Commerce Study
Notes 2010
{
By Andrew Newbound
Commerce and
Choice
{
Unit 1





Consumer decisions
Financial decisions
Business decisions
Employment decisions
Legal decisions
Decisions Affecting The
Quality of Our Lives

Want


Increase standard of living
Personal wants


Collective wants


1 person satisfied
Entire community satisfied
Need

Need required
Wants & Needs


Depends on income
Larger income = larger wants
Consumption








Which sector to work in
Run a business/work for someone else
How to adapt to changes in jobs market
Time
Transport
Location
Income
Enjoy
Employment Decisions

Impact to quality of life



Amount of money have to spend
Hours (social)
Who you work with

Get on with
Employment Decisions






How to receive income
Hours
Type of payment
Part-time
Working from home
Job sharing
Flexible Working Practices





Balancing spending and saving/investing
Preparing a budget
How to pay
Investment decisions
How to receive income
Financial Decisions





Feeling of security
Personal satisfaction
Buy something more expensive
To get a loan
Investments
Advantages of Saving





Marketing
Quantity to produce
Distribution
Legal structure
Choose:



Employee = less stress
Employer = more stress
Private/franchise
Business & Legal
Decisions



Production/distribution of product harm
environment?
Use of product harm environment?
Recyclable?
Environmental Impact
Decisions

Good


Services


Tangible, purchasable object
Non tangible & purchasable
Durable goods


Last
More time taken to buy


More expensive, last longer
Non durable goods
 Don’t last

Single/little use goods
Goods & Services

Depreciation


Complementary good


Replace another good
Producer services


Needs to be purchased with another good
Substitute goods


Lose value over time
Services consumed by businesses
Consumer services

Services everyone consumes in daily lives
Goods & Services
Definitions

Generic/own label product



Product produced by supermarket to combat
brands
Give consumers option to brand names
Reliable

Product trusted to perform intention to high
standard
Consumer Decisions



Buy because see
No thought put in
Avoid






Shopping list
Compare prices
Budget
Look for warranty
Look at product’s functions
Check reliability
Impulse Buying


Ranking of stores and store complexes based
on size
Top



Middle



Large shopping centres
Expensive consumer durable stores
Discount chains
Moderately expensive
Bottom


General stores
Small shops
Shopping Hierarchy

Changed in Australia




Old
= CBDs at top
New
= Shopping centres at top
People don’t have time
Want convenience
Shopping Hierarchy


Spending money at store
= rewarded by store
Encourage consumers to spend money at store
Consumer Loyalty
Program

Discount store


Department stores


No cut price promotions
Franchise



Cut price promotions
Independently owned
Share similar products & operating systems
under 1 trading name
Category Killers

Dominates in 1 category of products
Types of Retail Shops

General (corner) stores


Supermarkets


Owner-operated
Periodic markets


Large self service stores
Independent speciality shops


Once = common feature of neighbourhoods
Large number of sellers, informal
Shopping strips
Types of Retail Outlets

Line main street of town/suburb

Advantages of using planned shopping centres

Keep customers inside complex


Better parking


Cafes
Entice visitors
Direct marketing

Sales man comes to you to sell product
Marketing

Advantages


Find product over
internet to purchase




Then purchase from
same source
Not walking into
physical store


Convenience
Flexibility to change
mind
Cheaper
Wider variety
Disadvantages



Scams
Costs hidden
Postage
Internet Shopping

Support local industries


Some consumers prefer
Usually have higher quantities than cheaper
goods from overseas
Buy Locally

Deregulation


Trading hours



Time retail shop is
open
Group of stores
identical (Big W)
Diversity

Add variety
CBD


Retail chains


Remove laws

Central business
district
In centre of town
‘Anchor’ stores

Major shops in
shopping centres (Big
W)
Retail Outlets Definitions

Finance


Price






How much money you have to spend
If item is more than you can afford
Marketing
Age & gender
Environmental concerns
Service & convenience
Warranties & after sale service
Key Factors Affecting
Consumer Decisions

Hire purchase agreement

Funds lent by store – not financial institution


Differs from other forms of credit
Instore credit cards
Purchasing - Finance

Gross income


Income before tax
Disposable income (net income)

