Unit 1 AOS 3

• What is the external environment of a business?

  the external environment of a business involves the surrounding factors that can impact a business, over which it has some to no control. The external environment is divided into two: operating and macro.
• What are macro factors?

  These are political, economical, social, technological, legal and environmental factors that a business operates in and has no control over. These factors are constantly changing, meaning business owners & managers should try to predict and account for these changes in business planning. Understanding and responding to these changes is crucial for business success and growth.
• What are operating factors?

  These are the primary external factors impacting a business that it has little control over. These factors involve the external stakeholders that a business interacts with closely. Thus, each stakeholder can have a direct affect on a business and its activities. It is import at that a business monitors the behaviour of its stakeholders and finds a way to meet their needs. these factors include customers, competitors, suppliers and special interest groups.
• Compare the operating and macro environment of a business

  operating factors are specific to each business, macro factors are non-specific and impact all businesses. Operating factors have a shorter-time duration and are more immediate in nature. Macro factors can impact a business long-term with changes taking years to unfold. Both these environments have significant impact on the performance & operations of a business, and failure to recognise, address, and plan for these can have repercussions on the success of a business.
• Who are customers?

  customers are the people who purchase goods & services from business, expecting high quality good and services, reasonable prices, and convenience.
• Explain how customers can affect a business.

  Customers can directly impact a business‘s sales and revenue by purchasing its products and services, the more they but the more the profit increases. Changes in customer preferences, tastes and buying habits can also affect sales and the types of products/services business needs to offer. Positive feedback by customers can enhance brand reputation and attract more customers while negative feedback can damage reputation and deter potential customers.
• Who are competitors?

  these are other rival businesses or individuals who produce and sell the same, similar, or competing goods and services to the ones offered by the business.
• Explain how competitors can affect a business.

  They can affect a business‘s price setting strategies by offering similar or same products at lower prices, forcing the business to adjust its prices in order to compete. Competitors may introduce new/improved goods & services prompting business to enhance/innovate to stay relevant in the market. Competitors can compete for the same pool of customers, leading to a battle for market share. A business may need to invest in marketing strategies or improved customer services to attract/retain customers.
• Who are suppliers?

  these are the businesses or individuals that supply materials and other resources that the business needs to conduct its operations.
• Explain how suppliers can affect a business.

  If suppliers fail to deliver on time or face disruptions in their own operations, it can lead to delays in production, ultimately impacting the ability of a business to meet the needs of its customers. If suppliers deliver low quality or defective supplies can result in product defects, customer dissatisfactions, harming brand reputation. Positive relationship can lead to better communication, increased reliability, and cost saving opportunities. Negative relationships can lead to conflicts & disputes leading to disruptions in operations.
• What are political factors?

  these refer to the actions, decisions, and policies of governments and political parties that can impact businesses.
• How do political factors affect businesses?

  political changes in trade policies, tariffs, and import & export regulations can affect a business‘s ability to access markets, source materials, and complete internationally. Businesses that rely on government contracts or funding maybe directly affect by change in government spending priorities. Changes in government can lead to changes in policies, which can disrupt business operations leading to instability.
• What are economic factors?

  these are the conditions and events in the economy that affect decisions of the people, businesses, and government.
• What are social factors?

  these are societal trends, values & beliefs that shape consumer behaviour and expectations of how businesses should operate.
• What are technological factors?

  These refer to the advancements and innovations in technology that affect how businesses operate and compete.
• How to technological factors impact businesses?

  rapid tech advancements introduce new products, processes, and services. Businesses must adapt to these changes to stay competitive. Technology enables businesses to streamline operations, enhance efficiency, and reduce costs. For example, automation tools & softwares can automate repetitive tasks, saving time & resources. Through technologies like internet & e-commerce platforms, businesses can now reach global markets & engage with customers worldwide.
• What are legal factors?

  these are the laws, regulations, and legal frameworks imposed by the federal, state, and local government that rule how businesses should operate.
• What are environmental factors?

  these refer to the external conditions & influences from the surrounding environment that can affect a business‘s operations.
• What are legal and government regulations?

  these are the laws and rules made by parliaments & governments, as well as the decisions made by courts, that guide businesses to uphold the safety of the community and promote fair competition within industries.
• Why should businesses understand their legal rights and responsibilities?

  businesses that fail to obey the law not only risk damaging their brand reputation, which can lead to a loss of customer trust & loyalty, but also face the possibility of legal penalties can include significant fines or even the cancellation of their licence to operate. This, in turn, can cause financial losses and risk business closure.
• What are employment laws and regulations and how can they apply to a business?

  these are the rules that govern the relationship between employers & employees. Owners must recognise their obligation to provide a safe working environment for their employees. To ensure this, they can implement regular risk assessments. They should ensure fair treatment of employees and protect them from any discrimination like unfair dismissals. To ensure this, they can conduct fair & transparent hiring & dismissal processes. following these will boost employee morale & reduce the risk of lawsuits.
• What is an environmental legislation?

