Uploaded by Shemalah Anthony

Y11 BM U1 AOS2 Class Tutorial

Year 11 Business
Area of Study 2 – External Environments
Business Environments
* Global Issues
* Economic Conditions
* Political and Legal
* Societal Attitudes
* Technological Developments
* Corporate Social
Responsibility Status
* Customers
* Competitors
* Suppliers
* Special Interest Groups
* Employees
* Managers
* Location
* Legal Business
Macro and Operating
form the external
Stakeholders are anyone with a vested interest in the activities of the business
definition for
Units 3&4
Macro factors
Macro factors and considerations
include legal and government
regulations, societal attitudes
and behaviour, economic
conditions, technological issues,
global issues and corporate
social responsibility.
These factors are important and
are outside the control or
influence of a business, and
therefore businesses need to be
able to respond to them.
Operating factors
Operating factors are the immediate
external factors impacting a business
which a business has some control
The operating environment of a business
has a range of factors.
Understanding these factors will provide
the business with improved information
on which to base its planning decisions.
The operating environment is made up
of stakeholders that have a direct
impact on the operation of the business.
Internal Environment (come back to in
AOS 3)
The internal environment is
made up of elements created by
the people within the business.
The internal environment
consists of factors within a
business which a business has
control over
Similarities & differences between
internal vs external environment
Similarities & differences between
macro & operating factors
Textbook reference & Activities
► Complete
► Read
the following:
pages 66 - 69
► Questions
2, 5, 7, 11, 13 & 14
MF: Key Legal and Government
Legal and government regulations that are relevant to businesses are
designed to protect the rights of employees and customers, as well as
preserve the environment.
These regulations are also made to direct businesses to uphold the safety of
the community and promote fair competition between businesses.
If businesses fail to comply with these rules, they risk consequences such as
receiving fines, damaging their reputation or losing the right to operate.
With many new rules and laws being created and updated regularly by all
levels of government, business owners should continuously consider how these
regulations affect their business’ planning process.
Page 62
Key legal and government regulations
At the macro environment level, a business owner must consider a range of
factors, such as:
Employment laws & regulations
Environmental protection legislation
► Industry regulations
► Council regulations
► Taxation requirements
Employment laws and regulations
When hiring employees, business owners should consider the employment laws and
regulations that they must comply with.
Legislation protects employees by setting minimum wages and working conditions.
When planning a business, business owners must recognise their obligation to
provide a safe working environment for their employees.
► The Occupational Health and Safety Act 2004 & Occupational Health and Safety
Regulations 2017 - ensure Victorian businesses promote employee wellbeing and safety.
Legislation also protects employees against unfair dismissal, discrimination and
provides methods to resolve workplace disputes.
Equal Opportunity Act 2010 (Vic)
Environmental legislation
Environmental legislation is designed to protect the environment from harmful
business activities.
Many businesses rely on natural and limited resources such as oil, water and gas.
When used improperly, businesses can have a negative impact on the environment.
During planning, every business owner must find out whether their business
activities will relate to any environmental legislation. Owners must be informed of
all relevant legislation at different levels of government as different laws may be
developed to protect the environment.
Many environmental laws and regulations relate to:
• Minimising energy use.
• Reducing water use.
• Reusing, recycling and reducing waste.
• Matters of national environmental significance.
Industry regulations
When starting a business, business owners need to research the unique rules and
regulations that apply to their business’s industry.
Industry regulations may require a business to obtain certain qualifications,
registrations, permits or licences.
To check what rules are relevant to the business, owners can refer to the
Australian Business Licence and Information Service (ABLIS).
For example, businesses that are involved with children require employees to
gain a Working with Children Check.
Council regulations
Local councils have various rules and regulations that impact business activities.
Therefore, many business activities are influenced by the local government.
Business owners must become familiar with the local council regulations in the area
their business will be operating to avoid legal issues.
Taxation requirements
There are many taxation requirements that a business must fulfil to
legally begin operating.
Some requirements include:
► obtaining an Australian business number (ABN),
► which will enable a business to register for goods and services tax (GST)
when necessary.
► The planning stage of a business involves owners applying for the
business’s tax file number (TFN) to the Australian Taxation Office (ATO) so
the business can be easily identified for taxation purposes.
Page 63
Textbook reference & Activities
► Complete
► Read
the following:
pages 70 - 74
► Questions
1 - 3, 5 & 7 – 11.
MF: Societal Attitudes and behaviour
Both societal attitudes and societal behaviour impact the ways individuals
interact with businesses. As businesses are significantly affected by the way
customers act, business owners should investigate common societal attitudes
and behaviours during business planning.