Income after tax
Income




Sale is not always lowest price
Don’t rush
Hidden costs
Unit pricing

Price by standard unit


E.g. Price per 100g
Better deal

See which product is ACTUALLY cheaper
Comparing Price Tips

Packaging


Grab consumer’s attention
Service and Convenience

Become increasingly important


Lives busier
Value of free time = increased
Factors Affecting
Consumers


Agreement of conditions good
repaired/replaced
Look for




In writing
Long warranty/extended
Keep original packaging
What not to do with product
Warranty

Unconscionable conduct


Dishonest behaviour by person providing
goods/services to consumers
Bait and Switch Advertising


Lure customers with something then change
Become illegal (dishonest & misleading)
Consumer Protection

Why have sales


Consumer rights



To know what you are buying
To pay reasonable price
2 conflicting price tags - rights

Sales
Lure customers
Complain to consumer affairs

Check if money owing on 2nd hand car

Check logbook, service stickers
Consumer Protection


Did not order but charged for
Rights

Do nothing


Must pick up within 3 months or you keep
Write letter

Must pick up within 1 month or you keep
Unsolicited good

Scams




Dishonest
Fake
Overcharging
High pressure sales
tactics

Consumer protection





Ask for identification
Check if employed
Check company
Get a written copy of
contract
10 day cooling-off
period
Door to door sales

Pyramid scheme


Perpetrators recruit new people to pay money to
those above them in the hierarchy expecting to
be paid by those below them
Internet to promote scams

Similar to pyramid schemes
Consumer Protection
1.
2.
3.
4.
5.
6.
Identify problem
Contact business without delay
Contact relevant industry association,
obodmans
Contact state government’s consumer affairs
department
Contact mediation/conflict resolution service
Contact court/tribunal
Steps to Resolve Dispute
With Retailer
Name of Scheme
Description
Consumer rights
& advice
Bait & switch
marketing
Lure consumers,
out of stock
Protection against
‘Fake’ Product
Reduction
No/little price
reduction
Know what
original price was
Double ticketing
2 conflicting price Complain
tags
Overvalued &
unsafe vehicles
Old cars being
Check log book
sold for big prices
Unsolicited goods Getting goods you Do nothing/letter
did not ask for
Door-to-door
sales
Salesman coming
to house
-Check details
-10 day coolingoff
Pyramid/internet
schemes
Offer of ‘free’
money for fee
None
Scheme Table

Elements







Legal object
Possible to perform
Consideration
Legal rights
Intention
Offer and acceptance
Purchasing pair of sunglasses

Contract because incorporates elements of
contract
Contract

Prices Surveillance Act


Protect consumers from price rises
Trade Practices Act

Improve competition
Government Acts Purpose

Be of merchantable quality




Reasonable quality for sale
Protected from misleading & deceiving
practices
Info must be accurate
Safety instructions on dangerous products
Legal Rights of
Consumers

‘No refunds’ signs = illegal

Consumers have right to refund if goods are
unsafe, do not work the way they are meant to
Contracts






Ask questions
Let buy beware
Minimise environmental impact
Be aware of impact of consumer decisions
Use products correctly
Behave ethically
Responsibilities of
Consumers In Marketplace

Important for consumers to be active and
assertive when purchasing goods & services


Essential to protect yourself against dishonest
retailers & faulty goods
Caveat empter

Buyer’s risk
Contracts




Breaking product
Injuring self, others
Death
Loss of warranty
Not Reading Instructions
Problems Created:

Set of principles


Knowing right and wrong
No knowing

Ethics
Loss of finance and warranty
Government
• Office of fair trading
• Consumer, trader &
Tenancy Tribunal
(CTTT)
• Australian
competition &
consumer commission
• Ombudsman
Independent
• Australian consumer
association
• Kidsafe
• Community
organisations
• Media
Organisations Providing
Assistance
Orientation to
Investing
{
Unit 2

Spread risk




Not all eggs in 1 basket
Across variety of stocks, industries
Loss in 1 stock = small loss to portfolio
Less than 4% per stock recommended

Expensive for small investors
Importance of Balanced
Portfolio

Portfolio


Stock


Investment in business
Bonds



Collection of investments by same
person/organisation
Investment in debt
Designed to earn interest
Mutual funds

