Business Studies

• • Geographic Influences: Effects of climate change, natural resources, topography, physical infrastructure, and location
• Economic Influences: Many factors that relate to economic activity in a country, region or the world that include

  • Inflation
  • Wages
  • Unemployment
  • Exchange rates
  • Interest rates
• Technological Influences: The growing use of tools, technqiues and systems in a business to solve a problem or to serve a purpose in the operation

  • Robotics
  • Telecommuncation
  • Internet and ecommerce
• Legal Influences: Refer to the laws and regulations that a business has to abide by or favce the consequences of various penalties

  • Equal employement opportunities
  • Laws on taxation
  • Occupational Health and Safety
• The three societal issues that have the potential to influence major change in business practice include

  • Awarness of our vulnerable environment
  • Desire to provide business family friendly workplaces
  • Growing belief that businesses must cater for workplace diversity
• Geographic Influences

  • Increases competion
  • Access to labour
  • Expands market
  • Cheaper materials
  • Flexible location
• Market influences:

  • Change in labour market
  • Change in capital/finance market
  • Change in consumer market
• • Financial Influences: Deregulation of Australia's financial system has resulted in a more flexible, market orientataed approach across the financial sector
  • For e.g.- An increase in interest rates means there will be less borrowing
• • Societal Influences: Are the ideas, values and beliefs held by people in a particular society
• Political Influences: Derived from state and federal government policies and inluded free trade policies and the process of deregulation
• Examples of Political influences are:

  • Taxation (GST, Company tax cuts)
  • Environmental management (Banning plastics)
  • Social reforms ( Gender diversity in workplace, Equal pay, Paid parental leave)
  • Labour market reforms ( Changes to penalty rates, skilled immigration policies)
• Institutional Influences: Institutions that influence a business

  • Regulatory bodies
  • Trade union
  • Employer associations
  • Government
• Competitive Situation Influences:

  A sustainable competitive advantage refers to the ability of a business to develop strategies to ensure it has an "edge" over its competitors for a long period of time.

  Number of competitors: The size and number of firms in an industry

  Ease of entry: The ability to establish a business

  Local and foreign competition: Labour costs, Transport costs, Costs of raw materials
• What is this acronoym Every Girl Must Preserve Righteous Salahs or Death stand for in the Business life cycle?

  Establishment stage, Growth Stage, Maturity, Post-Maturity -Renewal -Steady State -Decline
• E.G.M.P.R.S.D

  Establishment stage is where a business first enters the market.
• 33% of businesses fail within the first year of trading
• What's the Growth Stage?


  When a business has established itself and has a cash flow

  • Increasing revenue/profit
  • Expanding market share
  • Developing reputation
  • Increasing reliable customer base ( Marketing & Word of Mouth )
• Maturity Stage consists of:

  • Cash flows are stable
  • Reliability and loyalty
  • Sales will peak and begin to slow down
• Post maturity - Renewal is:

  • Increase in sales/profits
  • Expansion of business through merger/takeover
• Steady state:

  Continues to operate at the level it has been during the maturity phase
• Decline/Cessation: Business begins to lose because

  • Competiton becomes aggressive
  • Failure to respond to external influences
  • Lost touch with target market
  • Declining sales/profits
• Reasons that a business can decline

  • Poor marketing
  • Poor location
  • Uncontrolled growth
  • Having too little/much product
  • Poor financial management
  • Lack of experience
  • Increased competiton
  • Lack of demand for a product
  • Failure to meet customers needs
• Factors that lead to business decline

  • Lack of management expertise: Includes failing to modify existing business plans based on the chnages of the environment
  • Lack of sufficient money (Undercapitalisation): A business doesn't have enough capital to collect business operations
• Voluntary cessation: Business owner makes the decision to shut down and terminate their business
• Involuntary cessation: External party forces owners of a business to cease operations and terminate existence of the firm
• Bankrupcy: Is a declaration that a business or persion is unable to pay their debts
• Voluntary administration: An insolvency procedure where an external administrator is appointed because a company is in financial trouble
• If voluntary administration is not successful then liquidation will occur
• Liquidation: Business operations are terminated by selling all business assets for cash, to pay off any outstanding debts. The money then could be used to pay off secured loans held by creditors such as a mortgage
• Receivership: A process whereby a receiver takes control of a business's assets with the intention of paying off creditors
• When a company ceases operation it has gone insolvent
• Insolvency: When a person or organisation cannot meet its financial obligations as they fall due
• Partnerships have unlimited liability which means partners may be held responsible for the debts of the partnership
• A sole trader can be personally liable for the debts of their business
• The main advantage of being a partnership over a sole tradership is that there is more than one owner so the risk is spread across multiple people
• The main disadvantage of being a partnership over a limited company is that all owners are jointly and severally liable for any debt, meaning if one partner fails to pay then other partners will also be liable
• Unsecured loans are paid from any money left over from the sale of assets
• Stakeholder: Is someone who has interest in the business or is affected byt it
• Shareholder: Is someone who bought shares and makes them a partial owner
• Unlimited liability: Is where the risks of a business also affect the business owner