AOS 3

• External Environment


  Factors over which the business has LITTLE control over, such as economic conditions, government policy, competitors and technology
• Operating Environment


  Refers to stake holders external to the business, which have direct impact on the business. The business has less control over these factors than the internal environment
• Macro Environment


  Refers to the broad forces, conditions and trends in the economy and society within the business operates. The business has no control over these factors. Changes within the macro environment make it necessary for managers to make adjustments to the business' planning
• Customers


  • People purchasing goods/services. The expect high quality goods and/or services for a reasonable price
• Competitors


  • The rivals who sell competing goods or services
• Suppliers


  • The businesses or people that provide resources and materials a business needs in its operation
• Interest Rates


  The price charged for the use of money
• Tax Rates


  Percentage of income or value of a good, service or asset paid as tax
• Stakeholders


  Group or individual that has a vested interest in the operations of the business
• Corporate Social Responsibility


  Refers to managing a business in such a way that the broader social welfare of the community, including its employees, customers, suppliers and the environment, is taken into consideration when making business decisions
• Memorandum of Understanding


  A formal agreement with two or more parties, that outline the terms and conditions of coming to an agreement
• The external business environment can be broken down into 'operating and macro environment'
• Operating Environment: Stakeholders external to the business


  • Customers
  • Competitors
  • Suppliers
  • Special Interest Groups that try and make businesses adopt certain practices (such as unions or lobby groups)
• Macro Environment: Broad forces, conditions and trends in the economy and society, within the business operates

  • Political Factors
  • Economic Factors
  • Social Factors
  • Technological Factors
  • Legal Factors
  • Environmental Factors
• Political Factors include government policies and political stability, tax implications, industry regulations, and global trade agreements and restrictions
• Economic Factors include exchange rates, economic growth/decline, globalisation, inflation, interest rates, cost of living, consumer spending
• Social Factors include lifestyle choices, cultural norms and expectations, consumer tastes and buying habits, and population demographic
• Technological Factors include technological innovation in products and services, data storage security levels, and disruptive technologies, such as smartphones, social networking, automation, robotics, and AI
• Legal Factors include changes in legislation, employment labor law, employment tribunal decisions, health and safety regulations, political sanctions, and sustainable resources. CSR and ethical sourcing of goods and services
• Environmental Factors include direct impact on the environment, carbon emissions and utilising sustainable resources
• Society expects business owners to follow the rules. Each level of government has its own direct and regulations which all businesses must follow. Owners must have a good understanding of these rules that will affect their operations and planning. If they fail to then they risk losing customers and their reputation
• Establishing a new business

  1. Must register a business name with Australian Securities & Investments Commission (ASIC)

  2. Receive a Certificate of Registration and an Australian Company Number (ACN)

  3. Require an ABN (Australian Business Number). A partnership or company requires its own tax file no.
• Location requirements


  • Local government zoning
  • Building regulations
  • Position and signage
  • Fire regulations
  • Parking regulations
• Local Governments - Food Act 1984 (VIC). Authorised health inspector, to ensure all standards are maintained for food storage temperature, kitchen layout, employee clothing requirements, and correct food handling
• Employment requirements


  • Conditions, unfair dismissal, dispute setting methods, human rights, tax payments on behalf of employees
  • Health and safety - Occupational Health and Safety Act 2010 (VIC)
  • Legal responsibilities when hiring (discrimination and equality)
  • Equal Opportunity Act 2010 (VIC) - unlawful to discriminate based off age, disability, gender identity, marital status, parental status, physical features, beliefs, race, sex or sexual orientation
• Taxation requirements


  • Prepare a set of accounts - BAS (business activity statement) - at intervals (monthly or quarterly)
  • BAS outlines the collection and payment of GST (goods and services tax)
  • Pay-as-you-go (PAYG) tax instalments on behalf of employees
  • State Government payroll tax
  • Tax payable on its own earnings
• Fair trade and competition, provides consumer protection. Competition and Consumer Act 2010 - consumers have the right to purchase goods that are good quality and fit the purpose for which they were bought
• Environment Protection and Biodiversity Conversation Act 1999 - Protection of the environment. Environment Protection Act 1970 (VIC) - noise emissions, prevent pollution
• Societal Attitudes & Behaviours

  Ideas, values and beliefs held by people in a particular society
• Values & Beliefs


  Shared principles and morals of a group of people or society - good or bad? - necessary or unnecessary? How people behave. Constantly changing affecting businesses plan
• Trend


  Peoples attitudes or behaviour in society is developing or changing. Demographics - characteristics of the human population. E.g. Australia's ageing population - median age of the population is rising. - may result in more businesses in healthcare, however labour shortages. Family friendly and flexible workplace. Belief - business must support families
• Economic Conditions


  The influences that relate to economic activity in a country. - interest rates, wages, unemployment, exchange rates and inflation. Impact on both businesses and customers
• Interest Rates


  Price charged for the use of money. Business - cost involved in generating revenue. Will rise in periods of inflation
• Employment Rates


  Employed - one hour or more in a specified week. Expansion moments - employments will rise. During contraction - unemployment level will rise
• Tax Rates


  Percentage of income or value of a good, service or asset paid as tax. A cost for a business
• Business and consumer confidence levels


  How businesses and consumers are feeling about the economy. High consumer confidence = more likely to purchases
• Technological Considerations


  Growing use of tools, techniques or systems - solve problems and make it more efficient. Innovation - Revolutionising the workplace - increased efficiency, productivity - create new products
• Technological Developments


  • Hi-tech robotics
  • Internet, mobiles, electronic funds
  • Decrease in the number of employees, constant replacement of products
• Global Considerations


  Overseas Competitors and Markets. Global competition due to rivals or competing businesses that serve internationally. Local businesses can sell their products overseas - spread the risks and allows it to grow. Issues - Distribution, transportation, currency, taxes and duties, marketing and packaging requirements, and legal (customs and cultures)
• Offshoring Labour


  Moving processes or services to the same or another business located in an overseas country. Intensive parts of products - Car and plane assembly. Complex Services - Call centres and contractors