unit 1, aos 3

Question 1

define external environment

Answer 1

involves the surrounding factors that can impact a business which it has no control over, categorised as macro factors, or operating factors. It is important for businesses to consider both macro and operating factors during planning, as assessing these factors can equip businesses to make more strategic and well-informed decisions e.g. pressure from environmentally conscious consumers drove Woolworths to stop using plastic bags and start charging a small fee to use reusable bags.

Question 2

define internal environment

Answer 2

involves factors within a business that a business has control over because decisions about internal factors are determined by the people within the business. A business can change internal factors to align with, or respond to external factors which they cannot control, for example, when technical advancements are made a business may replace some of its labour resources with machinery and equipment.

Question 3

define macro factors

Answer 3

are social, legal, technological, global and economic conditions that a business operates in and has no control over. Macro factors can impact a business’s internal environment, for example, if economic conditions are strong then demand for a business’s products and services is likely to be higher and the business will need sufficient resources and products available to sell to customers.

Question 4

define operating factors

Answer 4

are the primary external factors impacting a business that it has some control over. Operating factors can impact a business’s internal environment, for example, if suppliers experience delays or become unreliable this could potentially decrease the quality and/or quantity of the goods or services a business provides to customers.

Question 5

define business planning

Answer 5

is the process of establishing a business’s goals and developing strategies to achieve them. The environment a business operates in is unpredictable, and constantly changing meaning it is important for business owners to plan before they begin operating, as well as continuously plan for both internal and external factors through the lifetime of the business.

Question 6

types of macro factors

Answer 6

• Societal attitudes & behaviours
• Technological considerations
• Economic conditions
• Global considerations
• Legal & government regulations
• Corporate Social Responsibility considerations

Question 7

types of operating factors

Answer 7

• Customer needs & expectations
• Suppliers and the supply chain
• Competitors’ behaviour
• Special interest groups

Question 8

macro vs operating factors

Answer 8

similarities:
- Both macro and operating factors are part of the external environment.
- Failure to recognise and plan for both macro and operating factors can negatively impact business success.

differences:
- The business has some control over operating factors, but no control over macro factors.
- Operating factors are specific to each business, whereas, macro factors are non-specific and impact all businesses in an industry.

Question 9

define law and government regulations

Answer 9

are the laws and rules made by parliaments and governments, as well as decisions made by the courts. These regulations guide businesses to uphold the safety of the community and promote fair competition within industries.

Question 10

employment laws and regulations

Answer 10

Rules that govern the relationship between employers and employees, specifically the obligations they have to each other.

example:
Award legislation protects minimum wages and working conditions.
Occupational Health & Safety Act and Regulations promote safety and wellbeing in a workplace.
Employment legislation protects against Unfair Dismissal & Discrimination.

Question 11

Environmental legislation

Answer 11

The set of laws that aim to preserve the surroundings/ conditions in which we live & operate. Many businesses rely on natural and scarce resources e.g. oil, water, and gas. When these resources are used improperly businesses can negatively impact their environment. Laws are put in place to minimise this negative impact and protect limited resources.

Environmental laws and regulations often relate to:
minimising energy use
reducing water use
reusing, recycling and reducing waste
other matters of national environmental significance

Question 12

Industry regulations

Answer 12

The rules specific to a business within a certain economic activity (industry). May require a business to obtain qualifications, registrations, permits, or licences. The Australian Business Licence and Information Service (ABLIS) is a free government service that helps business owners determine what licences, permits, registrations, and approvals are required for their specific industry.

Businesses that are involved with children require employees to obtain a Working with Children Check.

Question 13

Council regulations

Answer 13

Local government rules made to govern businesses operating in a specific geographic area. Business owners must familiarise themselves with council regulations to avoid legal issues.

examples:
Business location is determined by local zoning laws e.g very few business types are permitted to operate in a residential zone.
Business operating hours are regulated to account for issues such as noise level.
Restrictions can be placed on renovating a business premises for example, if they are heritage listed.
Local laws govern when and where businesses can dispose of waste.
Business signage can be restricted, for example, large signage may create a tripping hazard.