Business values and products should align to what customers place importance
on. By appealing to what customers believe in, such as being environmentally
friendly, a business is more likely to attract customers. To remain competitive,
business owners must constantly monitor changes to common societal attitudes
and behaviours.
Australian society is changing; there have been many waves of immigration
since World War II and this has influenced food, traditions, social attitudes and
businesses in Australia. They affect businesses as it is the way individuals live,
work and consume products which evidently affects how businesses operate.
Values and beliefs
Values and beliefs help people form opinions about how businesses should
Due to increased communication globally, such as social media, society
has become more aware of and concerned about the way businesses
operate. There is now an expectation for businesses to positively impact
the community and the environment.
For example, businesses that promote the importance of achieving good
health by offering meditation and exercise programs are viewed
favourably by customers.
Businesses can constantly research changing values and beliefs to develop
products that suit these opinions, such as offering healthier food options
which appeal to the growing awareness of health and wellbeing.
Real world example
Businesses can identify a trend by analysing data for
Researching trends provides informative evidence to
businesses about people’s changing customer behaviours.
Businesses should plan their products and activities
according to the trends relevant to their target market. By
doing this planning, businesses are more likely to attract
more customers due to appealing to common desires.
Real world example
Textbook reference & Activities
► Complete
► Read
the following:
pages 75 - 78
► Activity
► Activity
2 – 6 & 14.
the Case Study “The rise of veganism”
MF: Economic Conditions
► When planning a business, individuals should consider current
and future economic conditions.
► As the economy is a macro factor, individuals are unable to
control its effect on businesses and consumers. Instead,
individuals should plan to launch their business when economic
conditions are strong as businesses are more likely to be
successful when the economy and customers are financially
► Individuals can assess current economic conditions using factors
such as:
► interest rates
► tax rates
► the level of business and consumer confidence.
Interest Rates
An interest rate is the price charged or paid for the use of money.
During business planning, individuals must consider the commercial
feasibility of their idea. If an individual does not have enough money,
they can take out loans to cover initial set up and operations costs.
Before taking out a loan, business owners should consider the offered
interest rate.
If interest rates are low, business loans are less costly and loan
repayments are easier to manage.
If interest rates are high, business owners will have to pay more for the
amount borrowed.
Business owners should ensure they are able to afford the current
interest rate if they take out a loan.
Tax Rates
All individuals and businesses pay income and other taxes. As part of the
planning process, taxation consequences should be taken into account.
Businesses may look more favourably at activities that are tax deductions
when establishing their business. Business owners must consider their tax
obligations when planning a business.
The government determines and applies different tax rates to businesses
depending on their structure. Many businesses in Australia pay a company
tax rate of 27.5% or 30%. The government also requires businesses to pay
several additional taxes, such as Goods and Services Tax (GST).
During business planning, owners should calculate their expected
compulsory tax payments to select the most appropriate business
structure. Business owners should also ensure that they can meet all tax
obligations to avoid legal penalties from the government.
Business and consumer confidence
When planning a business, individuals should consider the current levels
of business confidence and consumer confidence.
Business and consumer confidence is high when there is a belief that the
economy will grow. Whereas, business and consumer confidence is low
when economic growth is expected to slow down or the economy is
expected to shrink.
Consumers who believe economic conditions will improve are more
willing to spend money as they are optimistic about their financial and
job security.
To take advantage of high consumer spending, individuals should plan to
launch their business when confidence levels are high.
When business and consumer confidence is low, individuals may plan to
delay the launch of their business or launch on a smaller scale.
Different economic cycles & consumer
Textbook reference & Activities
► Complete
► Read
the following:
pages 80 - 84
► Questions
1, 3 - 6 & 11 - 13
MF: Technological issues
► As technology has evolved, it has significantly changed the
way businesses operate.
► Although developments in technology cannot be controlled,
owners should take advantage of the opportunities that
technology presents when conducting business planning.
► Business owners should also consider the impact that
technology has on the market and customer expectations.
► Business owners that do not plan to use technology to their
advantage may risk their business and its products
becoming redundant.
Technological developments
When planning a business, owners
should consider that technological
developments can significantly
improve various aspects of their
business and its operations.
Taking advantage of new technology
can allow a business to increase its
speed of production and precision, as
well as offer more convenience to
As a result, incorporating advanced
technology in a business can improve
its productivity and effectiveness. If a
business does not plan to take
advantage of technological
developments, its products may
become outdated and unattractive to
The future
of business
Textbook reference & Activities
► Complete
► Read
the following:
pages 85 - 88
► Questions
3 – 6 & 9 - 12
MF: Global issues
Globalisation has resulted in Australian businesses facing
more international competition than ever before.
