Business+Studies+Topic+1

= = =__3.3 External Influences __=

=__Institutional influences __= There are three main institutional influences on business, including government, regulatory bodies and other groups such as trade unions and employer associations. 

__Competitive situation influences __
Competition between firms to be the 'market leader' or to win customer loyalty can benefit the consumer and the business. It can provide the consumer with more choices, a range of qualities and a variety of prices. From the business point of view, competition can stimulate greater efficiency in production and usually results in a better quality product or service at the lowest cost to the business. Each business aims to achieve a sustainable competitive advantage over its competition in order to capture a larger portion of the market. 


 * ~ Types of market concentration ||~ Features/characteristics ||~ Example ||
 * < Monopoly ||< * Complete concentration by one firm in the industry
 * Firm has the ability to decide the price of the good or service because there are no competitors (i.e. the firm is the price maker)
 * Customer has no influence over the price charged. i.e. the customer is the price taker. ||< Australia Post

Railcorp ||
 * < Oligopoly ||< * Consists of a small number of larger firms that dominate the market
 * Are able to stay in control of the market because they spend large amounts of money on advertising and this enables them to restrict the entry of new competitors to the market. ||< Banks

Oil companies

Car manufacturers ||
 * < Monopolistic competition ||< * Most common type of market in Australia
 * Large number of buyers and sellers
 * The goods and services sold are differentiated from competitors using methods such as packaging, advertising, brand names and quality. ||< Clothing manufacturers

Local retailing || =__Changes in markets__ =
 * < Perfect competition ||< * Large number of small businesses that sell products that are the same or similar
 * Very little advertising is used to increase market share
 * The only way to achieve market share is through price competition. ||< Fruit and vegetable growers ||

Changes in financial/capital markets
Finance (capital) is now more mobile and flows relatively easily between countries, especially since the 1970s when many countries phased out their controls on foreign exchange trading.

====However, the instability of financial markets was evident during the global financial crisis (GFC) in 2008–09. This was triggered by a series of loan defaults by US homeowners, which saw financial markets in the US collapse. This collapse sent shockwaves through the global financial and stock markets. ====

====The GFC caused changes to be made within domestic and international financial markets, and will continue to influence future transaction procedures. ====

Changes in labour markets
The labour market has not been 'freed up' to the same degree as other markets. If anything, the labour market has become less global in the last 60 years. Due to political barriers, the flow of people between countries is now more restricted than it was from 1850 to 1900, when waves of migration occurred. For example, even within the European Union, which gives citizens of any member nation the right to work and live in any other, only a small proportion of workers travel across national borders.

====However, two trends in the labour market have resulted in the movement of workers. First, the movement of large numbers of temporary skilled migrant workers has been very important in Australia, Europe and Asia. For example, large numbers of unskilled Turkish and Filipino workers work in numerous countries. Second, the growing demand for highly trained employees means that such people are increasingly mobile. ====

====During the mid 2000s and again following the GFC, Australia experienced an increased demand for skilled labour to support the expanding mining sector (driven by China's demand for commodities). This increased demand could not be met domestically; therefore, the Australian government increased the number of temporary work visas to address this shortfall in skilled labour. ====

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.5em;">Changes in consumer markets
====There has been phenomenal growth in the amount and value of world trade, especially since the end of World War II. After the sharpest decline in more than 70 years (GFC), global trade is set to rebound over the next few years and grow at 9.5 per cent. Countries are achieving cost savings by specialising in products they can produce efficiently. This results in cheaper prices on the world market and, in turn, generates increased sales in existing markets.====

====Improved technologies and communications have also changed consumer markets. With the advent of the internet, innovative and visionary Australian businesses may reach much larger markets and take advantage of economies of scale. Consumers around the world will just as readily browse an online store as examine a catalogue delivered to their private letterboxes.====

=__Summary of External Influences__=

> > > > >
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Legal influences are the regulation (legal framework) within which a business must operate.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Political influences are derived from both state and federal government policies and include taxation and the implementation of paid parental leave.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Institutions that influence business include government, regulatory bodies and other groups such as trade unions and employer associations.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Technological influences can increase business productivity and communication.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Other external influences include competition and changes in the financial, labour and consumer markets.