Pools of money from many investors invested by
professionals/according to indices
Sharemarket Definitions

Diversification




Portfolio strategy designed to reduce risk by
combining a variety of investments (stocks,
bonds and real estate) which are unlikely to all
move in the same direction
Volatility limited by fact that not all asset
classes/industries/individual companies move up
and down at same rate
Reduces both upside and downside potential
Allows for consistent performance under range
of economic conditions
Sharemarket Definitions
Personal Finance
{
Unit 3

Wage



Per hour
Penalty rate
Salary

Per year
Types of Income

Overtime


Penalty rates


Addition to income because of extra hours
Extra income because must work outside of
normal times
Flexitime


Ability to change working hours
In some occupations (on salary)
Spending and Saving

Commission



Payed per sale
Bonus/entire wage
Importance


No decent income without commission
Profit

Difference between income and costs associated
with business
Spending and Saving

Social security = income



Interest


Allows us to survive
Comes into household’s money
Return on debt
Dividends

Return on equity
Spending & Saving

Royalty



Income paid for use of intellectual property
Artists, inventors, authors, songwriters
Prize money



Income based on good result in competition
Professional gamblers
Professional Sports people = high income

Not going to flourish entire life (must survive)
Types of Income

Wage



Salary



Income earned per hour
Tradesman, retail
Income received per year, usually irrespective of
hours worked
CEO, teacher
Fee


Income from providing a professional service
Layer, public speaker
Types of Income (detailed)

Commission



Income from acting as an agent/go-between
between buyers and sellers
Real-estate agent, car salesman
Profit


Income from selling goods or services, less the
cost of selling them
Own business
Types of Income (detailed)

Social security



Interest



Payments made by government to ensure all
Australians have a liveable income
Unemployed, low-income earners
Interest received from loan investments
Bank, bank account owner
Dividends


Interest received from equity investments
Shareholder
Types of Income (detailed)

Rent



Royalties



Income received from use of property
Landlord
Income from sale of intellectual property
Artist, inventor
Prize money


Income received from winning competitions
CONSISTANTLY
Professional gambler, professional sportsman
Types of Income (detailed)

Relationship changes as we age

Presence of costs (children, hospital fees – fixed
expenditure) increases, yet our income doesn’t so
our variable expenditure will have to shrink
Fixed & Variable
Expenditure


Put money aside to spend at later date
Reasons




Saving
Let money grow
Deposit on a long-term loan
Save for retirement
Save for rainy day

Definition


Why



Put money away in the aim of earning money
Increase wealth
Means of income
Higher risk = higher return
Investing
Financial
institution
•Investment accounts
•Term deposits
•Cash management
accounts
•Key card accounts
•Passbook/savings
accounts
Sharemarket
Government
bonds & securities
Property/real
estate
Managed funds
Superannuation
funds
Investing Options

Why


Need/want something now which they cannot
afford
Costs



Principle (how much being borrowed)
Interest
Fees attached (bank, government etc.)
Borrowing

Types of loans



Mortgage
Personal
Credit card
Borrowing
Banks, building
societies & credit
unions
Merchant banks
Finance companies
Insurance
companies
•Mortgage loans
•Personal loans
•Small business loans
•Overdraft facilities
•Credit card facilities
•Leasing finance for business
•Business loans
•Other credit facilities for large business
•Business loans – business development
•Personal loans for purchase of cars and the like
•Property loans for large business
•Housing loans to policy holders
Loan Options
Understand you will be in debt
1.

2.
3.
4.
(You will need to pay it back)
Find out how much the loan is in total
Work out your repayment options
What will the consequences be if you don’t
make the repayments
Steps To Consider Before
Borrowing


Check of credit history
Examine if eligible for a credit card


Or other type of loan
Required to provide documentation



Bank statements
Pay slips
Check whether reasonable client
Credit Check







Stable job
Employment history
Address history
Income details
Previous credit history
Listing of assets
Listing of liabilities
Factors affecting ability to get
a loan







Choose card with longest interest free period
Choose ‘no-frills’ card with lowest interest rate
Beware of honey moon rates
Interest will be charged on every purchase
Find out if there is an annual fee
Find out how many points you earn per $
Life span of rewards
Golden Rules of
Borrowing

