Business opportunities in NSW are impacted by internal and external factors. Internal and external factors influence the business opportunities as they determine the success and failure of opportunities in the business environment. External influences are factors which mainly influence the environment outside the business and therefore they determine what the management staff inside the business must do to adjust with the changes in the external environment.
External influences include factors such as; economic, financial, geographic, social, legal, political, institutional, technological, competitive situation and markets. Internal influences are factors affecting the business from within i. e. internally. Internal influences include factors such as; product, location, management, resource management and business culture. The following business report is commissioned to examine the influence of external and internal factors of business opportunities in NSW.
The economic influence includes factors which relate to changes in the wider economy i. e. booms and recessions in the economy. The benefit of a growing economy allows opportunities for a business to increase profit, so businesses are able to experience rising living standards. ‘Booms’ and ‘upswings’ benefit business opportunities as they are periods where the economy is going through a positive phase where businesses have the opportunity to increase their positive total revenue. Consequently, this will lead to a rise in employment, consumer spending and wages.
On the other hand, “Busts’ and ‘downswings’ are periods where businesses are impacted negatively. An example of a business which suffered from the negative factors of the economic cycle was Harvey Norman. Sydney Morning Herald (SMH) reported Harvey Norman experienced a ‘downswing’ period as profits decreased from $128. 95 million to $81. 9 million and total sales had a decline of 7. 3% due to lack of consumer spending. Financial influences involve ‘deregulation’ which is the removal of government regulations from the industry in hope of improving competition.
The improvement of competition allows businesses the opportunity to improve efficiency and productivity of their employers and aim to achieve their required goal. Woolworths and Coles have recently removed regulations relating to supplier payments in order to lower costs and open up opportunities to expand their business and increase profit. Geographical influences such as location will determine the growth and development of a specific business.
Geographical influences impact business opportunities as it provides challenges to increase profits, sales and expansion of business. An example of expansion of business is IKEA who have expanded their business to Melbourne, Australia because of economic growth in the Australian economy. Due to dramatic increase in consumer spending, IKEA’s profit increased rapidly and therefore they were able to purchase an 80, 000 metre square warehouse. Geographical influence impacts on business opportunities as it increases employment, sales and expansion of business as seen by the actions of IKEA.
Social influences provide opportunities for businesses to change or develop to meet consumer demands. Social influences such as changes in consumer tastes and preferences significantly impacts on business productivity and opportunities. Failure for a business to satisfy consumer’s wants can be detrimental to a business and therefore can lead to a decrease in profits and sales or even cessation if they fail to meet consumer demands. An example of social influence on a business is the impact of the style of clothing of AussieBum.
AussieBum manufactures and sells their products via the internet and are successful as their material and style of the underwear and beach clothing is famous among society. The business is successful as the material they produce is unique. Additionally, the location of the manufacturing is based in Australia further satisfying the taste and preferences on Australian consumers. Social influences for this business includes its consumers demanding Australian manufacturers to maintain uniqueness and reflect the Australian image; and consumers demanding products to be purchased over the internet.
In this case, AussieBum successfully responds to social influences by having the correct production process of manufacturing their commodities and satisfying consumer demand and preferences. Legal influences impacts on business opportunities as it sets out regulations and laws that impacts business operations. Legal influences sets out guidelines that prevents businesses from discriminating or financial rorting. Additionally, legal influences such as laws and contracts can impact businesses as they are forced to buy from specific and this affects their total revenue.
An example of legal influence on a business is the investigation of Coles. A recent article published by Sydney Morning Herald states that Coles is undergoing an investigation on discrimination between suppliers based on their private label brands. This breaches statutes which include anti – discrimination laws. Legal investigation is costly and affects consumer buying and spending at this business. Hence, it is crucial for businesses to abide by legislations to take advantage of the opportunities and maintain consumer satisfaction.
Political influences impact businesses as government policies can lead to business uncertainty or business confidence. Political influences impact businesses as they implement policies which can change the structure of businesses. An example of political influences on a business is the impact the carbon tax has on BHP Billiton, a company in the mining industry. The carbon tax affects the company as BHP Billiton is now in charge of paying taxes which affect the company’s total revenue as there is an increase in costs.
The carbon tax affects business opportunities in BHP Billiton as they are unable to hire new efficient and productive employees due to increase in their costs. Business opportunities in NSW can also be affected by taxation that can increase business costs and therefore restrict the businesses ability to expand or increase their profit or sales. Additionally, the exchange rate can affect the volume of import and exports from global markets hence impact of the price of products.
Institutional influences refer to three bodies (Federal, State, and Local) which all have factors which impact business opportunities in NSW. The regulations of institutional influences are the safety and protection of employers in the business, the compulsory minimum wage, payment of taxes, approving new development and simple business codes of conduct and abiding by the legal business laws. These factors impact business opportunities as businesses must abide by these regulations in order to continue running and the breaching of the regulations can result in penalties which may affect the business financially.
A recent investigation involving Coles breaching these regulations as they demanded additional payments from their suppliers led to a decrease in profits and loss of other suppliers. These factors affected Coles as their supply of specific products is decreasing yet they have such high demand but in result aren’t able to satisfy consumers wants. Business opportunities are impacted by the institutional influences as businesses are forced to run in a certain way as it can affect their financial status as well as their reputation if they fail to do so.
Technology is improving at a rapid pace and allowing businesses to produce more efficiently. Technological influences impact vehicle manufacturing businesses such as Holden. Holden’s vehicles are produced rapidly because of innovative technology. The new Holden Barina features Apple’s Siri voice command providing more features and improving the product. Additionally, technological influence can impact businesses negatively. For example, technological advancements often replace employees and this decreases the opportunity of hiring new employment contributing to unemployment.
Nonetheless, technological influences provide opportunities for businesses to produce products more efficiently and in turn increase their total revenue. Competition is advantageous to both consumers and businesses as it provides opportunities for improvement and demand for consumer satisfaction. A competitive situation often influences businesses to lower prices of its products to gain consumer satisfaction. For example, Woolworths and Coles promote lower prices to compete with one another. This provides consumers with wider range of choice and preferences.
More so, they promote consumer points for purchasing goods and services at their store to remain competitive. Also, Jetstar has a policy which states they will provide a 10% discount on their service if their competitive airlines (i. e. Virgin Australia and Tiger Airways) offer a cheaper price for their service.In recent times financial/capital, labour and consumers have significantly changed. Financial/capital markets have seen international financial/capital flows become more flexible and easily accessible due to globalisation.
Therefore, markets are more integrated. ASX is an example of these changes as the business has now made it more easily accessible for consumers to purchase and sell shares globally over the internet. Financial/capital markets influence business opportunities as businesses in NSW are linked globally are able to communicate and operate more efficiently. However, negative economic influence can impact on domestic markets in NSW which can impede on business operations.