=<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 2em;">3.4 Internal influences on business =

<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Internal influences relate to the specific factors within the business that will affect its operations. These factors can be identified and adjusted via feedback and evaluation processes that provide the business with information for change. <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif;"> <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif;"> <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif;">

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.8em;">Product influences
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Product influences affect a range of internal structures and operations within the business. The main product influences on a business are as follows. > Range of goods and services refers to the number produced by the business. The larger the number, the more internal impact it will have on the business as it will need to expand operations and internal structures to accommodate the changes. > >
 * 1) <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Type of goods and services produced will affect the internal operations of a business. eg If goods are physically large or require many raw material inputs,
 * 1) <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Type of business (service, manufacturer or retailer). Internally, a service provider will be structured differently to a manufacturer or retailer, and the influences will vary. Some goods or services require extensive preparation, while others are merely deliverers. eg manufacturer or retailer.
 * 1) <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Size of the business, as previously mentioned, will be based on the range and type of goods and services produced, the level of technology utilised, and the volume of goods and services produced. The larger the business the more goods and services being produced, which will in turn influence the internal structures and operations of the business. A café will operate at a different scale to a club bistro and therefore the influence on business functions will be relative.

=<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.8em;">Location influences = <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Location can make the difference between success and failure. A good location is an asset and will lead to high levels of sales and profits. A bad location is a liability that adversely affects sales and profits.

<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">This is particularly true for retail and service-oriented businesses, which need a constant flow of people walking past the store — the passing trade — and thus need to be located in a shopping centre, mall or main street.

<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">The two most important considerations are customer convenience and visibility, which can be summarised in the following ‘equation’: <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: center;">**Prime location = Customer convenience + Visibility**

<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">If a business is not convenient and visible, customers may not make the effort to find the business, and optimum customer flow will not be achieved. It is normally best to avoid establishing a business in areas of low rental, because a bad business image may result. Locating next to complementary businesses may be beneficial because more customers may be attracted to a single site, as demonstrated by the clustering of retail outlets.



<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.5em;">Visibility
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">A business wanting high visibility would locate in a prime shopping area such as a shopping centre or main street. Companies concerned with manufacturing would not consider this to be a crucial consideration, so may choose a low-visibility location ‘out of town’ and then advertise their location to appropriate customers.

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.5em;">Cost
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Leasing or purchasing a central location in a busy shopping centre will be far more expensive than in a location with lower levels of passing customer traffic.

<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">If the business relies on passing customer traffic and maximum exposure, then the cost factor is unavoidable. These types of businesses include coffee shops or cafés, fast food outlets and retail shops.

<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">On the other hand, location may not be a key consideration if the business does not rely on passing customer traffic. Such businesses search for a low-cost site, especially if they are related to manufacturing and require large premises. These types of businesses include mechanics, car yards, equipment hire, and even solicitors and doctors.

<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Given the rapid changes in technology, many businesses do not consider their location as important at all. They are able to communicate with their customer base through computers, especially with the internet (which has become the fastest growing avenue for consumer sales). These types of businesses include telemarketers or businesses that wish to sell their products via the Web.

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.5em;">Proximity to suppliers
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Proximity to suppliers is an important consideration for some businesses but not others. The main issue is the size and quantity of the raw materials needed for production, or the size of the finished goods to be supplied. A business that relies on bulky raw materials or finished goods — such as a logging company or steel manufacturer — has significant transport costs and will locate closer to the supplier in an attempt to reduce costs. However, for a business that does not transport bulky goods, proximity to suppliers is not a major consideration. These businesses include florists, bakeries and video hire shops.

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.5em;">Proximity to customers
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">The importance of proximity to customers depends on the type of business being established. A retail business must locate close to its customer base. A manufacturing or wholesaling business may decide it is more cost effective to transport the product to the customer, particularly if bulky raw materials are needed. Other location cost factors could include leasing costs in ‘prime shopping areas’, incentives offered by local councils, and general overheads such as rates or utilities.

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.5em;">Proximity to support services
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;"> Support services are the activities needed to assist the core operations or prime function of a business. They include accountants, solicitors and government agencies such as Austrade and the Business Enterprise Centre. Small businesses traditionally tend to use external services (mainly as a result of limited finance) whereas medium-sized and larger businesses often provide their own support services internally. But this trend is changing, with businesses now preferring to downsize their work force (in an attempt to reduce costs) and outsource many activities.

