External Influences on the Business Environment.

Economic cycles are the periods of growth (boom) and recession (bust) that occur because of fluctuations in the level of economic activity
Government policies are put in place to keep the economy growing steadily, without putting pressure on inflation and wages
Expansion and peak is when inflation is the highest, businesses are at a all time high, they have unemployment falling
Contraction and troughs are when salaries are at low levels and there is unemployment rising

The economy is affected by :

Government policies (decisions)
Overseas trends -> changes in trade, investment, currency levels and buying and selling to countries
The growth and development of other economies

Deregulation is the removal of government regulation from industry, with the aim of increasing efficiency and improving competition (government policies were revoked to allow competition to allow more profits into the Australian economy) eg. global businesses can access finance from worldwide sources which mean lower interest rates

Two major factors affecting businesses activities affecting Australia :

The geographic location in the Asia-Pacific region
Changing demographic (age, gender)
Process of globalisation : The process that sees people, goods, money and ideas moving around the world faster and more cheaply than before. To be considered global is to be stationed to two or more countries.
Geographical influences provide opportunities for business expansion, increase in sales and an increase in profit
The climate influences the geographic
Tariffs and government subsidies can benefit a brand but relying on it too much can lead to a downfall (eg. Holden)

Businesses should consider societal attitudes and behaviours
Societal attitudes are the ideas, values and beliefs held by people in a particular society
Social influences have changes to fashion and culture which can affect businesses sales and profit as well as business growth (example : health craze in organic food)

Regulations (legal framework) within which a business must operate. Regulations are rules, laws or orders that businesses must follow. For example : Public health Act 2010 (NSW) or COVID-19
Business laws in Australia : The ACCC Australian Competition and consumer commission operates nationally for the enforcement and administration of competition and consumer protection laws.

State and federal government policies
Example : taxation, paid parental leave, gender workplace diversity and environmental regulations.

Institutions that influence businesses
The government (federal, state and local), regulatory bodies (EPA - environment, NSW Fair trading, ASIC and ACCC), other groups (ASX, trade and industry associations, trade unions)
Federal Government : Are obligations all of Australia have to follow - payment of taxes for employees [minimum wage], provision of employee superannuation, customs regulations abiding to relevant legislations that would affect business operations
State Government : provision of employee entitlements (WHS), entitlements and awards, payment of payroll taxes, abiding by state legislation like health, abiding by pollution controls
Local Government : Are councils and cities that have control over approving the development and alteration of building and fire regulations, parking regulations and size-location-and shape of business signs

Increase business productivity and communication
Technology helps the reduction of operating costs eliminate boring and repetitive tasks, send information more rapidly and improve efficiency
Downside : Jobs can be lost due to technological influences
One factor of technological influences are the cost of these devices

A sustainable competitive advantage is the ability of a business to develop strategies to ensure it has an ;edge; over its competitors in the long run (being more successful)
Sustainable competitive advantage means a company staying in the top spot
Factors influencing a businesses competitiveness : number of competitors, ease of entry into a new market, local and foreign
Number of competitors : How many competitors there are in a particular market, there are 4 types of market concentration

Monopoly : One business operating in that business, eg. Australia post (the ability to decide the prices since it can’t be challenged)
Oligopoly : Small number of businesses of large scale businesses that dominate the market (eg. banks), staying in control of the market because they have the money to advertise
Monopolistic : Most common type of market in Australia with a large number of buyers and sellers, GST differentiate from competitors through methods of advertising, brand names and quantity. (eg. clothing manufacturers)
Perfect competition : Large amount of small businesses that sell the same or similar products, price competition is the only way to achieve market share (eg. fruit and vegetable growers)
Ease of entry : Ability to establish a business within a particular industry (factors : market concentration and size of competitors)
Local and foreign competitors : Have factors such as labour costs, transport costs, economy anf cost of stock/raw materials

Changes in financial/capital markets : It nows flow more easily between countries
Changes in labour markets : staying domestic, migration has decreased since the 1900’s, trends such as an increase in temporary skilled migrant workers and growing demand of highly trained employees
Changes in markets : huge increase since WWII, Decline from global financial crisis and countries achieving cost savings by specialising in products that they can produce efficiently, consumers being able to purchase online which gets rid of physical stores and saves money since you don’t have to buy property