T3 Economics Intensive

Cambridge Chapters 4.2-4.6

What happened to businesses during the COVID-19 pandemic?

• Many businesses closed

• Those who could respond fastest and innovate survived

Why do businesses invest in technology?

• To increase their productivity

What is one way businesses invest in technology?

• By funding research and development (aka R&D)

Why may small businesses struggle in terms of funding R&D?

• Funding R&D has a very high cost which small businesses may not be able to afford

When do businesses tend to allocate more money to R&D?

• When economic conditions improve

Why do businesses allocate money to R&D when economic conditions improve?

• More money is available during these periods

• Consumer confidence is increased, so consumers are more likely to purchase new products and spend money

Why does the government support R&D?

• Because it provides general benefits to the public

• e.g. drones

What is business innovation?

• When organisations introduce new or improved processes, services or products to effect positive change within the business

When do businesses tend to innovate?

• When economic conditions change

  • Increasing or decreasing

Why do businesses innovate when economic conditions change?

• To maintain or increase market share

What are two examples of businesses that failed to innovate? (in textbook)

• Nokia

• Kodak

When economic conditions are increasing, what do businesses innovate in?

• Products

Why do businesses innovate in products when economic conditions increase?

• Businesses ave surplus funds available during this time period, so if innovation fails they can “fall back” on their traditional revenue

When economic conditions are decreasing, what do businesses innovate in?

• Processes or systems

Why do businesses innovate in processes or systems when economic conditions decrease?

• It helps businesses save on costs because it is usually accompanied by decreasing staff numbers and merging resources

Why do businesses spend on marketing?

• To influence consumers’ spending habits

• To increase brand visibility

• To boost sales and revenue

What are some examples of effective marketing strategies (with examples)?

• Promotional marketing (e.g. Tourism WA; used stories to promote WA as a travel destination)

• Grassroots approach (e.g. The Little Creatures; curated strong community engagement with brewery tours, tastings, and sponsoring local events and other events)

  • Grassroots: community-based

• Personalised marketing (e.g. Coca Cola; used customised bottles to increase consumer engagement)

• Branding marketing (e.g. Apple and Nike; used slogans to associate their brands with certain qualities)

  • e.g. Apple’s slogan associated it with creativity and innovation, Nike’s slogan associated it with determination and motivation)

Why do businesses not want surplus resources, staff or finished products?

• Adds unnecessary expenses to the business

Why might businesses change staffing levels?

• To respond to the changing market and demand, therefore changing the number of staff needed

• Employers want to employ just enough staff

What is productivity?

• The efficiency with which resources can be converted into goods and services

Has productivity increased or decreased over time? If so, why?

• Has been increasing

• Because of an increase in skills and technology

What is one key driver of productivity in relation to people?

• The development and skills of people

What are some benefits of upskilling staff?

• The quality of service is higher

• Staff are more satisfied

• Less staff turnover

• Less overall costs for the business (because of less staff turnover)

When technological processes improve, what will happen?

• More and higher quality goods can be produced

What is an example of an important technological investment (see textbook)?

• Microchips

• Important because they were far smaller and cheaper than the average computer processor during that time period

What do businesses expect to see when they spend large amounts of on technology?

• A return over time rather than immediately

Why do businesses hire managers and pay experts for their business?

• To streamline their systems

• This minimises wasted materials and time

What is an example of a business with an efficient system?

• McDonalds

• Efficient because burgers are low-cost, uniform and made quickly

What is the just-in-time inventory system

• A strategy of managing inventory and/or production that links the ordering of raw materials to production scheduling

What can happen if a business changes processes and systems too often?

• Staff can experience change fatigue

  • Change fatigue: mental and physical tiredness associated with change

What are three current ethical issues for businesses?

1. Discriminatory workplace practices

2. Labour conditions

3. Environmental sustainability

What is considered ethical decision-making in the context of discriminatory workplace practices?

• Fair hiring practices

• Providing equal opportunities for advancement

• Fostering a culture of respect and inclusion

What are examples of four types of discrimination (in textbook)?

• Race

• Gender

• Age

• Disability

What is considered ethical decision-making in the context of labour conditions?

• Conducting regular audits

• Working with suppliers to increase labour standards

• Being transparent about sourcing practices

What industries is the ethical issue of labour conditions frequently prevalent in?

• Textiles

• Electronics

• Agriculture

What is considered ethical decision-making in the context of environmental sustainability?

• Using renewable energy

• Reducing emissions

• Promoting recycling and reuse

What are three campaigns encouraging ethical practices?

1. Animal rights activism

2. Fairtrade

3. Environmental campaigns

What industries is the issue of animal rights frequently prevalent in?

• Food production

• Fashion

• Cosmetics

What do organisations campaigning against animal rights campaign against specifically?

• To end animal testing

• Increase veganism

• Ban use of exotic furs and skins

What is an example of an organisation campaigning for animal rights?