<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Today, proximity to support services is not the most important location factor, because advancements in technology have enabled all businesses (large or small) to access a range of support services through the use of computers (the internet and email), faxes, mobile phones, and phone and video conferences.

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.8em;">Resource influences
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">The four main resources available to a business are: > >
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;"> Human resources . These are the employees of the business and are generally its most important asset.
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;"> Information resources . These resources include the knowledge and data required by the business such as market research, sales reports, economic forecasts, technical material and legal advice.
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;"> Physical resources include equipment, machinery, buildings and raw materials.
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;"> Financial resources are the funds the business uses to meet its obligations to various creditors.

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.8em;">Management influences
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Rapid advances in technology, coupled with the significant pressures on businesses from increased competition due to forces of globalisation, have resulted in businesses flattening their structures. This means that there are fewer levels of management. Such businesses can adapt quickly to meet changing consumer needs and market conditions because there are fewer managers who need to approve decisions.



<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.8em;">Business culture
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">All businesses have their own business (corporate) culture — the values, ideas, expectations and beliefs shared by the staff and managers of the business. Each business develops its own particular way of doing things. The style or character of a business is consequently reflected in its culture. <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Business culture can be revealed officially in the policies, goals or slogans of a business. It can also be seen in the unwritten or informal rules that guide how people in the business behave, such as the way staff dress, the language staff use and the way that staff treat each other and customers.

<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">A manager must understand and assess all facets of a business's unique culture as this is a powerful tool for achieving goals. Knowing and appreciating a business's culture makes it easier to get things done faster or to initiate a change to routine or procedures. Competent, effective managers will use the business's culture as a force for positive change. Research has shown that businesses with a healthy, well-developed and strong culture are more likely to be successful, because such a workplace is perceived by the employees to be more positive and personalised. Employees who have clear expectations feel better about their work — they develop a sense of belonging. A manager who does not understand a business's culture may experience failure or disappointment.

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.5em;">Elements of a business culture
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">A business culture normally consists of four essential elements:

> > ===<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.5em;">Culture and organisational structures === <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">The culture of a business is often evident in its organisational structure. <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;"> <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Formal businesses with an emphasis on bureaucracy, line authority, hierarchical management structures, and defined job titles and areas of responsibility often have prevailing cultures that emphasise accountability, communication and cooperation. A culture that values and expects defined career pathways may be evident in formal organisations. > > <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Less formal businesses with flatter management structures, less departmentalisation and fewer defined spans ocontrol often exhibit highly flexible, innovative and risk-taking cultures. > > ===<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.5em;">Management's role in developing a business culture === <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Once a positive business culture is established, it needs to be kept alive. Management must ensure that staff members are given sufficient training to reflect the values of the business. > <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;"> Management must continually reinforce what the values are by communicating with staff, rewarding employees who display the appropriate values, and recruiting staff who already fit in with the values of the business
 * 1) <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">//Values//. These are the business's basic beliefs, shared among its employees. Business values can include honesty, hard work, teamwork, quality customer service, employee participation and innovation.
 * 2) <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">//Symbols//. These consist of events or objects that are used to represent something the business believes to be important. It is a case of ‘actions speaking louder than words’. For some businesses, competitive sports are a key feature of the business's culture. Other businesses have encouraged employee development and loyalty through the use of training and development programs.
 * 3) <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">//Rituals, rites and celebrations//. These are the routine behaviour patterns in a business's everyday life. Regular social gatherings can be held to help develop a sense of belonging among employees who normally work in small teams during the wee //<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Heroes //<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">. Heroes are the business's successful employees who reflect its values and, therefore, act as an example for others.
 * 1) //Heroes//. Heroes are the business's successful employees who reflect its values and, therefore, act as an example for others.

=__<span style="font-family: Geneva,Helvetica,Arial,sans-serif;">Summary of the Internal Influences on a business. __=
 * 1) **<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">The internal influences on a business include product, location, resources, management and business culture.
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Product influences affect a range of internal structures and operations within the business.
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Location will have a direct impact on the sales and profits of some businesses.
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Factors to consider when choosing a location are:
 * visibility
 * cost
 * proximity to suppliers
 * proximity to customers
 * proximity to support services.

