business environment
the surrounding conditions in which the business operates. can be divided into two categories: internal and external environment
external environment
consists of operating and macro environments, little to no control over
internal environment
consists of factors business most control/some control over
operating environment
refers to the stakeholders the business interacts with in conducting its business. has a direct impact on the operations of the business. little control
planning
is the process of setting goals/objectives, and deciding how they will be achieved
interest rates affects on planning
high interest rate - loan repayments increase. less likely to borrow + business makes large profit
low interest rate - business loans more affordable loan repayments lower. more likely to borrow money. expansion more likely to occur as owners more confident they can borrow money and afford to ‘service their loan’
high - loan + business makes large profit
low - loan + expansion + borrow money
tax rates (economic conditions)
- the percentage of income/value of good, service or asset paid as tax
- tax rates on certain activities affect owner decisions when planning.
- e.g. activity option that offers tax reductions may be attractive option in planning
on certain activities affect planning + tax reductions attractive
business and consumer confidence levels (economic conditions)
- how they are feeling about economy.
- high business confidence - reflected in decisions made when planning e.g. owner could plan to expand the business, take on more debt or employ more workers
- high consumer confidence - consumers optimistic about financial condition and their ability to find/maintain employment. more likely to make purchases
high - owner confident + expand
low - optimistic financial conditions + makes purchases
values and beliefs (sociel attitudes and behaviours)
shared principles and morals of a group/society, including protecting environment and expectation businesses will contribute positively to society
principles/morals of society + environment + society
trends (societal attitudes and behaviours)
trend - general direction which people’s behaviour in society is developing/changing. e.g. changing demographics and workplace culture
direction behaviour in society developing + demographics + workplace culture
global issues affect on planning
owner needs consider global issues like overseas competitors and markets, offshoring labour, exchange rates, protection of intellectual property at a global level and online sales
overseas competitors
owners who compete with them need competitive advantage based on strengths business, and reducing costs/improving quality of product. may also plan to differentiate their goods and services from other businesses.
competitive advantage + costs + quality + differentiate goods
overseas markets
selling goods/services to overseas markets spreads the business’ risk and allows it to grow.
issues - transportation and distribution, conversion of currency, taxes and duties, marketing and packaging requirements and different customs and cultures
offshoring labour
- moving some of a business’ processes or services to same or another business located overseas.
- do this to take advantage of lower costs, including labour and transportation, more favourable economic conditions in other countries
explain (definition) why ashburton cycles would need to consider exchange rates when planning their business
- a depreciation (a fall in the value of a country’s currency in relation to another country) make exports cheaper and imports more expensive. exporting businesses benfit. manufactures importing goods face increasing costs
- an apreciation (an increase in the value of a countrys currency in relation to another country) exports more expensive and imports cheaper, reduces competitiveness of businesses that export.
evaluate (advantages + disadvantages) why csr is an important consideration during the planning stage
- corporate social responsibility refers to managing a business in a way that the social welfare of the community, employees, customers, suppliers and the environment is taken into consideration when making business decisions. this is over and above legal responsibilities
- to be socially responsible, should aim to provide for greater good of society. important recognises their business activities have impact on society locally and needs to give careful considerations to its actions
- whilst csr can be costly to implement, more expensive ebikes, the benefits should outweigh the costs form of ensuring that business’ production process will not have serious/negative impact on environment/community
environmental considerations
- Important ensure business’ production process wont have a serious/negative impact on environment when planning.
- E.g. could support environmentally friendly suppliers
planning the productions of goods and services that are in society’s best interests
- ensure that production process doesn’t have serious/negative impact on community health social conditions
e. g: - fair and equitable treatment of customers by manager
operating factors (css)
customers
competitors
suppliers
special interest groups
outline (brief description) two reasons why ashburton cycles would need to consider customers when planning
- customers - reason why businesses exist. buy goods or use its services, expecting a high quality at competitive prices. must respond to the needs of customers, making sure that right product is delivered at the right time.
- needs to plan to produce high quality products. to ensure future viability and profitability, needs to recognise/assess changes in consumer tastes so it can constantly satisy consumer needs/wants
using an example from the article, explain how competitors affect ashburton cycles’ business planning
competitors are businesses/individuals that offer rival goods/services. needs to be aware of existing competitors, like kmart and big w, and have to monitor environment for potential newcomers. to remain competitive, must respond to any change in actions of competitors
explain why it is important that ashburton cycles is aware of where suppliers are sourced from and how they reach the business
- suppliers provide resources used in production process. good relations with suppliers important to guarantee efficient running, important to have reliable supplier network. one supplier puts business at disadvantage
- location distance to suppliers. delivery, rate stock, quality, and pricing/comparisons other suppliers of similar products, to identify if they can better meet ashburton cycles standards.
- suppliers - sustainable + corporate social responsibility
unions (special interest group)
- employees may join a union to improve their pay and working conditions.
- unions represent employees in many workplaces in australia.
- unions work to prevent anything that diminishes employee rights, safety or conditions
environmental lobby groups (special interest groups)
promote environmental issues to the public, government and businesses
