Business Unit 1 Sac 2

Chapter 2

How can planning for the internal and external enviro help a business?

planning for external and internal factors enables a business to remain competitive and strategic in an ever changing business world, a business

What is external enivronment?

Surrounding factors that can impact a business, which it has minimal control over.

Macro - NO CONTROL (legal, economic conditions)

operating - SOME CONTROL (customers, suppliers)

What is internal environment?

Factors within a business that a business has control over. (types of business, business locations)

What is the relationship between external and internal?

Both can influence and effect each other

Business can change internal factors to align with or respon to external factors out of their control

=by doing this a business can remain competitive

Internal enivro factor impact on external enviro factor example

Business resource needs

High quality is utilised = likely to meet customer expectations and needs. vice versa.

external enviro factor on internal enviro factor

gov regulations

changes in gov policies may require business to change internal processes

What is a Sole Trader? (type of business)

a business structure that is owned and operated by one individual

adv: full control+decision making power, easy + simple to register, cheap

dis: unlimitied liability on owner (risk of assets seized to pay debts), difficult to take time off work

What is a Partnership? (type of business)

is a type of business owned by 2-20 owners, unicorporated meaning all owners are one entity

adv: risks shared, greated expertise, minimal start up costs

dis: conflicts can arise due to shared decision making, profit shared

What is a Private Limited Company? (type of business)

Incorporated busines structure (seperate legal entity from owners), one director max 50 shareholders, shareholders specifically selected by board members and expect return on original investment through dividends

adv: greater access to capital = bans more likely to provide loans, limited liability for shareholders

dis: complex annual reports need to be published for shareholders, complex to establish

What is a Public Listed Company? (type of business)

incorporate business structure, unlimited shareholders min one share holder and three directors

adv: no permission needed to trade/ sell shares, company can live longer than directors

dis: conflicts can arise, more time taken to establish

What is a Social Enterprise? (type of business)

aims to fulfill community or enviro needs through the selling of goods or services. Must contribute 50% profits towards cause

adv: community benefits, may gain financial support from other businesses/gov

dis: hard to balance financial + social objectives, hard to obtain bank loan as goal is not solely finance

What is a Government Business Enterprises? (type of business)

owned and operated by gov, operates in public sector, fulfills specific purpose outline by gov

adv: helps community+needs, healthy competition to private sector

dis: gov and politicians can interfere, must follow specific rules and time frames. risk i

What is a Online business? (Types of business models)

goods and services are traded via internet, can reach wider audiences

Advertising Model - customers have free access to web, and other business pay for space to promote their products

Brokerage Model - Buyers and sellers exchange products online. money earnt by charging sellers a fee when profit is made (ebay)

What is a direct to consumer business? (type of business model)

products sold directly to consumer with no intermediaries invoved (eg retailer)

easy to set up

adv: customer convenience, time saved

dis: bo may find it difficult to grow/expand business as intermediaries are not involved

What is a bricks and mortar business? (type of business model)

a business that has a physical store presence, face to face service

adv: increased employment opportunities, customers know what they’re buying

dis: may be difficult to physically access store, time required to train employees

What is a franchise? (type of business model)

bus model that grants another person right to operate under its name, usie its bus systems, and sell its g+s

adv: reduced risk of failure has procedures+processes have already been established, customer awareness of brand = high sales

dis: rep of brand may be poor due to other store’s performance, franchises must regularly pay % of profit to franchisor

What is an importer? (type of business model)

purchases g+s from overseas and sells them in home country

laws on safety/quality must be considered

adv: bus accesses cheaper prices overseas as min wages may be dif, acess to products owner’s home country doesn’t have

dis: importing can reduce local employment opportunities, increased delivery costs based on distance

What is an exporter? (type of business model)

produces g+s in its home country and sells to overseas buyers

adv: overseas customer base can increase sales

dis: may be difficult to accommodate to and understand overseas laws

What does it mean to purchase an existing business?

buying a bus that is already set up + operating

buyer obtains premises, equipment, stock, goodwill

success evaulation should be considered before buying

adv: bus may have strong rep with customers

dis: employees may resist change in ownership=slowed operations

What does it mean to establish a business?

best choice for individuals w innovative ideas

location, staff, suppliers to be est

adv: owner has full decision making control, can fill a gap in market

dis: may be difficult gaining customer base, greater risk as it is a new bus

Why should a business consider business resource needs?

operation of bus requires natural, labour + capital resources to produce g+s

BO should consider quality, cost, supplier choice, CSR

What are Labour resources?

people who provide bus with skills + qualifications to conduct bus activites (eg warehouse staff)

supplier considerations - may pay min wage to reduce costs+increase profit

quality - bus should hire employees with right skill set

csr - prioritise employee wellbeing by providing flexible work hours

What are capital resources?

man made goods used in the production of g+s (eg tech,machines)

allows bus to produce products faster and make high quality goods

supplier considerations - BO may choose high quality resources to improve quality of final product

nature of resources - maintain capital to keep up to date with technology

csr - BO may source resources from local suppliers to support nation’s economy

What are natural resources?

raw meterials from enviro used to produce g+s (eg oil to gas)

supplier considerations - BO may choose cheaper suppliers to reduce cost

nature of resources - some resources may need to be stored (refridgerated)

csr - bus may avoid using resources that harm enviro to be enviro friendly

What are business locations?