>> >> >> >> > > > =<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 120%;"> 3.5 Stakeholders = > Businesses have many stakeholders : the people and groups that interact in some way with the business and have a vested interest in its activities. In this sense you are a stakeholder of your school. > > > > > ==<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.8em;">Responsibilities to shareholders == > <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Shareholders are the owners of the business. As such, the main responsibility of the business is to maximise the return on the shareholders’ investment in a sustainable way. Must provide annual report. > > ==<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.8em;">Responsibilities to managers == > <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Adequate resourcing levels, clear lines of communication and delegation of authority are necessary preconditions for successful management. Training, policies, support and auditing programs are needed. <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;"> > > > > > > > > > > > > > > > > > > > > <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;"> > > > > > > > > > > > > > > > > > > >
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">The four main resources of a business are human, information, physical and financial.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">A flatter organisational structure reduces the number of levels of management.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Business culture can be seen in the unwritten or informal rules that guide how people in the organisation behave.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">There are four essential elements of a business culture: values, symbols, rituals and heroes.

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.8em;">Responsibilities to consumers
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">One of the largest groups that a business must satisfy is its customers. > <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">usinesses that respect and satisfy their customers have a much greater chance of success. Those that exploit customers will suffer the same fate as those that exploit employees — they will lose customers to their competitors.

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.8em;">Responsibilities to society
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">As previously explained, businesses have a responsibility to the local community to be good corporate citizens. Society expects businesses to give back to the community something of what they take out in generating profits.

<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 1.8em;">Responsibilities to the environment
<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">There is growing pressure for businesses to adopt ecologically sustainable operating practices. This is in response to concerns about climate change and the destruction of the natural environment. Concern for our environment operates at both the local level as well as on a global scale.

<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">__Summary for Stakeholders__ > > > > <span style="background-color: #8f2d1c; color: #ffffff; display: block; font-family: Helvetica,Arial,sans-serif; font-size: 26px; text-align: left;">4 Business Growth and Decline
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Businesses have many stakeholders with varying, and sometimes conflicting, interests.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Shareholders are putting their money at risk; therefore, they expect a reasonable rate of return.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Managers expect the confidence and support of senior executives.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Employees expect a safe and psychologically rewarding work environment.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Businesses that respect and satisfy their customers have a much greater chance of success.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Society expects businesses to be good corporate citizens and give back something to the community.
 * <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">Society expects businesses to adopt ecologically sustainable operating practices. <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">
 * <span style="font-family: Geneva,Helvetica,Arial,sans-serif;">stages of the business life cycle

<span style="font-family: Geneva,Helvetica,Arial,sans-serif;">– establishment > <span style="font-family: Geneva,Helvetica,Arial,sans-serif;">– growth > <span style="font-family: Geneva,Helvetica,Arial,sans-serif;">– maturity > <span style="font-family: Geneva,Helvetica,Arial,sans-serif;">– post-maturity
 * <span style="font-family: Geneva,Helvetica,Arial,sans-serif;">responding to challenges at each stage of the business life cycle
 * <span style="font-family: Geneva,Helvetica,Arial,sans-serif;">factors that can contribute to business decline
 * <span style="font-family: Geneva,Helvetica,Arial,sans-serif;">voluntary and involuntary cessation – liquidation

<span style="background-color: #ffffff; display: block; font-family: Helvetica,Arial,sans-serif; text-align: left;"> <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;"> =<span style="background-color: #ffffff; color: #443191; font-family: Helvetica,Arial,sans-serif; font-size: 2em;"> 4.1 Introduction = Businesses are similar to people in that: However, the most striking similarity is that, like people, a business will pass through a number of distinct stages as it develops. This is referred to as the business life cycle. <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">The business life cycle is a model; that is, a simplified version of 'real-life' situations. Using a model makes it easier to understand the complexities of the business world. <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;"> > <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">The four main stages in the life cycle of a business are shown in figure 4.1. > > <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">no two are identical
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">each has its own identity
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">they are referred to by name or brand
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">they possess individual personalities and physical appearances
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">they are confronted by life's challenges
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">they sometimes succeed and at other times fail
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">they rely on each other for survival.

<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;"> with the business life cycle, there is no set time limit for each of the stages. <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;"> <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;"> __ Business Life Cycle __ 4 stages, no set time for each stage. 1) Establishment Business idea is created. a) Determine the most appropriate business structure. (eg sole trader, partnership, company). b) Do you need finance? c) Choose the location. d) Ensure you adhere to government regulations. e) Find and train staff. Other costs may include promotion of the products and planning for production. At this phase sales are usually low and costs high (could be cash flow problems).

