Executive Summary Of The Importance Of Business In Australia Business Essay

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A business is defined as "a commercial or industrial enterprise and the people who constitute it in Australia businesses are important because they "support the development and use of new technology, provide Australians with employment, they feed and develop the economy through taxes and investment, produces a wide range of products giving the community a choice of what products they want to buy, a growing competition means lowered prices of those products, and they export those products which generates income for Australia's economy". [2] iiThere are many internal and external environments that impact on businesses external include; "Economic, financial, geographic, social, legal, political, institutional, technological, competitive situation and markets. Internal factors are; Product, location, management, resource management and business culture." [iii] 3They impact in a positive and negative way on Australian businesses and in this business report I will be explaining how.

Importance of Business in Australia

Business is the back bone of the Australian economy; there are several things that businesses do that are of vital importance to Australia as a country. [iv] "Business supports the development and use of technology" by buying new equipment which provides companies like: Apple or Mac with revenue to pay for employees that research and develop, as well as the necessary machinery and equipment to develop modern technologies. Businesses also sell the product which allows customers to use newer technology, if stores like Dick Smith's didn't sell IPods or Iphones customers wouldn't be able to obtain those items. "Businesses also provide Australians with employment" [v] , without businesses most Australians wouldn't make any money, and not be able to provide for their families. "Businesses also feed the Australian economy" [vi] through taxes that they have to pay to the government, as well as the investments these businesses, a business creates money which goes around a community but they also buy and sell products which all support communities.

Internal Influence and Impact on Australian Business

An internal influence is an influence that is made by the business itself, they relate to factors within the business that will affect its operation. All these influences impact in different ways and because they are brought on by the company it means that they may be able to stop the influence if it is damaging to the business. Each different influence has different impacts and the influences are; Product, Location, Management, Resource Management, and Business Culture. [vii] 


The internal influence of product is the; actual goods or services produce by a business or company, these goods or services decide many factors for a business, if the size of the product is fairly large then the company will need more space to be able to store the product thus increasing the physical size of the business. The product will reflect the business, the bigger variety or range of products produced the bigger impact the product will make. If the business buys or produces more than it sells the profit margin will decrease, if the product is not suited to the businesses customers the business will suffer. I.e. Harvey Norman bought/produced several thousand computers/laptops ECT. They didn't sell and so Harvey Norman's profit margin decreased. [viii] 


Has been said to be the most important of all internal influences, there is a simple equation "Prime Location is= Customer Convenience + Visibility." There are several separate factors of location; Cost, Visibility, Proximity to customers as well as suppliers and support services. So basically if it's not easy and efficient for customers to go to a business that business will not get many customers, location can also make a business because if a business is positioned in a great location i.e. near the anchor of a shopping centre, they would generate more customers. [ix] 

Resource Influence

There are four main resources available to business; human, employees of a business, Information, Market research the knowledge needed to run the business, Physical, equipment/machinery/raw material and Financial, funds the company uses to pay taxes or other debts. Without proper resource management a company would fail i.e. When Vodafone or the Commonwealth bank faced a machinery glitch they lost capital. [x] 


In recent times due to technology and the current global financial issues have been "flattening" this means that the levels of management have been reduced, these business have more control over their business. There are however some faults for example, because there are fewer mangers/employees this means that those managers have more control and if one of these managers make a mistake it has a greater impact. [xi] 

Business Culture

The values, ideas, beliefs and expectations of a business, these can be through governmental policy or just the general dress-code of the staff. Through business culture the way people work is changed, and if there is a negative culture this will produce workers who are un-satisfied which means failure for the business [xii] 


External Influences and Impact on Australian Business

The external influences on business are influences that are either totally out or are of minimal control of the business. These impacts are more sever to the business than internal influences because the business cannot change the influence they can only change the business itself to suit the influence i.e. Taxes. There are many different influences and they all impact the business in different ways and they are: Economic, Financial Geographic, Social, Legal, Political, Institutional, Technological, Competitive situation, and Markets. [xiii] 


