SCSA Business Management and Enterprise Environments

Answer(s) could include:

• A patent can give Smoothex exclusive rights to manufacture and sell any device, substance, method or process that is new, inventive and useful. When Smoothex expands globally it can apply for a patent in countries individually. This might be a good option if it only sells in a few countries.
• Alternatively, Smoothex can register a patent in multiple countries under the Patent Cooperation Treaty (PCT).
• The PCT is administered by the World Intellectual Property Organisation (WIPO), of which there are 148 participating countries. If the WIPO approves the patent, the intellectual property (IP) is protected in the countries that are members of the treaty. A patent is maintained if annual fees are paid. Patents must also be updated if there are any changes to the device, substance, method or process. In addition, Smoothex would have to file individual patent applications in the countries that are not members of the PCT.
• If Smoothex does not register for a patent, it is at risk of others stealing or using its idea, creating a loss of income and competitive advantage.

Answer(s) could include:

Corporate social responsibility:
Corporate social responsibility requires Smoothex to achieve its business goals in the context of the broader system in which it operates, thus giving due consideration to the community, society, triple bottom line and environment of a range of stakeholders. For example, Smoothex could support local charities (through donations/corporate sponsorship) in Indonesia and Malaysia. This could build positive relationships with the local communities and also help develop a positive business image in these countries.

Environmental sustainability:
Environmental sustainability requires Smoothex to adopt environmentally responsible operations such as use of dyes, recyclable packaging, waste of materials and recycling of supplies where possible. Smoothex could apply these to its operations to develop a positive public image and engender staff loyalty due to the respect demonstrated for their local country and its environment.

Answer(s) could include:

Levels of education:

• This can affect each country's economic environment. Levels of education differ depending on whether the country is more developed or industrialised, less developed, or a newly industrialising or emerging economy.
• Smoothex will need to consider the level of education in the countries to which it intends to export.
• if there is a skills shortage in a country, Smoothex will need to base employees overseas and use financial packages to attract staff. There may be issues in using technology, inability to fill positions or an understanding of how to store or sell Smoothex skincare and cosmetics.

Customs:

• When doing business in another country, Smoothex will need to consider cultural differences that may be presented.
• Cultural differences could include basic customs, mannerisms and gestures. For example, if a salesperson approaches a meeting with knowledge of a custom's cultural background, then his/her words, body language and actions can all be adapted to better suit those of the customers.
• Understanding cultural differences and adapting to these differences will allow Smoothex to be better liked by customers in Indonesia and Malaysia.

Holidays and celebrations:

• Smoothex can use this to provide content to put on their social media pages for marketing purposes, such as Christmas holiday sales or using a celebration as a background to sell products or services for Chinese New Year or Halloween.
• Indonesia and Malaysia have a multi-cultural background and people celebrate a wide variety of holidays.
• Smoothex will need to be aware of the holidays and celebrations in the countries in which it is hoping to do business to ensure its success.

Religious beliefs:

• The main religion of a country can influence the way Smoothex conducts its business.
• Although very few religions influence business activities directly, the impact of religion on human value systems and decision-making is significant. Thus, religion exerts a considerable influence on people's actions and outlook on life, as well as on the products they buy.
• Smoothex will need to be aware of the religious beliefs of Indonesia and Malaysia to ensure that it does not offend its customers.

Business etiquette:

• The formality of address is an important consideration when dealing with colleagues and business partners from different countries.
• Consider if they prefer titles and surnames or being on a first name basis.
• While it can vary across organisations, Asian countries such as Indonesia and Malaysia tend to use formal 'Mr/Ms Surname', while Australians and Americans tend to use first names.
• Smoothex will need to be aware of business etiquette in the countries in which they choose to operate.

Communication protocols:

• It will be important for Smoothex to understand the importance of subtle non-verbal communication between cultures as this can be equally crucial in international business.
• What might be commonplace in one culture – be it a firm handshake, making direct eye contact, or kiss on the cheek – could be unusual or even offensive to a foreign colleague or client.
• Where possible, Smoothex will need to research in advance the professional protocols required with individuals from the Indonesian and Malaysian cultures.
• Staff will need to be perceptive to body language, and when in doubt, to ask. While navigating cross-cultural communication can be a challenge, approaching cultural differences with sensitivity, openness, and curiosity can help to put everyone at ease.