2) Growth Growth is dependent on economic cycle [] a) Businesses experience increased sales. This may mean changes in <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;">- Developing a human resource management policy, defining roles and responsibility. - Developing a financial management plan (debt collection, cash flow management). - Controlling inventories for over or under buying.
 * operational and management styles may be needed. This could involve:

b) Growth bring management challenges. - Owner may need extra staff or to ‘outsource’ contract labour - Owner needs to delegate tasks and assign sub-managers. - Legal structure needs to be reassessed. - Further avenues of growth need to be considered: For example: Expansion, takeover or merger. c) Diversification. - Business moves from initial prime function into related products. For example: Rip Curl and Billabong.

3) Maturity. This could involve a plateau effect from increased competition, reduction in enthusiasm, managers less able to react to change.

a) Adopting technology to improve production. b) Improve overall efficiency. c) Look for new market opportunities d) Build customer loyalty. e) Manage cash flow and finance more effectively. The age of a particular firm reaching this stage depends of the size of the firm and the industry. <span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; text-align: left;"> <span style="font-family: 'Times New Roman',serif;">[]

<span style="font-family: Geneva,Helvetica,Arial,sans-serif;"><span style="font-family: 'Times New Roman',serif; font-size: 14pt;">4) Post-Maturity. <span style="font-family: 'Times New Roman',serif;">Dependent on how managers react to the challenges of the maturity phase. Time of reflection and reassessment. Four possible outcomes: a) Steady: a business that is neither declining or expanding. Maintain sales and product lines. Can be prone to changes in market with continued R&D. b) Decline: falling sales and profits could result in business failure. Often difficult to reverse. May loose customers, key employees. Can find it difficult to obtain credit. c) Renewal: increasing sales and profits by new growth. May involve developing new products and new markets. Motivate employees to embrace change Planning and developing new market strategies. d) Cessation – voluntary and involuntary. <span style="font-family: 'Times New Roman',serif; font-size: 14pt;">Factors that can contribute to business decline <span style="font-family: 'Times New Roman',serif;">two main causes of business decline are:
 * 1) <span style="background-color: white; font-family: Geneva,Helvetica,Arial,sans-serif;">//<span style="font-family: 'Times New Roman',serif;">Lack of management expertise //<span style="font-family: 'Times New Roman',serif;">. When a business either fails to prepare a business plan or fails to keep <span style="background-color: white; font-family: 'Times New Roman',serif;">on modifying an existing plan as the environment changes, the stage is set for imminent failure. ‘Businesses don't plan to fail, they fail to plan.’
 * 2) <span style="font-family: Geneva,Helvetica,Arial,sans-serif;">//<span style="font-family: 'Times New Roman',serif;">Lack of sufficient money //<span style="font-family: 'Times New Roman',serif;"> — **<span style="color: #0080c6; font-family: 'Times New Roman',serif;">undercapitalisation **<span style="font-family: 'Times New Roman',serif;">. Without sufficient capital and a positive cash flow the business will not be able to purchase stock and materials.

<span style="font-family: Geneva,Helvetica,Arial,sans-serif;">**<span style="font-family: 'Times New Roman',serif;">Essential: Avoid business failure: manage the cash flow ** <span style="font-family: 'Times New Roman',serif;"> Cash is the lifeblood of the business. If the cash flowing into a business is greater than the cash flowing out, then the business can continue to operate. But if the cash flowing out is greater than the cash flowing in, then the business will eventually run out of money and be forced to close.

