Nature of business

Factors that may lead to success

Factors that may lead to failure

• Social media marketing

• Aesthetics

• Reaching consumer trends

• Brand partnerships

• innovation

• Covid 19 (external factors)

• Lack of planning

• Competitors 

• Lack of e commerce

• Eg: toys r us.

Positive effects on society

Negative effects on society

Drives economic growth

Fulfils consumer needs

Environmental concequences

Unnecesary resource waste

meaning

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con

example

Economic

Economic factors-interest rates, inflation, unemployment

economic cycles impact business activity

Booms lead to increased demand and profitability.

Low unemployment creates skilled workforce

Recessions reduce demand/increase bankruptcy

High-interest rates deter borrowing for expansion

During 2022 boom, Australia’s GDP grew by 4.7%, benefiting retail/construction sectors.

Financial

Financial influences relate to currency exchange rates, access to capital, global financial market stability

Strong financial markets provide investments 

Favourable exchange rates boost export competitiveness

Unstable markets deter long-term planning.

Rising interest rates increase loan repayment costs

Australian dollar’s depreciation in 2023 boosted exports but

raised import costs

Geographic

include climate, population distribution, and global trade opportunities

Growing trade relationships with Asia expand export markets.

Tourism benefits from Australia’s natural attractions

Extreme weather events disrupt supply chains.

Geographic remoteness increases logistical costs

The 2020 bushfires cost $3.5 billion, impacting agriculture and

tourism.

Social

Social trends, demographics, and cultural shifts shape consumer

behaviour and business practices

Businesses that adapt to social trends gain market share.

Sustainability initiatives customer loyalty

Rapid cultural changes may disrupt traditional markets.

Failure to meet societal expectations can harm reputations

Plant-based food sales grew by 15% in 2023, driven by health and

environmental concerns.

Legal

Legal influences include government regulations affecting business

operations, such as labour laws and environmental policies

Legal compliance builds consumer trust.

Employment laws improve workplace safety

Non-compliance leads to fines/ reputation damage.

Overregulation - deter innovation

The 2023 Wage Theft Act introduced strict penalties for underpayment of

employees.

Political

Political factors include government stability, trade policies, and

international relations

Free trade agreements increase market access -Stable policies reduce uncertainty

Political instability disrupts operations.

Tariffs and restrictions increase costs

The Australia-India Economic Cooperation Agreement (2023)

eliminated tariffs on key exports.

Technological

Advancements in technology drive innovation, efficiency, and

market expansion

E-commerce enables 24/7 operations.

Innovation improve experience

Rapid changes make systems obsolete.

High costs deter small businesses

Australia's e-commerce market grew 17% in 2023, by

platforms like Amazon.

Competitive situation

Competition levels in an industry influence pricing, quality, and innovation

Encourages quality improvement/lower prices.

Drives innovation

Smaller businesses struggle against dominant players.

Price wars 

Woolies/ Coles dominate 60% of grocery market, limiting competition.

Markets

Market influences include consumer demand, global trade

patterns, and supply chain dynamics

Expands reach to international markets.

Encourages innovation- meet diverse demands

Volatile markets create financial instability.

Supply chain disruptions hinder operation

Australia’s education export market contributed $40 billion in 2023, driven by international students

Internal influence

meaning

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Con

example

products

Products include goods and services produced to meet customer needs.

Expanding product range attracts diverse customers.

High-quality products enhance brand reputation.

Overspecialisation limits adaptability.

Managing diverse products increases operational costs

Coca-Cola expanded product range with 500+  brands worldwide, driving internal changes in production and marketing.

Location

geographical position of a business affects its accessibility, costs, and customer reach.

Strategic locations boost customer traffic.

Infrastructure supports efficient operations.

High-rent areas reduce profit margins.

Remote locations may limit access to skilled labour

Amazon opened warehouses in regional Australia in 2023 to reduce delivery times.

Resources

Resources include human, financial, and physical assets essential for business operations.

Well-managed resources improve productivity.

Financial reserves enable expansion.

Resource scarcity hinders growth.

Woolworths invested $400 million in 2024 in AI technology to enhance supply chain efficiency.

Management

Management involves planning, organising, and controlling resources to achieve business goals.

Skilled management enhances adaptability and innovation.

Clear strategies align operations with objectives.

Poor management leads to inefficiency and conflict.

Lack of vision hinders long-term success.

Canva's leadership model focuses on inclusivity, driving its global expansion in 2024.

Business culture

Business culture is the shared values, beliefs, and practices within an organisation.

Strong culture improves employee retention and performance.

Innovation-focused cultures drive market leadership.

Negative Effects and Implications

Toxic cultures lead to high turnover.

Resistance to change stifles growth.

Atlassian's open culture fostered its 20% revenue growth in 2024.