Get rewarded from buying from specific store
Loyalty Scheme
Being an
Entrepreneur
{
Unit 3

Person who is engaged in business activities


Specifically those involved in risk
In order to make a profit
Entrepreneur
{
Advantages
More money
 Own boss
 Own hours

{
Disadvantages
Financial risk
 Loss of funds
 Long hours
 Deal with demands
of customers,
suppliers, regulators
and financiers

Being Self Employed










Adventurous
Determined
Energetic
Competitive
Confident
Ambitious
Optimistic
Innovative
Resourceful
Skills in industry
Skills of Entrepreneurs

Finding out about various aspects of the business





Location
Competition
Demographics
Etc.
Ways


Talking with, surveying potential customers
Contacting trade of professional organisations


Advice about business and locations being considered
Obtaining data from the Australian Bureau of
Statistics
Market Research








Customer’s location
Length of travel
If the business needs to be in a retail area
Noticeability
Supplier’s location
Can it be out of a home?
Internet-based
Location costs
Location Considerations

Importance

If market is correct for business venture
Demographic Profile






Strengths
Weaknesses
Opportunities
Threats
Used with both competition and potential
business
Find factor/s that will make new product sell
more than the competitor's
SWOT Analysis

The demographic which the entrepreneur
wishes to appeal to
Target Market

Sole Trader (1)





Operate business
Manage business
Treat business as own
Unlimited liability
Partnership (2-20)
Business Structures
{
Private Company
Limited to 50
shareholders
 Pty Ltd
 Not sold to public
 Know people
 Limited capital

{
Public Company
No limit to people
 Listed on ASX
 Ltd
 Don’t know who
people are
 Unlimited capital

Company Structures
{
Advantages
Relatively easy to
establish
 Are own boss
 Personal satisfaction
 Own hours

Sole Trader
{
Disadvantages
Unlimited liability
 Limited access to
finances
 Income tax, no
company tax
 Difficult to take time
off

{
Advantages




Partners keep all profit
Share all losses
More capital
Work is shared



{
Disadvantages




Specialisation
More people to make
decisions
Easier to borrow money
Partnership

Unlimited liability
Share the profit
Disagreements among
partners
Responsibility for actions
of another partner
Partner leaves business

Partnership agreement
must be renegotiated

More capital




Borrowing money is easier
Legal entity
Specialisation


Supplied by shareholder
Employed to run different elements of business
Ownership can change many times


No new agreement
Perpetual succession
Company Advantages




Many government regulations
Limits placed on board of directors
Shareholders don’t always have control in
decisions
Expensive




Setup
Maintain
Organise
May be too large an inefficient
Company Disadvantages




Private sources
Bank/finance company
Sale of shares
Suppliers willing not to be paid until goods are
delivered
Sources of Finance


Leasing equipment
Buying through a hire purchase agreement
Ways to Avoid Huge
Upfront Costs

Paid for reputation of existing business
Goodwill
{
Advantages
Own range of
products
 No fees paid to
franchise
 Complete say
 Easy to expand
 Any suppliers

{
Disadvantages
Large start-up
capital
 No training
 Advertising costs
 Not possible to bulk
buy
 No goodwill

Establishing a New
Business

Location





Proximity to
customers
Proximity to suppliers
Rent costs
Size of property
Equipment


Staffing




Job descriptions
Recruitment
Interviewing
Hiring
Equipment to be
bought
Starting a Business Factors
Clothing
Personal Services
Business Services
JJs
McDonalds
TNT
Best & Less
KFC
FedEx
Payless Shoes
Red Rooster
Office works
Mathers
Subway
Expressway Spares
Crossroads
Donut King
Billabong
British Lolly Shop
Puma
Dymocks
Nike
Good guys
Wendy’s
Familiar Franchises
Selling and
Promoting
{
Unit 4

Promotion of good/service + sale of product
Selling Process

Value for money


Convenience


Service provided by retailer
Social and ethical


If the product is readily available
Service


Saving money is important
Brand conscious, fashion, if companies do animal
testing
Environmental

If product is bad for environment
Factors That Influence
Consumers





Introduce new products
Sell more existing products
Attract new customers
Demonstrate the advantage over alternatives
Improve company’s image
Reasons to Promote