the physical or non physical location that a bus operates from

What are shopping centres? (Business locations)

to act as a central point for all individuals needs (eg supermarkets, cinemas)

facol:

proximity to competitors - high, can cause sales to drop

area demographics - bo should consider if demographic of people going to sc fits their target market

adv: high foot traffic, more sales

dis: rent is expensive

What are shopping strips? (Business locations)

visibility - high, can be seen

cost - rent depends on popularity of location

adv: locals can visit often due to proximity = increase no. of loyal customers, employees can save time getting to work by using public transport

disadvantages: less foot traffic compared to sc, less parking

What is a home business? (business locations)

don’t need specific bus locations, can operate at home

accesibility - lower as situated in residential areas

personal factors - convenient for BO as they can save travel time

adv: flexible hours, less travel time

dis: less visibility, less living space

What is an online business? (business locations)

use internet to advetise + sell g+s important to remain competitive

personal factors - convenient for bo as physical location isn’t needed

competitors - large online

adv: wider customer base due to high access

dis: costs to develop website + sustain

What should a bus owner consider when sourcing finance?

BO should consider how they will fund bus operations, factors such as bus structure, control and flexibility should be considered

What is equity capital and what types are there? (sources of finance)

money contributed to a bus by an investor in exchange for partial ownership

investors take risk when investing as bus does not have to pay EC back

50% owned = investor has major influence over decisions

personal equity

private equity

public equity

What is personal equity? (sources of finance)

aquired by BO contributing their own funds to bus (eg persona savings)

limited flexibility due to amount of savings

full control

What is private equity? (sources of finance)

aquired by bus selling shares to selected individuals or bus that are approved by a board of directors

high flex bc more bus partners have more money

limited control

what is public equity? (sources of finance)

bus sells shares to public = high flex (eg on australian securities exchange)

requires bus to undergo Initial public offering which is costly

limited control

What are overdraft facilities? (sources of finance)

agreements between banks/bus/individuals that allow a bank account to be withdrawn below zero

high interest rates = expensive

BO has high level of ownership (partial ownership isn’t required)

larger companies can access high value OF as their ability to pay back a fund is higher

What are business support services and how are they helpful?

the specialised people, facilities or amentities that aim to help a bus successfully operate

BO may not have all required skills or expertise to run a bus, and may utilise bus support services

What are legal support services?

legal experts (eg solicitor)

bus must comply to all legal regulations that are constantly charging which is hard

can help bus create contacts + provide legal respresentation if required

What are financial support services?

(eg accountants)

some BO need support to understand financial details of running a bus

financial services can help bus to manage finances, achieve fiancial goals, evaluate financial feasibility of bus/advise on strategies

What are technological support services?

continuous tech developments means important for BO to plan and incorporate suitable tech to improve bus operations

to remain compeititve, bus should be aware of what tech competitors in same industry use

tech experts adivse on software that can improve operations

What are community based support services?

may help bus to connect with local community

bring individuals together who are interested in bus + community involvement (eg start up hubs)

can help to establish bus idea, provide services for local community

What are formal networks?

interconnected groups of people and official organisations that assit in offering professional support to business owners

can bring together individuals to discuss bus matters

What are informal networks?

an unoffial interconnected group

eg (family, friends)

that offer advice to BO, often more casual advice

What are business mentors?

an experienced and knowledgable bus person who provides guidance + advice

often can provide personal feedback, aid in writing bus plans

What is business planning?

the process of establishing a bus’s goals and developing strategies to achieve them

a bus plan is a document that outlines a bus’s goals + objectives as well as strategies to achieve them, aims to define direction of business

Executive summary (business plan)

overview of bus plan at start of report. brief description of philosophy, products sold

Business brand (business plan)

outlines bus’s vision + how it differes from other business (name, slogan)

business owners (business plan)

owners responsibility and skills/qualifications. provides an understanding of who is leading the business

Product (business plan)

description of products a bus plans to sell/or is currently selling/possible innovations/competitive advantages

Operations plan (business plan)

bus’s production process, suppliers, equipment, inventory

marketing plan (business plan)

marketing strategy, demographic, competitors

financial plan (business plan)

financial feasibility evaluation - financial objective, cost, sales

corporate social responsibility (business plan)

how bus will max positive community impact, strategies taken to minimise enviro damage

supporting documents (business plan)

licenses,qualifications, contracts

Benefits of business plans

determine if bus is viable/will be successful

BO can gain better understanding of industry, market, competitors, customers

what is a SWOT analysis?

(internal)

Strengths - high quality g+s/good bus rep

Weaknesses - poor bus rep/outdated tech

(external)

Opportunities - changing customer needs/expansion to new locations

Threats - declining economic conditions/increased rent costs

What is corporate social responsibility?

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

Why is it important to consider CSR when planning for a business?

is important during the planning process as businesses not only need to consider their financial objectives, but also need to express concern for the environment and society’s overall wellbeing. This can lead to successful business operations and a positive business reputation

What are two corporate social responsiblity considerations?

Choice of suppliers: Businesses should select ethical suppliers who offer fair working conditions and promote environmentally-friendly practices.

Conditions of work for employees: Businesses should ensure staff conditions exceed legal minimums and may offer extra benefits, like work-from-home options.