• People for the Ethical Treatment of Animals (PETA)

What techniques do animal rights campaigns feature?

• Powerful imagery

• Celebrity endorsement

What do Fairtrade Certifications guarantee?

• Made under fair conditions

• Workers receive fair compensation for their work

• Workers receive fair wages

• No forced or child labour

What do companies with Fairtrade Certification often benefit from?

• Increased brand loyalty

• Positive public image

What do environmental campaigns mainly address?

• Deforestation

• Ocean pollution

• Climate change

What is an example of a campaign and what did it do (in textbook)?

• Campaign to reduce plastic

• Led to…

  • Increase in reusable bags, bottles and packaging

What are three roles of ethical decision-making

1. Corporate Social Responsibility (CSR)

2. Consumer influence

3. Regulatory and industry standards

What are the benefits a company receive when it has Corporate Social Responsibility?

• Build trust with stakeholders

• Enhance long-term stability

What is one key factor consumers make purchasing decisions in relation to ethical decision-making?

• The business' ethical stace

What have businesses done in response to consumers looking for businesses with a positive ethical stance?

• They have adopted more ethical practices

What benefits do businesses gain when they comply with regulatory and industry standards?

• Avoid legal reprecussions

• Increased reputation and competitiveness

What is globalisation?

• The increasing level of interconnection with different parts of the world

What are two examples of regulations and standards (in textbook)?

• Modern Slavery Act 2018

• Global Reporting Initiative

What are two things that have enabled globalisation?

• Technology

• Free trade agreements

What are multinational corporations?

• Companies that are located in several different countries, or businesses producing and selling goods in several different countries

What does technology enable?

• The extension of traditional workplaces (e.g. calls, emails, video chat)

What are three impacts of technology in relation to people being less likely to have a singular job for life?

• Permanent full-time jobs will be replaced by shorter, temporary jobs

• Workers have to keep up with the changing nature of the workforce

• Working from home will increase

What is the “follow the sun” workflow model?

• A strategy that transfers workflow and tasks between different offices across various time zones, ensuring continuous work on projects without interruption

What does the “follow the sun” workflow model increase for companies?

• It increases the company’s responsiveness, as issues can be handled and resolved continuously

What do Free Trade Agreements enable?

• FTAs enable goods and services to be traded between countries with ease

What are some countries Australia has FTAs with (in textbook)?

• New Zealand

• China

• Singapore

What is an example of an FTA Australia is in (in textbook)?

• Association of Southeast Asian Nations (ASEAN) - Australia - New Zealand FTA (AANZFTA)

What are some benefits of the AANZFTA for Australia?

• Tariff reductions

• New opportunities for Australian exporters to tap into supply chains in the region

• Legal protection for Australian investors

• Ongoing economic engagement with ASEAN

What are the benefits of outsourcing?

• Lower cost of labour

• Lower overall infrastructure costs

• NOTE: outsource from developing countries

Why is outsourcing useful especially to Australia?

• Australia’s skilled labour market is small

What is child labour?

• Work for which…

  • The child is too young

  • The work is done below the minimum age

  • The working conditions are detrimental and unacceptable

What has the rise of sweatshops contributed to?

• The rise of child labour

Why do children work?

• To support their families

What are the impacts of children working rather than attending school, etc.?

• Lower formal education → less prospects for future job opportunities

• Work displaces them from their homes

What did the fourth industrial revolution introduce/popularised?

• Internet of Things

• Robotics

• Nanotech

• Artificial intelligence

• Virtual reality

What jobs are likely to decrease?

• Office jobs

• Manufacturing

• Production

What jobs are likely to increase?

• STEM jobs

• Especially in computing

What are future places of work more likely to look like?

• Interconnected spaces rather than open-plan offices

What are examples of “human skills”?

• Communication

• Problem solving

• Creativity

• Design

How has AI automation affected the value of “human skills”?

• It has increased their value

What are some features of a transferrable skillset (in textbook)?

• Financial and digital literacy

• Collaboration

• Management

• Analysis

What are the three types of jobs projected in the future with examples?

1. Work for machines (drivers, online store pickers, some health professionals)

2. Work with machines (surgeons)

3. Work on machines (e.g. programmers, designers)

What is a “caring economy”?

• A sector of the economy where machines do poorly but humans excel

• Includes nursing, psychology, childcare and education

Jobs in what two industries are becoming increasingly popular?

• Robotics

• Social media

What is robotics considered the intersection of?

• Science

• Engineering

• Technology

What are robots good at?

• Repetitive tasks

• Teaching skills

What is an example of robotics in a practical setting?

• Robo-advisors

• Use AI and algorithms to predict share market

What is an influencer?

• An individual with the power to influence purchase decisions in certain markets

How do influencers earn income?

• Product promotions

• Sponsorships

• Brand ambassadorship

What do influencers use platforms for?

• To reach a market with billions of people

What makes influencers effective?

• Ability to engage audiences with relatable content

• Establish trust and credibility

• Can reach a large audience easily