The economics of Australia are a cyclical process meaning that they go through "Boom" periods, meaning a time where business owners costumers are confident, which in turn means more buying which feeds and grows the economy and "Busts" also known as a recession this is when there is low costumer confidence so there is less money in businesses meaning, less employment which slants the growth of the economy. The economy has obvious impacts on business: when there is a boom there is money which develops the business, and when there is a bust there is no money which mean the business fails to meet taxes and debts ect. So the company fails and may foreclose. [xiv] 

Financial Influence

The deregulation of the Australian financial system has lead to flexibility within the financial sector. It means that there is a wider range of competition, and businesses no longer need to stay domesticated to their own communities, this is due to technology and Globalisation. [xv] 

Geographical Influence

This has an enormous impact on Australian business, the fact that Australia is located within the Asia-Pacific region as well as the economic growth of those countries i.e. China. This is a challenge for businesses because there is a stronger competition. And also provides opportunities for businesses to develop, as well as the census along with other population surveys which allow for businesses to develop and produce goods that are suited for that area, the negative is that businesses have to spend a vast of money to change, the aging population is an example, businesses will have to adapt to better suit that population. [xvi] 

Social Influences

The public is constantly changing in relation to tastes, fashions and culture. When a business can change to suit these tastes it makes an increased profit but businesses that don't change run the risk of becoming predated and lose customers. [xvii] 

Legal Influences

These are regulations and policies that the government put forward and they have massive impacts on the business. A business is expected to abide by all these laws and regulations, but these affect the amount of money a company makes, which in turn affects how well it runs. [xviii] 

Political Influences

When there are big political changes business confidence as well as uncertainty may rise or fall, governmental issues affect businesses because they can introduce taxes, an example would be the introduction of the Carbon Tax, which was made in response to criticism over Australian policy this will put strain on bigger companies. But they can also be good for a business; an example would be deregulation which is the removal of policies. [xix] 

Institutional Influences

There are three main institutional influences and they are; government, regulatory bodies and other. The government introduces regulations, the bodies monitor the business and others affect businesses like government. [xx] 

Technological Influence

With new technologies comes a new way for customers to shop and for businesses to sell, a business can utilize various technologies like the internet to broadcast there product as well as sell their products over the internet which appeals to newer customers, it also allows businesses to communicate to their customers quicker. Technology can also take away from businesses, for instance Borders which is a book shop, is facing difficulty because customers are now buying books off the internet because it is cheaper, this means that Borders will now have to close some shop and faces a difficult future. [xxi] 

Competitive Situation Influences

Competition between two stores is a general occurrence; they can benefit the customer through cheaper prices and better sales as well as the business through the growing customer to the business. Each company fights to become the leader which is called sustainable competitive advantage, the varying range of competitors determines how the business will produce and sell their product. [xxii] 

Changes in Markets Influence

Capital can now move through countries, it is now easier for businesses to buy overseas shares/businesses, this frees up businesses, in turn the business grows. Despite this growth there is an instability which was made evident during the GFC; there is now a massive move for the need of skilled workers, i.e. the increase of need for miners due to the growing mining sector. There has also been massive growth in consumer markets, in the value of world trade this was brought on through technology which made it easier to communicate. [xxiii] 


In conclusion, an external influence is one that is out of the businesses control whilst an internal influence is relating to a business. They are both negative and positive, because they help the business to develop and grow the business as well as allow the business to communicate at an international level, but they can be negative because they take away from Australian economy as well as Australian businesses losing money to international businesses. As in the past and as what will be in the future, internal influences like product, management resource management ECT. And external influences like technology, political influences, geographic ECT. Will always impact on business, because the business will have to change to suit the issue, if there are technological advancements the business must change to suit that. If a product isn't selling they must produce a new product that will appeal to customers.