Question 14

taxation requirements

Answer 14

Laws and rules related to the collection of compulsory payments to the government (tax) that apply to all businesses.

examples:
-Businesses must apply to the Australian Taxation Office (ATO) for a tax file number (TFN) so it is easily identifiable for tax purposes.
-Once a business turns over $75,000 per year it must register for Goods & Services tax (GST).

Question 15

define societal attittudes

Answer 15

Societal attitudes refer to the collective values, beliefs, and views held by the general population.
These attitudes influence how consumers behave, what they expect from businesses, and how businesses must respond and plan to stay relevant and competitive.

Question 16

define societal behaviour

Answer 16

Societal behaviour: is the way people act and respond in various situations. Social behaviour can impact business planning, for example, during the COVID-19 pandemic when consumers began panic buying items businesses needed to plan to meet the increased demand, such as employing more staff, or increasing production to raise output.

Question 17

define values and beliefs

Answer 17

Values and beliefs: are the principles, standards and assumptions upheld by individuals or a group of people, which influence how they make decisions. Businesses should constantly research changing values and beliefs to develop products that suit these preferences, such as offering healthier food options to appeal to consumer interests in health and wellbeing.
- Greater awareness of improving physical and mental wellbeing
-wellbeing of employees
- environmental sustainability
- hygiene practices

Question 18

define social trends

Answer 18

Social trend: is a general development in the way a group of people in society behave, for example, an increased reliance on advanced technology. Businesses analyse data to look for patterns and identify trends relevant to their target market so they can plan their products and activities to attract more customers.
- increased reliance on technology
- greater focus and action on achieving gender equality
- increased purchasing of products related to wellbeing and health

Question 19

define economic conditions

Answer 19

Economic conditions: These are the conditions that exist in relation to the productive performance and financial stability of a nation, or other geographical area and include factors such as interest rates and consumer confidence. A business should launch a business when economic conditions are favorable, and consumer spending is high because it will be more likely to succeed.
- interest rates
- consumer confidence
-employment levels
-tax rates

Question 20

define interest rate

Answer 20

An interest rate is the percentage charged by a lender to a borrower for the use of money, usually expressed annually. It affects how much businesses and consumers pay on loans or earn on savings, influencing spending and investment decisions.

Question 21

define employment level

Answer 21

Employment level: is the percentage of the labour force who are working in paid employment (the labour force includes the number of people aged fifteen and over who are willing and able to work e.g. not full-time students, or retired). The most common indicator of employment levels is the unemployment rate, which is the percentage of the labour force who are currently not in paid work.

Question 22

define tax rates

Answer 22

Tax rates: is the percentage of income or spending that is required to be paid to the government by individuals or businesses. The government decides and applies different tax rates to businesses, depending on their structure, for example, a sole trader pays tax at their personal income tax rate, whereas a public company pays tax at the company tax rate.

Question 23

define consumer confidence

Answer 23

Consumer confidence: is a measure of customers’ feelings and expectations about current and future economic conditions. Consumer confidence is high when there is a belief the economy will grow because consumers who believe economic conditions will improve are more willing to spend money as they feel optimistic about their financial and job security.

Question 24

define technological developments

Answer 24

Technological developments: are the invention and innovation of tools that solve problems and enhance processes. These developments can act as a source of business opportunity as they improve how businesses create, deliver and update goods and services, such as Apple which has been able to expand the number of products it makes and improve the quality of existing products.

Question 25

how do businesses adapt to tech developments

Answer 25

automated production lines: Manufacturing businesses should plan to adopt automated production lines (APL) as they are faster and eliminate human error. APL can complete repetitive, dangerous tasks which may be demotivating or unsafe for humans. Eftpos: Retailers should plan to introduce eftpos machines for customer convenience (no cash). Less risk of theft because businesses carry less cash. Faster transactions and proof of payment. Online presence: Businesses should plan to establish an online presence to connect with a global customer base 24/7 to increases sales.