Although businesses have no control over the changes in
the macro environment, a business owner will still need to
consider how global issues can impact their business
By considering these issues, a business can plan how it will
meet customer needs and remain competitive in its
specific industry. Businesses that do not plan to consider
global issues may lose customer sales and their place in the
Overseas competitors
When planning a business, it is important for business owners to
consider the actions of competitors within Australia as well as
Due to the impact of globalisation, Australian businesses are facing
high levels of overseas competition.
It is important for business owners to develop an understanding of any
overseas competitors they may face by investigating how they
operate, and identifying their strengths and weaknesses. This planning
will enable business owners to consider how they can implement
differentiation to distinguish themselves from overseas competitors
and build a competitive advantage.
Overseas markets
Business owners can plan to launch their business in both local and
overseas markets.
By doing so, businesses can access a larger and more diverse customer
base which can allow a business to reduce its dependence on the local
However, as every overseas market has different legal and government
regulations, launching in overseas markets will require more planning in
comparison to launching in a local market.
It is also important that business owners are aware of different customer
needs and expectations which will differ across local and overseas
Businesses may need to adapt their products to suit the customer needs
in different markets in order to attract customer sales.
How issues with overseas markets can
impact business planning
Offshoring labour
When planning a business, a business owner may consider offshoring labour.
Offshoring labour allows a business to take advantage of lower labour costs,
as hiring workers in some overseas countries may be cheaper than the costs
of labour in their local country.
A business may also use offshoring to increase efficiency or access a more
diverse range of skills. For example, the workforce in certain overseas
countries such as India consists of software engineers with more specialised
skills that are difficult to find in Australia.
A business owner may consider offshoring labour intensive or time
consuming tasks, which can give owners more time to focus their efforts on
expanding their business and gaining a competitive advantage in the
market. For example, car companies use offshore labour for manufacturing.
How issues with
offshoring labour
can impact
business planning
Exchange rates
An exchange rate is the price of one country’s currency expressed in
terms of another country’s currency.
One of the biggest challenges of conducting business outside of Australia
is the impact of exchange rate fluctuations.
The exchange rate directly impacts businesses that purchase resources
from overseas countries or sell goods and services in an international
There are many factors that affect exchange rates, such as political
events and economic conditions. As the value of a country’s dollar can
fluctuate daily, business owners must anticipate changes in exchange
rates and ensure they price their goods and services to account for
currency fluctuations. By planning for exchange rate fluctuations,
businesses can maintain their profit margins when changes occur.
Exchange rate example
Currency appreciation
is an increase in the
value of a currency
against another foreign
Currency depreciation
is a decrease in the
value of a currency
against another foreign
Online sales
When planning a business, a business owner should consider whether
they will establish an online presence.
Online sales present many opportunities for businesses, including
reaching a wider range of customers in both local and overseas
markets. Customers can purchase products from a business 24 hours
a day, which increases convenience and sale opportunities for a
If a business decides to establish an online presence, they may not
require a physical store which can reduce operating costs, such as
rent and utilities. As many businesses are now selling products
online, not taking advantage of opportunities to expand using online
platforms could result in a business becoming less competitive in the
How issues with
online sales can
impact business
Protection of intellectual property at a
global level
In AOS 1, we looked at different ways to protect intellectual property.
Businesses need to ensure they are protecting it at a global level as they
will face overseas competitors who may copy their creations, inventions,
brands and designs. By doing so, it takes the business’ competitive
They can be protected by:
Patents - are legal rights granted to a business for any processes, devices,
Trademarks - are legal rights granted to a business over aspects such as
substances or methods that are inventive, new and useful.
symbols, words, scents, numbers, sounds or images, which are unique to
a business and used to distinguish its products.
Copyrights - are legal rights that provide business owners with the exclusive right
to publish, reproduce or sell its original works such as art, music, films, writing
and computer programs.
Some real
examples that you
could use in a
Textbook reference & Activities
► Complete
► Read
the following:
pages 89 - 92
► Questions
1 – 9, 11 & 14
MF: Corporate social responsibility
► Corporate social responsibility is going above and beyond legal
obligations to operate in an economically, environmentally & socially
responsible manner.
► As society becomes more aware of business activities, business owners
are expected to be accountable for their actions. A business’s impact on
the environment and society is in the public eye, particularly on
platforms such as social media and the news.
► For businesses to survive and remain competitive, they must go beyond
legal requirements and display consideration for society and the
► Customers are increasingly expecting businesses to exceed legal
expectations and have a positive impact on society. To meet the
expectation of customers and society, owners should consider the best
interests of society and the environment when planning business
activities. There are many strategies that business owners could
implement to demonstrate CSR.
Environmental considerations
Protecting and preserving the environment is a key element of ensuring the welfare of
the local, national and global society. Business activities, such as producing goods and
services, can significantly damage the environment.
Social considerations
Another element of CSR that businesses need to consider is their impact on society.