__<span style="font-family: 'Times New Roman',serif; font-size: 18pt;">Voluntary and involuntary cessation. __ <span style="font-family: 'Times New Roman',serif;">Cessation : the closure of a business. <span style="font-family: 'Times New Roman',serif; font-size: 14pt;">Voluntary Cessation. <span style="font-family: 'Times New Roman',serif;">Decision taken by the owner. Reasons include: - <span style="font-family: 'Times New Roman',serif;">Loss of enthusiasm or ideas. - <span style="font-family: 'Times New Roman',serif;">Retirement - <span style="font-family: 'Times New Roman',serif;">Declining profits. - <span style="font-family: 'Times New Roman',serif;">Breakdown <span style="font-family: 'Times New Roman',serif; font-size: 16pt;">Involuntary cessation. <span style="font-family: 'Times New Roman',serif;">Decision is forced on the owner. Reasons include: - <span style="font-family: 'Times New Roman',serif;">Death of the owner - <span style="font-family: 'Times New Roman',serif;">Decreasing demand for products - <span style="font-family: 'Times New Roman',serif;">Economic conditions - <span style="font-family: 'Times New Roman',serif;">Increased competition (Asia) - <span style="font-family: 'Times New Roman',serif;">NSW Supreme Court order to sell the assets to pay debts. __<span style="font-family: 'Times New Roman',serif; font-size: 16pt;">Cessation Process. __ <span style="font-family: 'Times New Roman',serif; font-size: 16pt;"> __<span style="font-family: 'Times New Roman',serif;">Sole Trade or Partnership __<span style="font-family: 'Times New Roman',serif;"> – owners responsible for all debts. Personal assets can be seized if a sole trader If the debts cannot be repaid then the owner is declared bankrupt. __<span style="font-family: 'Times New Roman',serif;">Company. __ __<span style="font-family: 'Times New Roman',serif;">Liquidation __<span style="font-family: 'Times New Roman',serif;">: When the assets of a business are sold to recover debt. There is an order of creditors. __<span style="font-family: 'Times New Roman',serif;">Voluntary. __ <span style="font-family: 'Times New Roman',serif;">Shareholders vote to appoint a liquidator or creditors agree to a voluntary liquidation. __Involuntary.__ Creditors must take action in the Supreme Court. Receivership is when an independent party is appointed to realise the potential of the business either by restructure or sale. If no solution can be found the business assets are sold. Business Cycle case study: Oroton (see handout) ** =__ Preliminary Business Studies Topic 2. __= **<span style="background-color: #ffffff; font-family: Arial,Helvetica,sans-serif; font-size: 240%;">Business Management ** =<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif; font-size: 130%;">Section 1: The Nature of Management. =
 * **<span style="font-family: 'Times New Roman',serif;">Stakeholder ** || **<span style="font-family: 'Times New Roman',serif;">Main problems arising from company liquidation ** ||
 * <span style="font-family: 'Times New Roman',serif;">Company directors || * <span style="font-family: 'Times New Roman',serif;">Possible loss of directorship position and/or disqualified as a director
 * <span style="font-family: 'Times New Roman',serif;">Could lose personal assets to pay for the company's debts
 * <span style="font-family: 'Times New Roman',serif;">Possibility of a fine and/or imprisonment ||
 * <span style="font-family: 'Times New Roman',serif;">Creditors (unsecured) || * <span style="font-family: 'Times New Roman',serif;">May not recover any of the money owed
 * <span style="font-family: 'Times New Roman',serif;">If there are funds left over after the payment of the costs of the liquidation and payments to other priority creditors such as employees, it may be possible to receive part payment for the money owed; for example, 5 cents for every dollar owed. ||
 * <span style="font-family: 'Times New Roman',serif;">Employees || * <span style="font-family: 'Times New Roman',serif;">Loss of jobs
 * <span style="font-family: 'Times New Roman',serif;">Have the right, if there are funds left over after payment of the liquidator's fee, to be paid their outstanding wages and superannuation. ||
 * <span style="font-family: 'Times New Roman',serif;">Shareholders || * <span style="font-family: 'Times New Roman',serif;">Rank behind the creditors and unlikely to receive any payment
 * <span style="font-family: 'Times New Roman',serif;">The liquidator can request that holders of unpaid or partly paid shares in the company pay the outstanding amount on those shares. ||
 * <span style="font-family: 'Times New Roman',serif;">Society/economy || * <span style="font-family: 'Times New Roman',serif;">Loss of production from the liquidated companies
 * <span style="font-family: 'Times New Roman',serif;">Social and personal difficulties associated with job losses
 * <span style="font-family: 'Times New Roman',serif;">Loss of economic confidence ||

<span style="background-color: #ffffff; display: block; font-family: Geneva,Helvetica,Arial,sans-serif; font-size: 120%; text-align: left;">Introduction. <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Managing is an essential skill that all people need to develop. How well you perform the task of management will often determine whether you achieve the <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;"> goals you have set for yourself. In the world of business, just as in your personal life, management is a fundamental activity. It is what makes the business function. <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">The <span class="key-term" style="background-color: #ffffff; color: #0080c6; font-family: Geneva,Helvetica,Arial,sans-serif;">traditional definition of management <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;"> is the process of coordinating a business's resources to achieve its goals.