Advertising



All around us
Boost both sales and profit
Product endorsements and sponsorships
 Well known personalities paid to endorse

Or may be supported by company financially


In return for promoting product
Event sponsorship and Venue Naming Rights



Increase public recognition
Buy naming rights for major sporting and cultural
events
NRL = Telstra Premiership
Promotion Strategies

Product Placement



Guerrilla Marketing



Products display predominantly in movies/TV programs
Companies usually pay for such placements
Unconventional and flexible way to promote a brand
name
Competing companies advertise at other companies
events by unconventional means
Direct Marketing



Telemarketing, mail and email
Contacting households personally
Business like phone calls, letters that market product
Promotion Strategies

Junk Mail

Use of advertising flyers (junk mail)



Delivered via letterbox
Popular with:




Increased over last decade
Supermarket chains
Hardware stores
Real estate agents
Special Promotions




Boost normal sales
Often limited to selected items
Sometimes used to increase traffic to store
Specials
Promotion Strategies

Personal Selling



Form of direct selling
Door-to-door/Instore promotion of a particular
product
Publicity

Free media coverage given to company by media
outlets


E.g. newspapers and radio stations)
Especially when company releases a new
product/buys blocks of advertising space/time
with the media outlet
Promotion Strategies

Advertising often involves stereotypes


Exaggerated pictures/images of particular
groups
Often applied to genders


All girls love dolls
All boys want toy guns
The Role of Gender in
Product Promotion
Government In
Australia
{
Unit 5
[Insert Diagram of House
of Reps here]
[Insert diagram of senate
here]
The Global
Consumer
{
Unit 6


Buying and selling of goods & services on an
international scale
Factors promoting growth of global market




Developments in transport + communications
Changes in government policy
Changes in consumers’ tastes and preferences
Growth of transnational corporations
Global Market

International Trade



Domestic trade


Trade within a country
Why countries trade


Trade
Trade between countries
Relies on domestic trade links within a country
Earn an income
Get things not made in the country
Major
exports
Coal
Crude petroleum
Iron ore
Non-monetary gold
Aluminium
Major
Imports
Motor vehicles
Crude petroleum
Telecommunications equipment
Computers
Medical supplies
Australia’s Trade


Services now becoming increasing in trade
Previously mainly traded with Europe

Changed to Asia
Australia’s Trade
China,
6.2%
New
Zealand,
5.9%
Japan,
19.4%
Korea,
7.8%
USA, 9.7%
Australia’s Trade - Exports
Germany,
5.7%
UK, 5.3%
USA,
18.2%
China,
8.8%
Japan,
13.0%
Australia’s Trade - Imports

Developments in transport and
communications technology


Slashed cost & time taken to move goods, capital
Introduction of specialised ships




Reduction in cost of transport
Easy and quick transport
Promoted global market
Satellite and internet technology

Lower international communications

Cheaper phones
Growth of Global Market

Changes in government policy

Removal of trade barriers


Change in consumer’s tastes and preferences


Quotas, tariffs
Desire of communities to gain overseas products
and services
Growth of TNCs


Helped speed up globalisation
Expansion of global market (helped)
Growth of Global Market
Manufacturer
Wholesaler
Exports
Imports
Retailer
Customer
Overseas
Markets
Overseas and Domestic Links
50.0%
40.0%
Rural
30.0%
20.0%
10.0%
0.0%
Australia’s Exports
Resources/Mining
Manufacturing
Services


Operates 24hrs per day
Through individual markets


Traders can transfer large sums around the
world in seconds




Linked
Higher interest rates
Make money from trading currencies
In 2001, US$580 trillion was exchanged on the
global market
70x the value of global trade in goods and
services
The Global Finance Market


Shares on stock exchanges outside Australia
E.g. General Electric, Exxon Mobil, Microsoft
International Shares
{
Advantages

Spread risk



Disadvantages


Few listed on ASX
Changes in exchange
rates

Larger gains

Many stock exchanges
don’t trade in small
volumes
Higher volatility

Higher average return

Difficult to sell shares

Even out gains and losses
Wider range of
industries

{
Prices rise and fall
suddenly
Higher losses

Changes in exchange
rates
International Shares
Term deposits
• Must invest for certain
period of time
• Can withdraw within
time
• Lower interest rate
• Higher interest rate
(higher than savings)
Bank Deposits
Cash management
accounts
• Immediate access to
funds