Question 26

how do businesses adapt to developments- pros and cons

Answer 26

advantages: Implementing technology can increase the accuracy and precision of the production - provide consistent information about the businesses' prices, sales, and policies on websites - easily connect and respond to customers - automated production lines remove repetitive and unsafe tasks for employees - production can 24/7 - businesses can improve productivity by publishing info on their website - reduced labour= reduced costs Disadvantages - if they continually replace customers with technology, may develop a poor reputation - employees may lose their jobs if technology replaces their role - technology breakdown halt production - time-consuming to maintain - high initial and maintenance costs

Question 27

Define overseas competitors

Answer 27

Overseas competitors are businesses that are located in other countries that operate in the same industry and offer a similar good, or service. Globalisation has increased overseas competition and businesses must identify the strengths and weaknesses of competitors and how they operate so they can differentiate their offering and develop a competitive advantage.

Question 28

define overseas markets

Answer 28

Overseas markets: are any means by which the exchange of goods and services takes place outside of a business’s own country of operation. Business owners can plan to launch their business in both local and overseas markets to access a larger, more diverse customer base.

Question 29

define offshoring of labour

Answer 29

Offshoring of labour: involves a business moving its services or processes to another country. A common reason for offshoring of labour is to take advantage of lower labour costs, as hiring workers in overseas countries can be cheaper than employing local employees.

Question 30

define exchange rates

Answer 30

Exchange rates: are the relative prices at which the currency of one country can be exchanged for the currency of another country (e.g. Australian dollar for the US dollar). Exchange rates are impacted by political and economic conditions and fluctuate daily which means the value of a country’s currency either increases, or decreases compared to another currency.

Question 31

define patent

Answer 31

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, but only in the country in which the patent is registered.

Question 32

define copyright

Answer 32

Copyright: is free and automatic protection used on original ideas such as writing, art, sound, films and photographs. In Australia, copyright provides a business with the automatic and exclusive right to control the use of its creative work, such as its website content and photographs.

Question 33

define trademark

Answer 33

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. Business owners should consider registering the business’s trademarks during the planning stage, however trademark registration only operates on a country-by-country basis so trademarks must be registered by an owner in every country they seek to operate in.

Question 34

define online sales

Answer 34

Online sales: involve buying and selling goods and services using the internet. Businesses must decide whether to establish an online presence in their planning to achieve aims such as reaching a wider range of customers in local and overseas markets, and convenient purchasing for customers 24/7 through a website.

Question 35

define corporate social responsibility

Answer 35

Corporate Social Responsibility: is the ethical conduct of a business beyond legal obligations, and the consideration of social, economic, and environmental impacts when making business decisions. As society becomes increasingly aware of business activities and CSR considerations, business owners are expected to plan initiatives that demonstrate a commitment to socially responsible operations to remain competitive e.g. taking steps to reduce their carbon footprint.

Question 36

define customer needs

Answer 36

Customer needs: are the essential requirements consumers intend to fulfil with the purchase of a good or service from a business, for example, a product must be fit for the purpose it is sold such as a watch must tell the time. By consistently meeting customer needs a business is more likely to improve customer satisfaction, which can improve customer retention and increase sales.

Question 37

define customer expectations

Answer 37

Customer expectations: are the values or benefits that customers seek when purchasing a good or service from a business. Unlike customer needs, customer expectations are not essential requirements, but are things customers anticipate when making a purchase, and will not be fully satisfied unless they are obtained.

Question 38

define competitor

Answer 38

Competitor: is a business that operates in the same or similar industry and offers a similar good or service for example, KFC and McDonalds are both fast food outlets that compete for market share of the take-away food market. When planning a business, it is important for a business owner to conduct market research to track the behaviour of both local and overseas competitors in order to establish a competitive advantage.

Question 39

define suppliers

Answer 39

Suppliers: 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 the output, and if trustworthy and reliable can positively impact a business’s reputation, for example, the Body Shop sustainably sources raw ingredients from women living in Ghana, Africa, and empowers them by paying premium living wages to enable them to achieve independent income.

