VCE Busman Unit 1 AOS3

The Macro-environment

Factors outside of the business which it has no control over, and which have an indirect impact or influence on decision-making, performance, and success of all businesses.

Macro-environment factors:

• Social

• Economic

• Technological

• Legal/political

• Environmental

• International

Legal and Government Regulations

• Business Name: Must register with ASIC unless using your own name; an ABN is required.

• Partnerships/Companies: Need a TFN. Companies must register with ASIC for an ACN and Certificate of Registration.

2. Location Laws:

• Must comply with:

  • Zoning and building regulations

  • Signage placement and size rules

  • Fire and parking regulations

3. Health Regulations (Food Businesses):

• Require a license and must follow rules on:

  • Food storage temperature

  • Kitchen design

  • Employee hygiene

  • Food handling practices

• Regular inspections by health authorities.

4. Employment Regulations:

• Anti-discrimination laws, Work health and safety standards

5. Taxation Laws:

• Businesses must:

  • Submit a Business Activity Statement regularly

  • Collect and pay GST

  • Withhold tax from employee wages

  • Possibly pay payroll and income tax

6. Trade Practices and Consumer Protection:

• Products/services must be of good quality and suitable for use.

• Follow Competition and Consumer Act 2010 for:

• Fair trading, Accurate advertising, Safety, labelling, and pricing

7. Environmental Protection Laws:

• Must prevent: Pollution, Noise emissions, Environmental damage

Economic Conditions

• Interest Rates: Cost of borrowing money; lower rates encourage spending and investment.

• Wages: Affect consumer purchasing power and business labor costs.

• Unemployment: High unemployment reduces consumer spending; low unemployment may increase wages.

• Exchange Rates: Impact the cost of imports/exports and competitiveness in global markets.

• Inflation: Affects purchasing power and business costs.

Impacts on Business Activity:

• Interest Rates: Influence borrowing, investment, and consumer spending.

• Tax Rates: Affect business costs and profitability. Government may offer tax incentives (e.g., for R&D) to influence business behavior.

• Business and Consumer Confidence: High confidence encourages:

  • Consumer spending

  • Business expansion

  • Hiring

  • Willingness to take financial risks

Technological Issues

Technology refers to new applications of scientific knowledge which aims to optimise the operations of a business. It can add competitiveness and improve quality, safety, productivity and accuracy. Technological issues relate to businesses' growing use of tools, techniques or systems to solve problems or serve purpose in operations.

Technological Issue Developments:

• Medical tech (MRI, X-rays)

• Automation tech (Robotics and machines)

• Barcode tech (Barcode scanners)

• Communication tech (Emails, text messages)

• Cloud tech (Icloud and Onedrive)

• Robotic tech 

A business must ensure they are aware of all technological developments and learn how to adapt to stay in business.

New technology may impact the planning of the layout of a business, the number of staff they have, the level of customer interaction, and service efficiency.

Societal Attitudes

Values and Beliefs: The shared principles and morals of a group of people or society. They are learnt through life and help people determine good and bad. They determine what you do, wear, live, eat, and how you live.

Common Societal Attitudes

• Corporate social responsibility

• Respect

• Protection of the natural environment

• Products and services that are fit for the purpose and of good quality

Trends: A general direction in which people’s attitudes or behaviour in society are developing or changing. E.g. Working from home has been an increasing trend.

Global Issues

Globalisation allows businesses to buy/sell goods and services internationally but can present challenges and opportunities.

When planning a business, business owners need to consider the following global issues:

• Overseas Competitors and Markets

• Offshoring Labour

• Exchange Rates

• Protection of Intellectual Property at a Global Level

• Online Sales

Overseas Competitors

Businesses located in other countries that operate and offer goods and services in the same capacity. Due to globalisation and the increase in competitors, Australian businesses need to differentiate their business and that of their overseas counterparts.

Overseas Markets

Business owners who plan to launch their business into both local and overseas markets can create a more diverse range of customers and are not solely reliant on the local market.

Offshoring Labour

Offshoring of labour involves a business moving its services or processes to another country. Offshoring of labour allows a business to take advantage of lower labour costs, as hiring workers in overseas countries can be cheaper than employing local employees.

Exchange Rates

An exchange rate is the relative price at which a country’s currency can be exchanged for the currency of another. One of the biggest challenges of conducting business outside of Australia is the impact of exchange rate fluctuations.

Online Sales

Online sales, or e-commerce, involve buying and selling goods or services online. This allows businesses to reach local and global markets, operate 24/7, and potentially increase sales. By going online, businesses may also lower costs by avoiding expenses linked to physical stores, like rent and utilities.

The Operating Environment

Factors outside the business it has some control over, and which directly influence the business’  decision-making, performance, and success.

Operating environment factors:

• Customers

• Competitors

• Creditors

• Interest groups

• Suppliers

Customers

The people who purchase goods and services from a business, expecting high quality at competitive prices. If a business owner wants to be successful, they need to understand that customers are a powerful stakeholder.  

Customers expect businesses to be ethical and sustainable. 

For example:

• Utilising packaging that can be recycled 

• Environmentally friendly packaging

• Reduced Packaging

• Lower Factory Emissions

• Safe working conditions 

• Fair pay 

There are consumer groups who are prepared to mount publicity campaigns aimed at embarrassing those businesses who do not act ethically or responsibly. In recent years, consumers have become health conscious.

If consumers were to visit a local supermarket or café, they will expect a variety of products to be:

• Low in salt, fat or sugar

• Free of gluten, eggs, nuts, dairy and other allergies

• GMO (Genetically modified organism) free

• No artificial colours or flavouring

• Organic

• Fresh

• Vegetarian or Vegan

Special Interest Groups

Groups of people who attempt to convince a business to change or adopt particular policies or procedures.

Specific Issue Groups:

Groups that focus on a specific area, such as youth unemployment, anti-globalisation, and environmental protection.

Environmental Lobby Groups:

Organisations that advocate for the protection of the environment and promote environmental issues to businesses, the government, and the public.

Business Associations:
Organisations that support businesses through the provision of training and education programs, advice, and promotion of business interests to the public and government. They can also provide support services like seminars, conferences and training programs. The Small Business Association of Australia (SBAA) is an active organisation that specialises in supporting and advocating for the SME (Small and Medium Enterprises) sector.

Unions:

Organisations composed of individuals who represent and speak on behalf of employees in a particular industry to improve wages and working conditions. When planning a business, it is important to find out whether or not a union exists for employees in the industry. The purpose of a union is to promote fair treatment for employees in a particular industry.

Consumer Groups:

These groups monitor a business’s performance in terms of product, packaging, pricing, and advertising. Australia’s leading consumer advocacy group is Choice. Choice will determine the eBay product for consumers by testing products and comparing prices.