The goods and services that businesses produce, as well as general business activities,
can have a significant impact on society. It is important that business owners plan to
reduce any negative social impacts and consider ways that they can positively contribute
to society.
Environmental & social consideration tables
Textbook reference & Activities
► Complete
► Read
► Ben
the following:
pages 93 – 96
& Jerry CSR case study activity
OF - Customer needs and expectations
Business owners need to consider operating factors as well as macro factors.
It is important that a business monitors customer behaviour and considers
how to best meet their needs.
Customers are the reason a business exist.
Customer needs are the essential requirements that customers intend to
fulfil with the purchase of a good or service from a business.
Customer expectations are the values or benefits that customers seek when
purchasing a good or service from a business.
How have the choices that customers have changed over the years? What has
influenced this change?
OF - How customer needs and
expectations affect business planning
Customer convenience: Saving of time and effort
deliver/express delivery, click and collect, accept afterpay,
High quality good or service: high quality and operate as customer needs and expects.
Work closely with suppliers, product inspections before distribution
Social responsibility: ethical decision making
Ethical materials, reduce waste and pollution
Responsive customer service:
Respond to queries in timely manner, dedicated customer support team, social media,
live chat, FAQ page
Textbook reference & Activities
► Complete
► Read
the following:
pages 103 - 106
► Questions
1 – 7 & 9 - 13
MF - Competitors Behaviour
When planning a business, it is important for a business owner to consider the
behaviour of both local and overseas competitors.
This can be done via market research.
Having a detailed understanding of competitors will enable a business owner
to make informed decisions about their own products and business direction.
Suppliers and the supply chain
When planning a business, a business owner will need to decide which
businesses will supply them with the materials needed to produce their
A business may decide to purchase materials from local businesses or
businesses located overseas.
Suppliers and the supply chain
Supplier: supplies the inputs (resources) required for the production process
These resources can be raw materials, equipment, machinery, finance and
It is important for the business to have good, productive relationships with
their suppliers. Why?
In addition to this, having multiple suppliers is important as the business is
less vulnerable to supply difficulties.
Supply chain & sustainability
supply chain: a system of organisations, people, activities, information and
resources involved in moving a product or service from suppliers to
manufacturers and then on to consumers
Supply chain needs to be well managed as production of the business’ goods
and services depends on the resources.
During the planning stage, businesses need to consider where their resources
are sourced from. Many businesses have come under scrutiny for their supply
chain being unethical.
Sourcing considerations
When planning a business, business owners should consider where the business will source
its resources from.
A business may choose to source its resources locally or use a supplier located overseas.
Resources may also be sourced from a variety of suppliers in both local and overseas
Sourcing considerations choosing between local vs overseas suppliers:
Shipping costs
Social responsibility
Access to resources
Legal regulations
Retrieving considerations
After deciding what resources will be required and where to source them
from, a business owner must plan how the resources will reach the business.
Retrieving resources from a local market requires less planning than if a
business was to source resources from overseas markets.
Retrieving considerations choosing between local vs overseas suppliers
Road transport
Air transport
Rail transport
Sea transport
Special interest groups
When planning a business, business owners should consider that the operating
environment can be influenced by special interest groups.
Special interest groups seek to pressure businesses to make changes or adopt
certain practices.
Special interest groups represent important groups of individuals, such as
employees, business owners, customers and the environment.
special interest group: a group of people or an organisation seeking or
receiving special advantages or privileges
lobby group: a group that aims to influence organisations or governments in
their decision-making processes
Unions exist to promote fair treatment and wellbeing for all employees in its
specific industry.
Unions are able to significantly influence employment laws and negotiate
with businesses to increase wages and working conditions.
Unions also represent and defend employees when issues such as
discrimination and bullying arise in the workplace.
Business associations
Business associations are organisations that advise and support businesses in a particular industry.
Business associations provide advice on a business’s rights and responsibilities, as well as a large
range of issues that must be considered before starting a business.
Business associations
business association: membership organisation engaged in promoting the
business interests of its members
industry association: representative body for a particular industry group
Environmental lobby groups
When establishing a business, business owners should consider how their operations are going to
affect the environment.
When a business chooses to undergo activities that harm the environment, environmental lobby
groups often campaign to the public and the government to prohibit that business from continuing.
Consumer groups
These are lobby groups that monitor a business’s performance
in terms of its product safety, packaging, pricing, and
Textbook reference & Activities
► Complete
► Read
the following:
pages 107 - 109
► Questions
► Coles
1 – 5, 9 & 10
Case Study handout
Complete the following
Using the study design, textbook and your notes make sure you have
notes covering every key knowledge point.
Finish any outstanding class work
Complete the following questions:
All the ones that you find difficult. Especially the Exam Practice