Chapter 2

Internal Environment

Factors within a business that a business has full control over

External Environment

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

Operating factors

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

Macro factors

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

Sole trader

A business structure that is owned and operated by one individual

Partnership

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

Incorporation

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

Private limited company

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

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)

Australian Securities Exchange (ASX)

Electronic market where Australian public company shares are bought and sold

Social enterprise

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

Government business enterprise (GBE)

A business that is owned and operated by the government

Business model

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

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

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

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

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

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

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

Internal environment

• Resources

• Locations

• Finance Source

• Purchase/Establishing Business

• Types of Businesses/Models

• CSR

• Support services

• SWOT Analysis

Operational environment

• Customer needs/Expectations

• Special interest groups

• Competitors behaviours

• Suppliers/Supply chain

Macro environment

• CSR considerations

• Legal /Government regulations

• Global considerations

• Societal attitudes/Behaviours

• Technological considerations

• Economic conditions

Natural resources

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

Labour resources

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

Capital resources

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

Resources

Items required by a business to produce its goods and services

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