Answer(s) could include:

Economic activity:

• Both Indonesia and Malaysia are countries in the Association of South East Asian Nations (ASEAN) thus having a positive impact on business operations.
• Australia has free trade agreements in force currently with both Indonesia and Malaysia, which promotes economic activity between Australia and both of these countries.
• Low inflation in Australia means interest rates are likely to be kept low, which will allow local consumers to continue to purchase products from Smoothex. This will help maintain or increase revenue from Smoothex to support its investments overseas.
• Consumption patterns and income levels will influence pricing and distribution strategies for Smoothex.
• Indonesia and Malaysia have a growing number of women in the workforce who earn enough disposable income to buy cosmetics from Smoothex, thus improving opportunity for successful business operations in these countries.
• Fluctuations in exchange rates between the three countries have been low, thus, providing attractive pricing of products and making them more attractive to potential customers.

Discretionary spending:

• As the economies of countries develop there are people earning acceptable wages in stable employment. Therefore, consumers may have more discretionary income.
• The stimulus material states there is 'growing number of females who are becoming a part of the workforce in those countries'. So 'there is likely to be a high demand for Smoothex skin care and make-up products'. This is due to the increased discretionary income.
• An increased discretionary income in Indonesia and Malaysia could impact Smoothex in a positive way, as it could lead to increased sales.
• If the discretionary income is reduced, then customers are less likely to buy products from Rani and they are more likely to spend their income on essentials such as food rent, clothing or education. The current global economy could cause customers in Malaysia and Indonesia to have reduced discretionary income. This would impact Smoothex in a negative way.

Changes in legislation may change business operations. For example, workplace safety laws may change. This would require businesses' current operating policies or processes to be rewritten, or physical changes to the premises to ensure compliance, e.g. PPE or fire safety.

Businesses must also adhere to governing body industry regulations or standards. A business may need to transform human resources to reflect changed professional qualification requirements to be licensed in an industry, e.g. real estate agents.

Answers could include:

Discretionary spending:

• an increase in discretionary spending benefits SNO's business operations as clients are willing to spend more money with them
• Australian clients will be willing to spend more on an international holiday especially as young travellers who probably have to save significantly in the lead up to their trip
• given the situation with a strong AUD compared to JPY, Australians travelling in Japan have increased discretionary spending for activities including affordable skiing, visiting many cities and experiencing the local culture
• SNO's clients will have an increased budget for travel in Japan and they will be able to engage with luxury experiences as a result.

Currency fluctuations:

• SNO's business operations will be influenced by currency fluctuations as changes in currency values can impact on their overall business
• fluctuating exchange rates can decrease SNO Tours' competitiveness in the global marketplace. A strong domestic currency can make a company's products more expensive abroad, while a weak currency can make competitors' goods cheaper in the domestic market. They have identified that this can be used to their advantage in Japan in the current market conditions
• the current strong AUD compared to the JPY will benefit SNO as it will be less costly for them to operate in Japan, whereas if the currency fluctuates and the JPY strengthens it may become more costly for SNO.

Answers could include:

Corporate social responsibility (CSR):

• can invest in local communities, create jobs and provide economic benefits through tourism. This could mean supporting local artisans, farmers and businesses
• can promote respect for local cultures, traditions and heritage by educating travellers about the significance of local customs, landmarks and wildlife, as well as support projects that preserve cultural sites
• could use sponsorships and donations to support local community events to enhance their business brand image
• could fund conservation projects or support local charities to foster goodwill in the community to increase brand image.

Environmental sustainability:

• can invest in carbon offset programs or adopt renewable energy sources to minimise their carbon emissions. For instance, airlines are working on improving fuel efficiency and exploring sustainable aviation fuels (SAF)
• can adopt sustainable practices in areas such as waste reduction, water conservation and energy efficiency in hotel management. For example, using energy-efficient lighting, choosing accommodation for clients that offer water-saving systems and providing all information for clients online
• could promote responsible tourism and eco-friendly destinations by encouraging customers to visit less crowded, nature-preserving destinations and provide information on how to travel responsibly. They can also partner with cities in Japan that are committed to preserving local ecosystems and wildlife
• could educate clients about the environmental and social impacts of their travel choices. This could include offering eco-friendly travel options, providing tips on reducing carbon footprints and promoting responsible tourism through marketing campaigns.