Long term debt securities

Debentures

Pay set amount of interest



Maturity date


Coupon amount
Regular
Paid initial amount + interest
Can be traded before maturity

International bond market
Debt Securities

Long term debt securities

Unsecured notes

Same as debentures

Higher coupon rate


No security offered
Commonwealth Government Bonds



Up to 10 years
Provide for funding
Risk free

Lower rate of return
Debt Securities

Long term debt securities
 Semi-Government bonds

Issued by state governments and statutory authorities



E.g. Telstra
Guaranteed by Act of Parliament that established
authority
Short-term (money market) debt securities (bank
bills)


Bank bills = up to 180 days
Investor buys bills at discount rate

Will receive face value of bill on maturity

More than initially paid for
Debt Securities

Advantages over international shares and managed
funds





Regular predicable income
Greater security than international funds
Own choice of funds
Receive interest (not dividend)
E.g.





Bank deposits
Bonds
Debentures
Bank bills
Regular, predictable income
Interest Earning Investments
{
Advantages
Regular, predictable
income
 Choose amount of
risk


{
Disadvantages

Less risk
= lower returns
Higher risk
= higher return
Interest Earning Investments



Your money + other’s money = 1 fund
Managed by fund manager
Variety of investments

Australia + international markets
Managed Fund
{
Advantages
Variety of assets
 Professionally
managed money

{
Disadvantages

Managed Funds
Not as interesting

Not chosen for
yourself
{
Advantages
Can trade in small
volumes
 Less volatile when
compared to
international shares
 Losses = smaller

{
Disadvantages
Can’t spread much
risk
 Fewer range of
stocks
 Lower average
returns over time
period

Domestic Share


Companies which operate in many countries
Recent years

Expanded
Transnational Corporation

1967


Km’s from Bells beach
Brian Singer and Dong Warbrick


Created business to surf as much as possible
Diversified



Was surfboards
Now: surfboards, surf clothing, watches, shoes,
sunglasses, travel bags & backpacks, wallets and
mountain wear
Expand onto additional markets
Case Study: Rip Curl

Growth


International expansion


37% growth per year (average)
More money, be competitive
Lifestyle product


Items that you wear
Rip Curl went into this market

Sell to non-surf markets
Case Study: Rip Curl

Manufacturing



In Asia
Keep prices down
Licences manufacturing of products


Manager of brands
Not producer
Case Study: Rip Curl

Location of manufacturing


Developing nations
Sweatshops



Location of managerial staff


Developed nations
Workforce located globally

TNCs
Conditions undesirable
Wage = not able to meet basic needs of family
Take advantage of government incentives

Improve working conditions


Those in textiles, clothing & footwear industries
Involved in education campaigns

Draw attention to labour rights issues in garment
industry
Clean Clothes Campaign
(CCC)

Required to have face-to-face meetings
worldwide
Mobile Managerial Staff

Purchasing


Encourages to continue sweatshop labours
Why use?


Keep prices cheap
Increase profit
Sweatshop Labour
= Unethical to Purchase

Only area governments can legislate


Capitalist society
Show companies that sweatshop labour

Unacceptable
Trade Boundaries


Better meet local needs
E.g. McDonalds




Israel
Italy
Japan
Korea

Pork patty w/ lettuce & bulgogi sauce




Mixture of soy sauce and sesame oil
Malaysia – Careful inspection by Muslim clerics
NZ – Kiwi Burger


– No cheese on Big Mac
– Espresso and cold pasta
– Teriyaki Burger
– Bulgogi Burger
Quarter pounder w/ beetroot and fried egg
Norway
Uruguay
– McLaks (grilled salmon sandwich)
– McHuevo (poached egg hamburger)
Market Specific Products

Global business cycle

Good times


Recessions



More money lost
Higher volatility
Raising funds



TNCs
More money - tax havens
Borrow funds in domestic, overseas market
Sell equity in the form of shares
Use savings

Complex legal issues
 No global laws


Ethics


75% of company value comes from ethics of a
company
Tax minimisation

Transfer pricing


Payments made by one part of global business for
services provided by another part
Tax havens