Question 40

define supply chain

Answer 40

Supply chain: is the network of individuals or businesses that are involved in producing and distributing a final good or service to customers. Supply chain participants typically include suppliers, manufacturers, wholesalers, retailers and customers.

Question 41

define special interest groups

Answer 41

Special interest groups: are organisations or a group of people that seek to influence laws, policies, or behaviours to benefit a specific cause, for example environmental lobby groups such as the Australian Conservation Foundation that advocates for environmental protection. During business planning, business owners should consider that the operating environment can be influenced by special interest groups, such as the ACF that persuades businesses to act in an environmentally-friendly manner.

Question 42

define environmental lobby groups

Answer 42

Environmental lobby groups: are organisations that advocate for the protection of the environment and promote environmental issues to businesses, the government and the public. Environmental Lobby Groups such as the Australian Conservation Foundation campaign to the government to prevent a business operating in a way that harms the environment; and provide support and advice on implementing sustainability into a business’s operations.

Question 43

define business associations

Answer 43

Business associations: are organisations that advise and support businesses in a particular industry, such as the Victorian Chamber of Commerce and Industry. They provide advice and information through training programs, seminars, or personal consultations on employer’s rights and responsibilities, as well as a large range of issues that must be considered before starting a business.

Question 44

define unions

Answer 44

Unions: are organisations composed of individuals who represent and speak on behalf of employees in a particular industry to protect and improve wages and working conditions, such as the Australian Nurses and Midwifery Federation. Unions can significantly influence employment laws and negotiate with businesses to increase wages and working conditions, as well as represent and defend employees when discrimination and bullying arise in the workplace.

Question 45

how the market may change in the future

Answer 45

To be competitive, businesses should predict how future technological developments will affect the market (e.g. evolving customer demands). Anticipating customer demands for upgraded technology can impact sales, and business success. Businesses monitor, understand and adopt the latest technology because failure to respond may mean their product/ service becomes outdated. It may also mean they can’t produce at a rate fast enough to remain competitive.

Question 46

what is globalisation?

Answer 46

Globalisation is the process by which governments, businesses, and people across the globe are becoming more interconnected, allowing for increased international trade and cultural exchange. Globalisation has resulted in Australian businesses facing increased international competition. If a business owner decides to expand and sell the business’s products overseas, they must address global considerations that may impact the business’s operations, otherwise they may lose customer sales and their market position. - overseas competitors - overseas markets -offshoring of labour -exchange rates -patenting -copyrights -trademarks -online sales

Question 47

GLOBAL CONSIDERATIONS: overseas competitors

Answer 47

OVERSEAS COMPETITORS: are businesses located in other countries that operate in the same industry, and offer a similar good, or service. Globalisation has increased overseas competition. Businesses must identify the strengths and weaknesses of competitors and how they operate so they can differentiate their offering and develop a competitive advantage. e.g. Sukin skincare- Australian owned skincare ships products world-wide

Question 48

GLOBAL CONSIDERATIONS- overseas markets

Answer 48

OVERSEAS MARKETS: are any means by which the exchange of goods and services takes place outside of a business’s own country of operation. Business owners can plan to launch their business in both local and overseas markets to access a larger, more diverse customer base. However, accessing overseas markets requires more planning because: Laws/ regulations will differ Customer needs/ expectations will be different Economic conditions will differ from local conditions Cultural and communication barriers will exist Distribution methods may differ

Question 49

GLOBALISATION- offshoring of labour

Answer 49

OFFSHORING OF LABOUR: involves a business moving its services or processes to another country. Offshoring of labour allows a business to: take advantage of lower labour costs, as hiring workers in overseas countries can be cheaper than employing local employees. increase efficiency or access a more diverse range of skills e.g. software engineers with highly-specialised skills in India. Offshore labour-intensive/ time-consuming tasks to allow the business to focus more time and effort toward expansion and gaining a competitive advantage