Answers could include:

Internal source of funding:
Retained profit

• Retained profit is an internal source derived from business activities. SNO Tours has retained earnings that can be reinvested in the business in order for them to grow. This could be a long-term funding plan.

External sources of funding:
Financial institutions

• SNO Tours could seek funding from a bank or finance company willing to lend them money in the short term. This is more likely to have a short-term gain but might incur higher fees and charges.

Venture capital

• SNO Tours could seek funding from a venture capitalist to privately invest in their business. This would be a long term investment plan and would require performance measures and markers. The money would be repaid based on agreed terms.

Secured loans

• A secured loan requires collateral to be secured as a condition of a loan. SNO Tours would be liable to have their assets repossessed if they were unable to meet the conditions of the loan.

Government

• SNO Tours could investigate government loans or grants available to their company. The application process and receipt of funds could be a lengthy process.

Share capital

• SNO Tours could issue shares to private investors to raise funds for their global expansion; however, this option is not available to the public.

Recommendation

• Refers to one of the sources of funding described and states a valid reason for its choice.
  Accept other relevant answer.

Answers could include:

Stability of foreign governments:

• a lack of political stability in Japan would affect SNO Tours business operations. Unstable countries may experience riots, protests, looting and general disorder, which will disrupt business operations, whereas countries with a more stable government will be more attractive for SNO Tours' business operations
• the Japanese government is politically stable making it a safe and stable country to travel to, they have a strong rule of law, a reliable legal system and a well-functioning market economy
• SNO Tours should assess how stable the Japanese government is; for example, know what type of government the country has, how the business may be impacted by changes in the government and also the legal environment within that country.

Relationship of foreign governments with the Australian government:

• the diplomatic and economic relationship of Australia and Japan will impact on SNO Tours' business operations. It is to the company's advantage that the two countries have shared democratic values, a focus on regional security and common economic interests
• both countries are partners in organisations like the Asia-Pacific Economic Cooperation (APEC), the Trans-Pacific Partnership (TPP) and the United Nations this strengthens their strategic ties beyond just economics
• if the relationship becomes strained or issues come to light, SNO Tours should have an exit strategy for the company's retreat from Japan.

Answers could include:

Venture capital:

• is a source of external funding where wealthy individuals and companies offer a long-term loan to a business. A bank may not lend money to a company if it is going to start a new service or create a new product and it seems risky
• venture capitalists may be more inclined to take risks for long-term gain since there will be a significant amount of money at stake. Due to this high risk, the venture capitalist may offer a loan to the company on the condition that they become part owners
• the role of a venture capitalist is to finance new and expanding businesses such as the company, to bring management expertise to the business and to take on any high risks with the expectation that they get high returns.

Secured loans:

• a company can organise a loan that is secured against the assets that it owns. These assets could include property, vehicles, or equipment. The amount that can be borrowed together with the interest rate that the business is charged would depend on the type of security provided to the lender
• a lender is more likely to approve a loan for a company if there is high security. A business that is unable to repay the value of the loan will then see the lender take control of the assets and they would sell them to try to recoup the debt owed
• a lender often considers the purpose of the loan, the size of the loan, assets and income of the business, and the duration that the company would need the loan for in order to determine if the loan should be issued.

Answers could include:

• the stability of foreign governments in target markets directly influences the business environment, regulatory frameworks, investment climate, and operational risks for a company
• political instability, governance challenges, civil unrest, regime changes, or geopolitical tensions in specific regions can disrupt business operations, supply chains, market access, and strategic initiatives
• uncertainty or volatility in foreign governments may lead to regulatory changes, economic instability, security concerns, contract disputes, or legal challenges, requiring the corporation to assess, mitigate, and adapt to the evolving political environment to ensure compliance and success in international markets
• a stable government is more likely to maintain consistent policies and regulations, providing the company with a clear framework for doing business, thus is better for business operations
• in a politically stable environment, there is generally a stronger commitment to upholding the rule of law and enforcing contracts. This is crucial for a company that relies on legal agreements with local partners, suppliers, and customers
• stable governments are more likely to invest in infrastructure development, including reliable transportation, communication networks, and energy systems
• a stable foreign government is vital for the efficient distribution of technological products and services, reducing operational challenges and costs.