  This is a set of rules that aim to preserve the environment from harmful business activities. These laws apply to many businesses that rely on natural and scarce resources such as oil, water, and gas.
• How do environmental laws & regulations apply to businesses?


  these often relate to:

  • minimising energy use ( by turning off lights & equipment when not in use)
  • reducing water use (regularly monitoring water consumption)
  • reusing, recycling, and reducing waste (utilising reusable packaging)
  • being informed on other matters of National environmental significance

  By following these, businesses lower their utility bills and operational expenses, as well as maintain a positive brand reputation, attracting environmentally conscious customers.
• What are industry regulations?

  These are rules that are specific to businesses within a certain industry. When planning and starting a business, business owners must research the unique rules & regulations that apply to their business‘s industry. For example, businesses working with children require employees to obtain a working with children’s check.
• How to industry regulations apply to businesses?

  may require a business to obtain certain qualifications, registrations, permits, or licences. To check what rules are specific to their business, owners can refer to the Australian Business Licence & Information Service (ABLIS), which is a free government service website.
• What are council regulations and how can they apply to a business?

  These are local government rules made to govern business operating in a specific area. Business locations are largely determined by local zoning laws, eg. there are very less businesses allowed to operate in a residential area. Businesses may only be allowed to operate within a certain set of hours, these are put in place for issues such as levels of noice allowed at different times. There are also various restrictions on the signage a business uses eg. displaying large signboards outside a shop can create a tripping hazard.
• What are taxation requirements and how can they apply to a business?

  These are laws and rules related to tax that apply to all businesses. During business planning, businesses must obtain an Australian Business Number (ABN), which is an 11 digit no. used to identify a business and register it for GST when necessary. A business owner must also plan to apply for the business’s Tax File number (TFN) to the ATO, allowing it to be easily identified for taxation.
• What are societal values & beliefs?

  these are the principles, standards, and assumptions upheld by individuals or a group of people, which influence how they make decisions.
• How does the well being (belief) of employees impact business planning?

  Due to common beliefs in society that family & leisure time is important, there is an expectation that employees should be able to achieve a work-life balance in their job. Many businesses have responded to this by offering employees flexible working hours and work-from-home options.
• How does environmental sustainability (value) affect business planning?

  Society is majorly concerned with the negative impact that business activities can have on the environment. To address this concern, many businesses now source their materials ethically and aim to reduce the amount of waste & pollution their generate.
• How does greater awareness on improving mental & physical health & well-being (belief) impact business planning?

  To remain competitive, many business owners have adapted their planning to suit the growing importance society has placed on achieving good mental & physical health. For example, many supermarkets now offer a wider range of healthy food options.
• What are societal trends?

  A trend is a general development in the way a group of people in society are behaving. Businesses can identify trends by analysing data and looking for patterns.
• How can societal trends impact business planning?

  Increased reliance on technology over the years has led to businesses offering a wider range of devices to meet consumer demands & desire for adbavnced technology. Eg. Apple Watches. There has also been greater focus on achieving gender equality = implementation of workplace policies. Increased purchase of goods & services related to mental & physical health = active wear, exercise equipment, and workout programs.
• What are economic conditions?

  These are the conditions that exist in relation to the productive performance & financial stability of a nation.
• What are interest rates and how can they affect business planning?

  An interest rate is the price paid for money that had been borrowed, expressed as a percentage. If interest rates are low, business loans are less expensive and loan repayments can be easier to manage. If interest rates are high, owners will have to pay more percentage of the amount borrowed.
• What are employment levels?

  This is a percentage of the labour force who are working in paid employment. The most common indicator of employment levels is the unemployment rate, which is percentage of the labour force not in paid work, anyone unwilling or unable to work is not included (full time student or retired individuals).
• How do employment levels affect business planning?

  Employment levels can indicate the availability of workers and may also influence the wages a business needs to offer in order to attract workers. When employment levels are high across the economy, or just in a particular area/specific industry, a business may struggle to find staff = offer higher wages to compete with other job offers.
• What are tax rates and how can they affect business planning?

  A tax rate is the percentage of income or spending that individuals or businesses are required to pay to the government. owners must consider their tax obligations when planning to budget for these additional expenses. individuals should consider tax rates when deciding on the legal structure they will adopt. Business owners should always ensure that they can meet all tax obligations as they fall due, to avoid legal penalties from government.
• What are consumer confidence levels and how can they affect business planning?

  a measure of consumer’s feelings & expectations about current and future economic conditions. Measured each month through survey conducted on over 1200 Australian houses. Asking them about their current and future financial situation, expectations about future economic conditions, plans for spending on major household items. owners should plan to launch their business when consumer confidence levels are high, to take advantage of high consumer spending. When low, they may plan to delay or launch on smaller scale.
• Describe the elements of a boom cycle.

  A boom is a period of prosperity & growth in an economy, with economy growing rapidly, businesses thriving, with plenty of job opportunities. The level of consumer confidence is likely to be rising, as they are generally feeling positive, especially in their ability to obtain & hold onto employment. Therefore, likely to increase the amount of money they spend, potentially leading to businesses expanding & increasing the no. of people they employ.