Question 50

GLOBALISATION- exchange rates

Answer 50

EXCHANGE RATES: are the relative prices at which the currency of one country can be exchanged for the currency of another country (e.g. Australian dollar for the US dollar). Exchange rates fluctuate each day and are impacted by political and economic conditions. Fluctuations mean that the value of a country’s currency either increases, or decreases compared to another currency. By planning for exchange rate fluctuations, businesses can maintain their profit margins when changes occur. Currency appreciation is the increase in value of a currency against a foreign currency. Currency depreciation is a decrease in the value of a currency against a foreign currency. Exchange rates in action: If the Australian dollar appreciates then… Australian businesses that purchase materials from overseas countries will benefit because the Australian dollar can buy more of a foreign currency. An Australian business’s goods and service will be more expensive for overseas buyers, making them less attractive to overseas markets. If the Australian dollar depreciates then… The costs of imports for an Australian business will increase as Australian dollars cannot buy as much of a foreign currency. An Australian business’s goods and services will be cheaper for overseas buyers, making them more attractive in overseas markets.

Question 51

GLOBAL CONSIDERATIONS- online sales

Answer 51

ONLINE SALES: involve buying and selling goods and services using the internet. Businesses must decide whether to establish an online presence in their planning. An online presence can present the following opportunities for a business: reaching a wider range of customers in local and overseas markets convenient purchasing for customers 24/7 through a website Reduced operating costs (rent and utilities) if the business does not need a physical store Remain competitive given most businesses now offer online platforms

Question 52

GLOBAL CONSIDERATIONS- copyrights, trademarks, and patenting

Answer 52

Globalisation has brought rising international competition. It is increasingly important for business owners to protect their intellectual property. Business owners must ensure all aspects of their business are original to avoid fines and penalties.

Question 53

CSR- environmental considerations

Answer 53

Businesses should consider the welfare of local, national and global societies by protecting and preserving the environment in their production. Failure to do this can cause significant environmental damage. Businesses can plan to consider their environmental impact, and aim to increase the environmental sustainability of their business practices by: Sourcing environmentally sustainable resources to minimise environmental impact. Sourcing from local suppliers, instead of overseas to reduce the distance supplies travel and lower emissions. Using waste management strategies such as recycling and reusing excess materials where possible to reduce the amount of raw materials used and minimise waste generated during production (and therefore landfill). Eliminating packaging that is not environmentally friendly and replacing with recyclable packaging consumers will dispose of in an environmentally friendly manner. Using environmentally friendly, renewable energy sources such as solar power and wind turbines to cause minimal or no pollution to the environment in production. Donating a portion of their profits to organisations that seek to save the environment, therefore strengthening the business’s positive impact on the environment.

Question 54

GLOBAL CONSIDERATIONS- goods and services

Answer 54

Businesses must consider the significant impact their production activities can have on society. They should plan to reduce any negative social impacts their activities may have, and consider ways they can positively contribute to society by: Sourcing resources from local, instead of overseas suppliers to boost local employment and the local economy. Assist employees replaced by technology (e.g. redeploy them to another area or find them alternative employment) in order to reduce unemployment and minimise social issues such as crime and homelessness. Producing goods and services that are beneficial for society (e.g. a mindfulness app), rather than goods or services that have negative effects on the health and wellbeing of individuals. Devoting a portion of business profits to offering employees paid volunteer time in order to have a positive impact on improving social issues.

Question 55

OPERATING FACTORS- customer need and expectations

Answer 55

CUSTOMER NEEDS are the essential requirements consumers intend to fulfil with the purchase of a good or service from a business. For example, a product that is fit for the purpose it is sold. CUSTOMER EXPECTATIONS are the values or benefits that customers seek when purchasing a good or service from a business (they are not essential requirements but are things customers anticipate when making a purchase). For example, responsive customer service and corporate social responsibility.

