unemployment levels can make it difficult to find workers and often expecting of higher wage to compensate.
How do tax rates impact business planning?
Taxation refers to an amount of money that the government collects from a business as a percentage of its income or the value of a good, service or asset.
Changing taxation rates influence nearly every part of business planning — from day-to-day budgeting to long-term strategic direction. Effective businesses monitor tax policy closely and adapt their plans to maintain profitability, competitiveness, and compliance.
How will consumer confidence effect business planning:
Consumer confidence means the degree of optimism or pessimism consumers have about the economy or their own financial situation.
If consumer confidence is high, a business may expect their sales will increase. This impacts planning as they will plan for more orders and may increase production. However, if consumer confidence is low, a business may expect lower demand for their goods. A business may need to plan for less supplies, less staff or even a change in how they do business.
What is technology and how does if affect business planning?
As technology has evolved, it has significantly changed the way businesses operate.
Although developments in technology cannot be controlled, owners should take advantage of the opportunities that technology presents when conducting business planning.
Technology profoundly impacts business planning by enhancing efficiency, enabling data-driven decision-making, and fostering innovation. It streamlines operations, improves communication, and allows for more accurate forecasting and strategic planning.
What are examples of technological considerations?
Technological developments: invention and innovation of tools that solve problems and enhance processes. e.g. eftpos, online pressence
Business adapting to tech: Businesses must adapt to new technology, or they may not survive.
What are global considerations?
What id offshoring of labour and how does it influence planning?
Offshoring of labour involves a business moving its services or processes to another country.
Infleunce:
Offshore labor significantly influences business planning by impacting cost structures, operational efficiency, and access to talent. Businesses can leverage lower labor costs and access specialized skills in different regions, leading to reduced expenses and increased productivity. This can also affect strategic decisions related to location, resource allocation, and competitive positioning.
What are overseas markets and how does it influence business planning?
Overseas markets are any markets that are outside of a business’s own country of operation
Businesses can access a larger and more diverse customer base, allowing a business to reduce its dependence on its local market.
Infleunce:
expanding market reach, diversifying revenue streams, and presenting unique challenges and opportunities. Businesses must adapt their strategies to navigate cultural differences, legal frameworks, and economic conditions of new markets.
What are exchange rates and how do they influence business planning?
An exchange rate is the relative price at which the currency of one country can be exchanged for the currency of another country.
The exchange rate plays an important part in the planning of businesses that intend to export goods and services or import materials. Any changes in exchange rates will affect businesses.
Each day, the value of a country’s currency can fluctuate, therefore business owners must anticipate changes in exchange rates and ensure they price their goods and services to account for these fluctuations.
By planning for exchange rate fluctuations, businesses can maintain their profit margins when these changes occur.
What are overseas competitors?
Overseas competitors are businesses that to other countries that operate in the same industry and offer a similar good or service.
It is also important to have knowledge of all competitors —whether they are found in a local market, nationally or overseas.
Business owners who are aware that they will face overseas competition must stay informed of their rivals’ strategies, and their strengths and weaknesses.
Businesses may plan to differentiate their goods and services from other businesses to be competitive.
What are online sales?
Online sales involve buying and selling goods and services using the internet and is also referred to as e-commerce.
Online sales present many opportunities for businesses, including reaching a wider range of customers in both local and overseas markets.
Customers can conveniently purchase products 24 hours a day through a website, increasing a business’s sales opportunities. If a business decides to establish an online presence, it may not require a physical store, which can reduce operating costs such as rent and utilities.
As many businesses are now selling products online, failing to take advantage of opportunities to expand using online platforms could result in a business becoming less competitive in the market.
What is patenting and what is it influence on business planning?
A patent is a licence that provides a business with exclusive rights to use innovative devices, substances, methods, and processes.
A patent permits the business owner to exclude others from making, using, or selling its invention.
infleunce:
shaping their risk tolerance, decision-making processes, and overall entrepreneurial mindset
What is a trademark influence busniess planning?
A trademark is an exclusive right granted over a unique aspect of a business, such as a symbol, word, sound, or number, that is used to distinguish the business or its products.
Once a business owner registers a trademark, the business has the sole right to use, licence, and sell it to others.
infleunce:
A trademark significantly influences business planning by protecting a company’s brand identity, fostering customer trust, and providing a competitive advantage
What us copyright and what is its influence on business planning?
Copyright is free and automatic protection used on original ideas such as writing, art, sound, films, and photographs.
infleuce:
influencing how a business uses and protects its intellectual property. It affects what a business can create, use, and sell, as well as how it can protect its own creative works from infringement. Understanding copyright is crucial for avoiding legal issues and maximizing the value of a company’s assets.