<span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">These resources include: > > Roles of a Manager. > >
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Human resources. These are the employees of the business and are generally its most important asset.
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Information resources. These include the knowledge and data required by the business, such as market research, sales reports, economic forecasts,
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;"> technical material and legal advice.
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Physical resources. These include equipment, machinery, buildings and raw materials.
 * <span style="background-color: #ffffff; font-family: Geneva,Helvetica,Arial,sans-serif;">Financial resources. These are the funds the business uses to meet its obligations to various creditors.

Planning.
-Acquire information from within the business (internal) and externally. for example: trends in consumer tastes, technology and legal issues. As well opportunities and threats need to be identified. -This will impact on plans for expansion.

Organising.
Good decisions need to be made on: - what tasks needs to be done. - staff allocation - deciding on the most efficient methodology.

Leading.
- encourage staff to work as a team. - inspire people to reach their full potential. - command respect for the manager and the position.

Controlling.
- need to develop control process to monitor performance. - input controls (before production) - concurrent controls (work in progress) - feedback controls (final output) - analyse for planning adjustment.

__**<span style="font-family: 'Book Antiqua',serif; font-size: 18pt;">Features of effective management. **__ <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">The manager or managers of a small or large business plan and organise <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">the __functions__ of the business to ensure that the effort of employees is <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">coordinated to maximise sales, profit and customer satisfaction.

<span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">Management has the responsibility to guide the business through <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">its life cycle.

<span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">Efficiency is the result of effectiveness. <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">Maximising __Outputs__ (goods or services produced by a business) <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">in relation to __Inputs__ (resources such as labour, finance and equipment).

<span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">In a large business, the business’s management is able to delegate overall <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">responsibility for its success to experienced people within the business’s <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">departments, while in a smaller business the manager is expected to be <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">an expert in every aspect of its operations.

<span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">In either case, effective managers will perform roles that could be <span style="font-family: 'Book Antiqua',serif; font-size: 11pt;">classed as __interpersonal__, __informational__ or __decisional__.

__<span style="font-family: 'Book Antiqua',serif;">Impersonal Role. __ - <span style="font-family: 'Book Antiqua',serif;">Communicate their vision to motivate staff to achieve the set goals <span style="font-family: 'Book Antiqua',serif;">and foster a positive relationship between the business and staff. - <span style="font-family: 'Book Antiqua',serif;">Help the staff and company achieve its personal and business objectives. - <span style="font-family: 'Book Antiqua',serif;">Ensure business satisfies the he human needs of the staff. - <span style="font-family: 'Book Antiqua',serif;">Negotiate between management and staff to ensure fair outcomes for <span style="font-family: 'Book Antiqua',serif;">all. __<span style="font-family: 'Book Antiqua',serif;">Informational Role. __ - <span style="font-family: 'Book Antiqua',serif;">Communicate to staff, goals, expectations and direction. <span style="font-family: 'Book Antiqua',serif;">(ensure effective communication channel). - <span style="font-family: 'Book Antiqua',serif;">Pass on knowledge and expertise (teach). - <span style="font-family: 'Book Antiqua',serif;">Gather information from staff on better and more efficient practice <span style="font-family: 'Book Antiqua',serif;">as well as problems. - <span style="font-family: 'Book Antiqua',serif;">Know the skills of staff and their needs. - <span style="font-family: 'Book Antiqua',serif;">Receive collate and analysis information. __<span style="font-family: 'Book Antiqua',serif;">Decisional Role. __ - <span style="font-family: 'Book Antiqua',serif;">Make informed and sound decisions. - <span style="font-family: 'Book Antiqua',serif;">Be an effective problems solver. - <span style="font-family: 'Book Antiqua',serif;">Balance immediate and long-term needs. - <span style="font-family: 'Book Antiqua',serif;">Take advice from key professionals.

__ Skills of Management __

Skills of management have moved away from an authoritarian or autocratic style with

a rigid hierarchical structure to a more people orientated, participative style of leadership

with a flatter structure.

A wide range of skills need to be developed.


 * 1) 1) Interpersonal skills.

Managers get their work done with and through other people; therefore, interpersonal (people) skills are extremely important. Such skills mean a manager can work and communicate with other people and understand their needs.

