Globalisation: the removal of barriers of trade between nations.

• Globalisation is characterised by increasing integration between national economies and the transfer of capital, labour, intellectual capital and ideas, financial resources and technology.
• It has resulted in the increased movement of people, goods, information, technology, finance and culture throughout the world due to increased economic integration
• Can present business opportunities (for example, lower costs and new markets) or threats for businesses that do not adapt
• Through globalisation, businesses can leverage the competitive advantage each region of the world has to offer.
• It also is enabled by reduced transportation costs (for example, container shipping).

Sourcing: how a business acquires its inputs.

Outsourcing: when a business buys inputs rather than producing it themselves. This decision is often price motivated.

Supply chain: the range of suppliers a business has. Predictable and reliable supply chain management is critical to business to keep operations flowing smoothly.

Technology: the design, construction and/or application of innovative devices, methods and machinery.

• Technology allows businesses to be more competitive (cheaper, less dependent on labour and more efficient).
• Examples: logistics, distribution, quality management, inventory and supply chain management and sourcing.
• The use of technology can require a more highly skilled workforce; roles have changed due to technology.
• While potentially expensive, maintaining the latest technology can be essential to maintain competitive advantage.
• Considerations for implementing technology: the cost of implementation, the impact on staffing and the methods used by their competitors.

CAD (computer aided design): Computer software technology allowing designers, architects to draw a visual representation using a computer.

CAM (computer aided manufacture): manufacturing process is controlled by computer.

Quality Expectations

Quality: how well designed, made and functional goods are, and the overall degree of competence with which services are organised and delivered.

Quality management approaches: inspection of output, Total Quality Management (TQM), quality circles, “kaizen”

Quality expectations with goods: quality of design, fitness for purpose, durability.

Quality expectations with services: level of customisation, reliability of service provider, professionalism of service provider. Can be a major driver of customer loyalty.

Cost-based competition:

• Typically used it is difficult to differentiate the product in another way.
• Need to reduce operational costs in order to gain a price advantage. This can be done by outsourcing, using cheaper inputs, updating technology, reducing quality, relocating operations to a cheaper location.

Government policies Policies which impact on business operations include:

• Taxation rates
• WHS
• Environmental policies
• Employment relations
• Trade and industry practices

Governments give innovative businesses monetary benefits (such as financial grant and taxation concessions) so businesses are encouraged to develop new export products and earn income for the economy.

Other policies focus on reducing the negative impacts on the environment from business operations. There has been gradual reduction in protectionist policies for Australian businesses, forcing them to be more efficient in their operations and reduce costs.

Legal Regulations

Laws that affect operations of Australian businesses include:

• Environmental protection
• Consumer protection
• Anti-discrimination
• Taxation

Compliance costs: expenses associated with meeting requirements of legal regulations. The NSW State Government has responsibility for developing laws and policies affecting business operations that relate to:

• Small businesses and consumer law
• Payroll tax
• WHS
• Workers’ compensation
• Industrial relations
• Environmental issues
• Pricing of energy inputs

Commonwealth Legislation:

• Work Health and Safety Act 2011
• Fair work and anti-discrimination laws – Racial Discrimination Act 1975 (Cth), Sex Discrimination Act 1984 (Cth), Anti-discrimination Act 1977 (NSW), Fair Work Act 2009 (Cth)
• Taxation Act 1953 (Cth)
• Corporations Act 2001 (Cth)

Environmental sustainability

• Business operations should be shaped around practices that consume resources today without compromising access to those resources for future generations.
• Sustainable use of renewable resources e.g. solar, wind power
• Reduce use of non-renewable resources
• Reduce level of environmental impact and reduce waste

Extract from Business Studies Stage 6 Syllabus. © 2010 Board of Studies NSW.