TNCs
E.g. different wage levels
Places with low corporate tax rates


Meeting needs of present population without
affecting the ability of future generations to
meet their needs
How to be

Use more renewable resources
Ecological Sustainability

Impacts on ecological sustainability

Accessing raw materials


The production process


Waste products
Distribution


No more non-renewable resources
CO2 emissions
Methods of waste disposal

Destroyed ecosystems
Ecological Sustainability

Exchange rate fluctuations
1.
2.
Importer orders products (high AU$)
Importer pays for products (lower AU$)


Higher amount payed
Currency hedging


Protect against exchange rate fluctuations
Lock in exchange rate before payment
Risks in the Global Market

Political risks

Foreign government decisions & revolutions



E.g. Zimbabwean Government removing Western
influences
Civil unrest
Tariffs and Quotas on imported goods
Risks in the Global Market

Bilateral aid


Provided by donor country to another country
Multilateral aid

Provided by donor country through an
international agency


E.g. World Bank, International Monetary Fund
Non-government aid

Raised by public through NGOs
International Aid Programs
{
For




Eliminating diseases
Providing public
goods
Helping poor
countries become
more self-sufficient
Reducing risk of civil
war
{
Against




Not addressing
underlying causes of
poverty
Not reaching those
requiring it the most
Financing nonessential projects
Dependence
relationships
International Aid Programs

Effective aid programs



Support for community based development
activities
Long-term partnerships
Aid is used to benefit poorest and most
marginalised of a particular community
International Aid Programs


Dropped over time
Goes to:






Multilaterals and
other (33%)
East Asia (26%),
Papua New Guinea
(19%),
Pacific (9%),
Africa and other (7%)
South Asia (6%)
Australia’s Aid

Used for






Governance
Education
Rural development
Health
Infrastructure
Other

Denmark

Largest aid donor based on GNP (1%)


USA

Largest aid donor based on amount


GNP = Gross national product
21.1 billion US$
Australia

Contribution low based on other countries

Both in % of GNP and amount
International Aid Stats
{
For








Developed nations
supporting developing
nations
Faster growth
Quicker access to new
technology
Cheaper imports
Greater competition
More efficient economy
More jobs in developing
nations
Upward spiral of
employment and wealth
{
Against





Developed nations
bullying developing
nations
Greater difference in
wealth
Sweatshop labour
Damaging the
environment
Reducing the power of
governments to control
economic activity
Evaluating Globalisation
Towards
Independence
{
Unit 7







Need for independence
Opportunity for study
Opportunity for employment
Financial pressure
Domestic violence
Desire to live in a relationship
Family breakdown
Reasons for Leaving Home







Am I mature enough to leave home?
Can I afford to leave home?
Where am I going to live?
Will I share with anyone?
How will I look after myself?
Will I be able to cope on my own?
Who can I turn to for help if I need it?
Issues Involved With
Independent Living



Government organisations
Religious organisations
Community based organisations
Support Organisations

Community based organisations





Raise awareness of life changes
Tips about living away from home
Money issues info
Work info
Centrelink



Rent assistance
Centrelink Community engagement officers
Crisis payment
Support Organisations



Sexual harassment
Illness
Abuse
Homeless Dangers

No age
Legal Leaving Home Age



Financial
Emotional
Mental
Types of Support Young
People Require


How much you can afford to spend
Location


Where you are working/studying
Value for money
Accommodation Factors




Rented houses/apartments
Shared house/apartment
Private board
Emergency accommodation
Accommodation Options

Most expensive option

Number of payments

Bond




Advance rent


Rent 2 weeks in advance
Deposits and connection fees


Payment for damages
Returned if no damages
Equivalent to 4 weeks pay
Cost for utilities to be connected
Furniture & appliances

Most apartments are unfurnished
Renting a House/Apartment

Cheaper

Costs are shared
Shared Housing

Provide accommodation on short notice
Emergency Shelters



Pets
Social lifestyle
Stereotypes
Factors Affecting Choice of
Accommodation
{
Advantages
Less stereotypes
 Less mess
 More space
 Less to care for
 No arguments

{
Disadvantages
Higher costs
 Less security
 Lonelyness

Living on Your Own
{
Advantages
Lower costs
 More security
 Loneliness

{
Disadvantages
More stereotypes
 More mess
 More space
 More to care for
 More arguments