Interpersonal skills centre on the ability to relate to people, being aware of and appreciating their needs, and showing genuine understanding. People skills include the ability to communicate, motivate, lead and inspire (see Snapshot 1).

A manager who lacks empathy, is arrogant, opinionated, unable to communicate or who has difficulty relating to people will not be able to develop positive relationships with employees. Employees may actually work more efficiently when such a manager is absent because the fear of intimidation or victimisation is reduced (see the following Snapshot 2).
 * 1) 2) Communication Skills.

There is no simple recipe for great communication, but the Chinese philosopher Confucius once said:

‘Tell me and I'll forget. Show me and I'll remember. Involve me and I'll understand.’

Steve Jobs Iphone launch.

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One of the most difficult challenges for managers is getting employees to understand and want to achieve the business's goals. Effective communication is at the heart of meeting this challenge.

Managers who are effective communicators and who are able to share their thoughts and plans will find it easy to influence others

Owing to the complex nature of achieving effective communication, mistakes, misunderstandings and unforeseen barriers sometimes lead to false messages or no message being received. Miscommunication can have disastrous consequences in a business (see the following Snapshot).

Nonverbal communication mainly consists of body language (posture, facial expressions, placement of limbs and proximity to others).

If you have ever gone to a party, then you are likely to be aware of how effective body language can be. A smile, a glance, a stare, the angle of a person's head, a frown, a body movement or the invasion of someone's personal space — they all communicate a message.

It is important for managers to be aware of the power of body language and the messages that can be secretly conveyed. Usually, body language conveys a more powerful message than spoken or written communication. This can result in contradictory messages being intentionally or unintentionally given.




 * 1) 3) Strategic thinking skills

Watch the following perspectives on creative thinking.

The Castle []

Edward DeBono []

Strategic thinking allows a manager to see the business as a whole — as a complex of parts that depend on and interact with each other, like the gears in a machine and to take the broad, long-term view.

The ability to think strategically lets the manager see the ‘big picture’ and then:


 * visualise how work teams and individuals interrelate ( identify common goals)
 * understand the effect of any action on the business (holistic view)
 * gain insights into an uncertain future (long-term perspective)
 * see the business in the context of events and trends, and identify opportunities or threats.

Strategic thinking therefore involves thinking about a business's future direction and what future goals the business wants to achieve.

Many people assume that strategic thinking skills are the exclusive field of senior management, however managers at all levels need to exercise this skill. It will help the business maintain its competitive position within a constantly changing business environment. Strategic thinking can be learned through practice.

Class Discussion:

As a student, for example, you were thinking strategically when you made your senior course subject selections in Year 10. You had to imagine what the future job or study requirements would be when you left school, how the workplace may change over time, what future goals you wanted to achieve, and what would interest and motivate you in the future.

What do you expect to achieve in the next 10 years.

4) Vision

A clear, shared sense of future direction that inspires people to attain a common goal.

Vision must foster a sense of cooperation and committment.

The vision should be understood and agreed to by all staff.

5) Problem solving and decision making skills.

Problem solving involves finding and choosing a course of action to correct or improve a situation.

Steps involved in the problem solving process:

(Draw in a mind-map fashion)


 * Decision making is identifying the course of action and implementing.
 * Remember......
 * Decision making is the goal, problem solving is the process.

6) Flexibility and adaptability to change.

This has become an essential skill in the current environment.

Managers must be flexible, adaptive and proactive rather than reactive.

They must be aware of changes in the internal and external environments, and be prepared to take risks.

The maximises a businesses ability to take advantag of opportunities.

7) Reconciling the conflicting interest of stakeholders.

Must be acountable to all stakeholders.

Some of these stakeholders may have conflicting interests. Eg. Workers want good renumeration and a safe environment, customers a good price and shareholders a resonable return.

A primary management function is to resolve conflicts between stakeholders

Society increasingly expects businesses to accept responsibility and accountability towards all stakeholders.

Economic development must be accomplished sustainably.

The triple bottom line refers to the economic, social and environmental performance of a business.


 * <span style="font-family: 'Times New Roman',Times,serif; font-size: 20pt;">Achieving Business Goals. **

If you were absent for these lessons...

1) Get the handout notes from Dr Stoney and read them.

2) Watch these You Tubes.

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3) Complete the homework worksheet task sheet. This must be handed in for marking.