U1 AOS2

• Business environment


  The surrounding conditions in which the business operates
• Categories of business environment

  • Internal
  • External
• Internal environment


  Factors which the business has some degree of control; it is sometimes called the micro environment
• Factors in the internal environment


  • Employees and managers
  • Legal business structure
  • Type of business model
  • Business location
  • Source of finance
  • Business support services
• External environment


  Factors over which the business has little control; it may be further divided into operating and macro
• Factors in the operating environment

  • Customers
  • Competitors
  • Suppliers
  • Special interest groups
• Factors in the macro environment


  • Corporate social responsibility
  • Global issues
  • Economic conditions
  • Legal and government regulations
  • Societal attitudes and behaviours
  • Technological considerations
• To increase a business's chance of success

  A business must take a proactive approach to planning for, and responding to, external factors
• When a business changes


  It can effect society and environmental factors
• Types of legal business structure

  • Business entity
  • Incorporated business
  • Unincorporated business
  • Sole trader
  • Partnership
  • Silent or sleeping partner
  • Incorporation
  • Shareholders
  • Wholesales
  • Limited liability
  • Unlimited liability
  • Private limited company
  • Public listed company
  • Prospectus
  • Social enterprise
  • Government business enterprise
• Business entity


  An organisation that exists separately to its owner in order to produce and sell goods and services
• Incorporated business


  A business that has a separate legal existence apart from its owners
• Unincorporated business


  A business that becomes a registered company and a separate legal entity to its owners
• Sole trader


  A business owned and operated by one person
• Partnership


  An unincorporated business structure with a minimum of 2 and a maximum of 20 owners (without exceptions such as chemists)
• Silent or sleeping partner

  One who contributes financially to a business but takes no part in the running of the business
• Incorporation


  The process that a business goes though to become a registered company and a separate legal entity
• Shareholders


  The owners of a company who are entitled to a share of its profits
• Wholesales


  A business that sells large amounts of goods to retailers
• Limited liability


  When the shareholders of a company cannot be held personally responsible for the debts of the business
• Unlimited liability


  When the business owner is personally responsible for all the debts of their business
• Private limited company


  An incorporates business with a minimum of 1 shareholder and a maximum of 50 non-employees shareholders
• Public listed company


  An incorporated business with a minimum of one shareholder (and no maximum), and whose shares are openly traded on the Australian securities exchange
• Prospectus


  A legal document that provides details about investment in the company
• Social enterprise


  A type of business that produces goods and services for the market, with the primary objective of fulfilling a social need, yet it has profit as an objective
• Government business enterprise


  A type of business which is controlled by the government, providing a range of essential services but run in a similar way to companies with shareholders and a board of directors
• Comparison of business structures

  • PTY LTD
  • LTD
  • Sole trade
  • Partnership
  • Social enterprise
  • Government business enterprise
• Online business


  A business model where goods and services are traded via the internet
• Types of online business models

  • Advertising-based websites
  • Freemium
  • Brokerage
  • Merchant
• Advantages of online business

  • Larger customer access
  • Operate 24/7
  • Less expensive
  • Can be set up quickly
• Disadvantages of online business

  • Customers aren't able to try the product in person
  • Difficult customer services
  • Higher risk of theft due to online security breaches
  • Online security issues
• Bricks and mortar


  A traditional business model that is based on a physical store
• Types of bricks and mortar businesses

  • Retail
  • Manufacturing
• Advantages of bricks and mortar

  • Customers are able to see, feel and test the product in real life
  • Products can be displayed providing more exposure
  • Face-to-face interactions with employees
  • Brand recognition can be established
• Disadvantages of bricks and mortar

  • Difficult for customers to reach if located far away
  • Require access to car parking
  • Less flexibility within employees
  • More expensive to establish
• Bricks and clicks


  Businesses with a physical and online store
• Direct to consumer business


  A business that sell their products directly to consumers without intermediaries
• Advantages of direct to consumer

  • Greater customer convenience
  • Direct control over the brand presence and advertising
  • Saves time
  • Obtain higher profit margin
• Disadvantages of direct to consumer

  • Difficulty in growing business
  • High level of competition
  • Aren't able to reach as many customers
• Intermediaries


  Those that transfer a product from a manufacturer to the consumer