Business Studies – Environmental and Internal Influences on Business

What do economic cycles (business cycles) measure?

Fluctuations in the general level of economic activity, usually % change in GDP.

Name the four phases typically shown on an economic cycle diagram.

Peaks, troughs, contractions, and expansions.

List two characteristics of an economic expansion for consumers.

Growing consumer confidence and increased consumer spending.

During an economic contraction, what usually happens to employment levels?

Employment levels fall.

How might a business respond during an economic expansion?

Increase production capacity, raise prices, and hire more employees.

Define an interest rate in the context of business finance.

The cost of borrowing funds or the return on invested funds.

Why are low interest rates generally good for business expansion?

Lower the cost of borrowing, encouraging investment.

What is a key risk when borrowing heavily at low interest rates?

Future rate rises increase debt-servicing costs.

Define an exchange rate.

The value of one currency expressed in terms of another currency.

If the Australian dollar appreciates, what happens to the cost of imports for Australian businesses?

Imports become cheaper.

When the AUD depreciates, how are Australian exports affected overseas?

Exports become cheaper for overseas buyers, boosting demand.

Give one way climate variations affect businesses.

They influence revenue for food, recreation, and clothing industries due to demand changes.

Name two benefits globalization offers to Australian businesses.

Access to cheaper inputs/labour and the ability to sell products globally.

State one risk of outsourcing production to low-cost countries.

Potential damage to brand reputation if labour conditions are poor.

What does CSR stand for?

Corporate Social Responsibility.

Why is workplace diversity considered a social influence on business?

A diverse workforce = perspectives, skills, and cultural insights, decision-making and brand image. ↑

Give two examples of flexible working arrangements now expected by employees.

Working from home and access to childcare/family-friendly hours.

Define technological influence in a business context.

The design or application of innovative devices and systems to improve operations or products.

What is a key danger of slow technology adoption?

Competitors gain market share, potentially leading to business failure.

Define a market in economic terms.

Any medium that allows parties to interact to facilitate exchange of goods, services or resources.

What was one effect of deregulating the Australian financial services industry?

Businesses gained increased access to funding at lower prices.

What are the three product-related influences on operations?

Whether the offering is a good or a service, and the 4Vs (volume, variety, variation, visibility).

Why is proximity to suppliers important for a manufacturing plant?

It reduces transportation costs and allows quick response to demand surges.

State two key location considerations for a retail outlet.

Visibility/exposure and customer convenience.

List the six classic management functions.

Planning, organizing, staffing, leading, directing, controlling.

Give three attributes of an effective manager.

Strong communication skills, strategic thinking, and ethical standards.

How does a flatter organisational structure benefit decision-making?

It reduces layers, leading to faster decisions and greater employee empowerment.

Describe a holacratic structure.

Organisation of multiple overlapping, self-managed, cross-functional teams.

Give two examples of physical resources.

Machinery and buildings.

What does the VRIN framework assess?

Whether a resource is Valuable, Rare, Inimitable, and Non-substitutable for competitive advantage.

State the three essential elements of business culture.

Vision, values, and artifacts.

How can managers reinforce a positive culture?

By role-modelling behaviours, offering training, and celebrating successes.

Identify three internal stakeholders of a business.

Shareholders, managers, and employees.

Why are customers classified as external stakeholders?

They are affected by business operations but are not part of the organisation’s internal structure.

What type of market concentration exists when a single firm dominates supply?

Monopoly.

Which market structure features many sellers offering differentiated products?

Monopolistic competition.

Why is ease of entry harder in an oligopoly?

High start-up costs and significant barriers to entry such as brand loyalty and economies of scale.

Name two pieces of legislation that protect consumers in Australia.

Competition laws and consumer protection laws.

How can legal compliance benefit a company?

It avoids lawsuits, fines, and reputational damage, ensuring stability.

Why is foot traffic vital for retail businesses?

High pedestrian flow increases potential sales and brand visibility.

List four main types of business resources under the expanded list (7).

Physical, financial, human, organizational, innovation, reputational, technological/IP.

What is an autocratic management style?

A style where the manager makes decisions unilaterally with minimal employee input.

Define laissez-faire leadership.

A hands-off approach where employees make their own decisions

Why might a business adopt flexible management styles (adaptive management)?

To adjust leadership techniques based on task complexity, resources, deadlines, and employee experience.

Give two elements commonly used to express a company’s values.

Symbols (e.g., logos, uniforms) and rituals/celebrations (e.g., annual award nights).

What is the primary expectation of shareholders?

A return on their investment through dividends and/or capital gains.

How can environmental concerns influence production decisions?

Firms may adopt sustainable materials and processes, environmental footprint and satisfy stakeholder expectations.↓

Explain how a strong business culture can improve productivity.

Shared values and trust ↑ employee morale and cooperation, ↓ conflicts and absenteeism.

Why is brand reputation classified as a resource?

Customer trust and loyalty, competitive advantage that rivals find hard to replicate.

Which external stakeholder can boycott a business for unethical practices?

Customers (consumers).