Factors that affect Food Product Development
External Factors (The Macro Environment)
Make notes from pages 249 – 261 from the text to help fill in the spaces.
A food producer or manufacturer must consider factors that cannot be fully
controlled. External environmental factors that affect the success of the product or
business include:
A. Economic – countries move through an economic cycle which is affected by:
 Changes in inflation
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 Interest rates
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 Exchange rates
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 Tax rates
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 Import/export tariffs
 Wage agreements and salary levels
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 The level of unemployment
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There are 4 main stages to the Economic Cycle
1. Recession
 Occurs when unemployment is high
 People spend less, buy the essentials, tend to opt for value for money
products
 People are more reluctant to try new products
 Business costs rise, profits fall and many go bankrupt
2. Expansion
 Economic climate starts to improve, unemployment reduces, interest rates
and inflation go down
 People begin to buy new products
3. Boom
 Occurs when consumers spend more money, eat out more, try new
products and travel more.
 Businesses generally choose this time to expand
 New businesses appear
4. Contraction
 Interest rates rise and the economy moves towards recession.

Draw the graph that shows the stages in the economic cycle on page 230 in the
space below.

Make notes about the economic cycle below.
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B. Political – Individual countries control the manufacture of food in various
ways.
 Give an example of what a food manufacturer would need to do and the
processes involved in being able to develop a new product.
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
Fill in the table below with two examples of Federal, State and Local
Influences.
Type of Influence
Federal
Examples of how the Food Industry is affected
State
Local

Research how Australia governs the development of new food products
and what authorities may be involved.
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C. Technological – includes a range of things that impact on food product
development from machines to systems. Examples include: machines, robots,
computers, microchips, materials science, biotechnology, communication and
transportation systems.
 List one advantage of technology in aiding food product development.
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 List one disadvantage of technology in food product development.
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D. Ecological – this relates to the relationship among living things and their
surroundings.
 Consumers demand that food companies and the government prevent
pollution and conserve natural resources.
 Companies must address such things as; industrial by-product waste,
failure to recycle, degradation of waterways, effects of
pesticides/herbicides.
 Companies need to consider the costs of dealing with waste and replacing
natural resources and calculate the amount to be passed on to the
consumer.
 Read the Goodman Fielder Environmental Policy (page 234) and list how
the company addresses environmental issues.
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