Chapter 2

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Internal Environment

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Factors within a business that a business has full control over

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External Environment

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Factors that can impact a business, which it has minimal/no control over

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27 Terms

1

Internal Environment

Factors within a business that a business has full control over

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2

External Environment

Factors that can impact a business, which it has minimal/no control over

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3

Operating factors

Primary external factors impacting a business that it has some control over

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4

Macro factors

Social, legal, technological, global, and economic conditions that a business operates in and has no control over

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5

Sole trader

A business structure that is owned and operated by one individual

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6

Partnership

A business structure that is owned by 2-20 owners.

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7

Incorporation

Process where business become a separate legal entitled to it’s owner

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8

Private limited company

An incorporated business structure that has at least 1 director and a maximum of 50 shareholders

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9

Public listed company

An incorporated business that has an unlimited number of shareholders and lists and sells its shares on the Australian Securities Exchange (ASX)

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10

Australian Securities Exchange (ASX)

Electronic market where Australian public company shares are bought and sold

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11

Social enterprise

A business that aims to fulfil community or environmental through selling goods or services

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12

Government business enterprise (GBE)

A business that is owned and operated by the government

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13

Business model

A plan that identifies how the business will operate to make a profit

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14

Online business

A business model where goods and services are traded via the internet

Pros:

  • Customers can order 24/7

  • Wider customers

  • Web quick to set up

  • Avoid rent

Cons:

  • Customers can’t see products

  • Strong customer relationships are hard

  • Online security issues

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15

Direct-to-consumer business

A business model where the business’s products are sold directly to consumers with no intermediaries involved.

Pros:

  • Direct control over brand presence and advertising

  • More reliable sales data and customer information

  • Saves time

  • Higher profit

Cons:

  • Difficult to grow business

  • Not reach as many customers

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16

Bricks-and-mortar business

A business model that has a physical store presence

Pros:

  • Customers can see products in person

  • Products can be promoted in stores

  • Stronger customer relationships

  • Brand recognition through logos

  • Increases employment opportunities

Cons:

  • Customers need to be physically present

  • Potentially crowded stores

  • Times and money establishing physical locations

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17

Franchise

A business model that grants another person the right to operate under its name, use its business systems, and sell its goods and services

Pros:

  • Support and advice provided

  • Business starts with a good reputation

  • Operation system and reputation established

  • Sales likely to be higher

Cons:

  • Limited decision-making power

  • Reputation can be negatively impacted by other stores

  • Percentage of profit goes to the company

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18

Importer

Purchases goods and services from overseas and sells them in its home country

Pros:

  • Provide access to goods/services that the home country doesn’t have

  • Potential cheaper prices

Cons:

  • Different systems and regulations affect deals

  • Increase delivering cost

  • Reduce local employment opportunities

  • Unreliable supply chain

  • Potentially long wait times

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19

Exporter

Produces goods and services in its home country and sells them to overseas buyers

Pros:

  • Increase skills

  • Overseas customers may be willing to pay for more

Cons:

  • Accommodate different laws

  • Higher team costs

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20

Internal environment

  • Resources

  • Locations

  • Finance Source

  • Purchase/Establishing Business

  • Types of Businesses/Models

  • CSR

  • Support services

  • SWOT Analysis

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21

Operational environment

  • Customer needs/Expectations

  • Special interest groups

  • Competitors behaviours

  • Suppliers/Supply chain

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22

Macro environment

  • CSR considerations

  • Legal /Government regulations

  • Global considerations

  • Societal attitudes/Behaviours

  • Technological considerations

  • Economic conditions

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23

Natural resources

Raw materials from the environment that are used in the production of goods and services

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24

Labour resources

The people who provide the business with their skills and qualifications to conduct business activities

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25

Capital resources

Man-made goods used in the production of goods and services

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26

Resources

Items required by a business to produce its goods and services

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27

Corporate social responsibility (CSR)

The ethical conduct of a business beyond legal obligations, and the consideration of social, economic, and environmental impacts when making decisions

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