Question 56

business planning- competitors behaviour

Answer 56

COMPETITORS are businesses that operate in the same or similar industry and offer a similar good, or service. Businesses must conduct market research into and then consider the behaviour of local and overseas competitors when planning to ensure they: can establish a competitive advantage (differentiate based on what makes them unique) have a detailed understanding of competitors to make informed decisions about their own products and business direction plan for the potential emergence of new competitors respond quickly to changes in competitor behaviour, to deal with any potential threats before they arise

Question 57

suppliers and the supply chain

Answer 57

When planning a business, the owners must choose appropriate suppliers to provide the inputs used to produce the business’s output. Specifically, businesses must plan to: establish a supply chain (suppliers, manufacturers, wholesalers, retailers and customers) to coordinate the flow of inputs from raw materials to delivery of the final product. select trustworthy, reliable suppliers which will positively affect business reputation, customer satisfaction and sales. ensure transfers are efficient between each participant in the supply chain so that a sufficient number of products can be produced to meet customer demands and expectations.

Question 58

suppliers and supply chain- where resources are sourced

Answer 58

When planning a business, owners should consider where it will source its resources from, either locally, or overseas. There are various factors to consider such as import duties (a tax paid on goods and services brought into Australia from overseas), which may impact its ability to obtain supplies. Other key sourcing considerations in business planning are: Time Shipping costs Social Responsibility Access to resources Legal regulations

Question 59

suppliers and supply chain- how resources reach the business

Answer 59

After deciding what resources will be required and where to source them from, a business owner must plan how the resources will reach the business. Some retrieving considerations (options as to how resources could reach the business) include: Road transport Air transport Rail transport Sea transport

Question 60

special interest groups- environmental lobby groups

Answer 60

ENVIRONMENTAL LOBBY GROUPS are organisations that advocate for the protection of the environment and promote environmental issues to businesses, the government and the public. Environmental Lobby Groups can: campaign to the public and the government to prevent a business operating in a way that harms the environment provide support and advice on planning to implement sustainability into a business’s operations. campaign for both new laws and regulations, and to help ensure businesses comply with current environmental legislation The impact by environmental lobby groups affects business planning because: businesses must be aware of past and ongoing actions from relevant environmental lobby groups to avoid activities condemned by them. businesses should plan for environmentally sustainable operations e.g. implementing renewable energy. businesses should monitor changes in environmental legislation to ensure planned operations are legal.

Question 61

special interest groups- business associations

Answer 61

BUSINESS ASSOCIATIONS are organisations that advise and support businesses in a particular industry. Business Associations: provide advice relating to employer rights and responsibilities, as well as business start-up (e.g. legal regulations). provide information and up-to-date news relevant to specific industries e.g. changes in consumer demands. provide training programs, seminars, conferences, or personal consultations. Can put new businesses in contact with established businesses to help build beneficial relationships and networking skills. offer memberships to businesses for their specific industry and operations which can be joined by paying a membership fee. The impact by business associations affects business planning because: business owners will be more likely to adequately plan for all legal requirements needed to start their business. business owners are more likely to adequately plan for the current and future business environment, as they have up-to-date information about their industry. businesses are more likely to work closely with others and plan for their business to be unique.

Question 62

special interest groups- unions

Answer 62

UNIONS are organisations who represent and speak on behalf of employees in a particular industry to protect and improve wages and working conditions. During planning, business owners should investigate whether a union exists in their industry because cooperating with the union can help a business avoid conflict, or a negative reputation. Unions can: significantly influence employment laws and negotiate with businesses to increase wages and working conditions. advocate for fair, secure, and safe working conditions for employees, including safety standards that exceed legal requirements and additional benefits e.g. extra breaks. represent and defend employees when issues such as discrimination and bullying arise in the workplace. expose businesses to the media and lead them to develop a negative public reputation. The impact by Unions affects business planning because: businesses should consider the remuneration levels unions have requested from similar businesses within the industry. businesses should consider the working conditions unions have requested from similar businesses within the same industry. businesses should plan to establish rules that ensure fair and equal treatment of employees.