Living With Others


Live by yourself
Advertise
Don’t Know Anyone to Live
With





Personal finances
Sharing a home
Insurance
Finding accommodation
Arranging a lease
Living Independently
Considerations

Legal responsibility for child under 16
Guardianship

Circumstances


Safe place to go
Support yourself financially
Leaving Home Under 16




Classifieds
University noticeboards
Real estate agents
Word of mouth
Finding Accommodation

Tennant


Landlord


Person who rents
Person who owns the property
Blacklist

Database of bad tenants
Glossary


Lease agreement signed by tenants & landlord
You agree to



Look after property
Pay a certain amount of rent
Landlord agrees to


Not raise rent
Not force you to leave
Rental Tenancy Agreement

Loss of all/part of bond



Bond
Fail to pay rent
Leave before lease has finished
Don’t give notice before you leave


Household responsibilities are shared
Less responsibilities for 1 person
Task Sharing

Insurance


Economise


Contract which ensures payment in event of
some problem happening to you or your
property
Cut back to save money
Budget

Detailed plan of finances designed to ensure you
don’t spend more than you earn
Glossary

Lifestyle plan


Variable expenses


Plan of commitments to help you manage your
time without stress
Expenses that vary
Fixed expenses

Expenses, such as rent, that can’t vary
Glossary

Establishment costs


Only have to pay once
Ongoing expenses


Continue to have to pay
E.g. rent, food, electricity
Types of Expenses

Allowance





From parents/other family members
Proceeds of investments
Employment
Government
Scholarship/bursary



University
Government agency
Large company
Sources of Income

Length of budget



Time between income payment
Fixed expenses
Variable expenses
Household Budget Factors


Turn lights off
Limit showers
Ways to Limit Variable
Expenses

Why?




No insurance


Thievery occurs
Something happens to it
Damage occurs
Going to lose items if something occurs
Car insurance

Comprehensive is better than Third-Party
Property
Insurance








Refrigerator
Washing machine
Television
Wardrobe
Video recorder (or DVD player)
Bed
Table
Chairs
Items essential for living
away from home


Moving out
Depreciation value
Joint Ownership Problems



Joint ownership
Personal ownership
New item




Credit card
Hire purchase agreements
Lay-by
2nd hand
Major Household Item
Buying Options



Compare
Sales
Buy 2nd hand
Value for Money
{
Advantages
Convenient
 Don’t pay
immediately
 No interest if paid
quickly

Credit
{
Disadvantages
Interest charged
 Possibility to
become a bad credit
risk
 Possible to get into
lots of debt

{
Advantages

{
Interest lower than
credit card
Disadvantages

If don’t pay

Higher interest

Hire-Purchase
Pay more than
purchase value
{
Advantages
Cheaper
 Bargains available
 If from store


Delivery available
2nd Hand
{
Disadvantages
No warranties
 If from public


No delivery

Items can break/malfunction

Don’t have to pay extra to be repaired/replaced
Warranty Importance





Cost
Quality of product
Age of product
Features of product
Requirements of yourself
Purchasing Factors





Religious organisations
Other charities
Service clubs
Youth clubs
Government departments
Organisations for Help


Self satisfaction
Opportunity to meet new people

Make friends with similar interests
Volunteer Benefits

Essential for young people

Many things to do can lead to


Stress
Overwhelmed by responsibilities
Time Management
{
Short Term
{
Weekly timetable
 Avoid stress

Lifestyle Plans
Long Term
Ensures decisions
you make now lead
to goals in future
 Future goals


Bond


Budget



Money you pay up front when you move into a
rented property
Detailed plan of you finances
All income and expenditure
Classifieds


Advertisements in the newspapers
Arranged in columns under headings
Glossary

Fixed expenses


Landlord


Person who offers his/her property for rent
Lease


Expenses you cannot change
The document that outlines terms under which
you rent a property
Hire purchase

Pay for large items over a long period of time
Glossary

Shelters


Tenant


Person who rents property
Variable expenses


Emergency accommodation run by
community/church organisations
Expenses you can change
Warranty

Guarantee to repair/replace a faulty item after
purchase for a set period of time
Glossary

Rent
The amount charged for accommodation in a
house/appartment