Answers could include:

Banks

• Offer a variety of deposit, investment and loan accounts to businesses.
• The money collected from depositors and money earned from investment is used to fund loans to customers.

Finance companies

• Provide loans for businesses.
• A finance company gains its funding from banks and other financial institutions at a set interest rate and uses these funds to extend credit to customers.
• A finance company will earn profit by charging its customers a higher interest rate
  than what they are paying, and may charge loan fees and other administrative
  charges.

Answers could include:

• is an internal source of finance
• arise from the internal activities of a business, as opposed to finance from external
  sources
• a source of finance which could help with long-term activities of a business
• is more of a long-term source of finance than short-term.

Answers could include:

Debentures

• Are issued by a company as a long-term loan to the debenture holder.
• These provide a long-term source of finance without the business losing any control.
• Debenture holders do not have a voting right, so a business could raise funds without losing any control of the company.

Share capital

• The funds raised from selling shares in a limited company.
• The funds raised can generate a large sum of finance for a company and is a main source for limited companies.
• Should a company raise funds from selling more shares, the company would increase the number of shareholders to whom profits are distributed.

Trade credit

• Refers to an amount owed to suppliers for goods and services supplied on credit and not yet paid for.
• Could mean ‘free finance’ as the suppliers may not charge interest on the amount outstanding.
• A flexible form of finance as businesses can decide when to pay and is widely available in most industries.

Answers could include:

Religious beliefs:

• can impact global business practice as they influence many aspects of business practice including marketing, communication and operations e.g. aligning product launches to the religious calendar
• businesses must be aware of any specific religious beliefs when operating in a new country (i.e. the dominant religious belief) as this may impact on long-term strategic plans or short-term day-to-day trading i.e. religious holidays and closures
• respecting religious practices, such as ensuring that foods on site do not contain ingredients prohibited by local religions i.e. halal or kosher products.

Customs:

• can impact global business practice as it is important to know and understand how business communication takes place between business partners in overseas markets
• is important to avoid stereotypes to fully understand the customs of an international market; businesses should seek advice regarding any cultural customs prior to undertaking business in an international market
• some cultures, such as those in many Asian or Latin American countries, have a more hierarchical approach to decision-making, where the top executive makes the final decision. In other cultures, like in Scandinavian countries, decision-making tends to be more egalitarian and involves input from multiple levels.

Business etiquette:

• can impact global business practices as it is important to know and understand the ways of doing business in a global business environment; for example, working hours, customary greetings, meeting etiquette, dress codes and socialisation in the workplace
• paying attention to non-verbal cues such as body language and facial expressions can provide context to verbal communication
• offer interpretation and translation services to assist with multilingual support. This can enhance customer service and accessibility in a cross-cultural setting.

Answers could include:

Banks:

• offer businesses a range of deposit, loan and investment accounts
• collect money from businesses that deposit their money with them and earn money from their own investments. They use these funds to give out loans to other businesses who require finance, provided they can pay a deposit.

Financial institutions:

• offers loans to businesses
• unlike a bank, finance companies do not require businesses to place a deposit. They earn profit by charging businesses a high interest rate and loan and other administrative fees.

Answers could include:

Economic activity:

• economic activity in the global market often involves the production, distribution, purchasing, and selling of goods and services
• when a business operates globally, it needs to be aware of the levels of gross domestic product rates in the various countries it operates in. This rate has an impact on how much the business can grow and how much profit it can make
• if a country the business operates in experiences an economic downturn, sales would fall as consumers in that country will not be confident to spend. Similarly, if the country it operates in experiences an economic expansion, the business would see sales and profits grow as there would be higher levels of consumer confidence and sentiment.

Interest rates:

• interest rates represent the cost of credit and play an important role in shaping business decisions and investment strategies
• rising interest rates will increase the cost of borrowing for global businesses and make investments more expensive while falling interest rates will decrease the cost of borrowing for businesses
• fluctuations in global interest rates will affect spending patterns and impact global expansion. For instance, rising interest rates will cause consumers to decrease their spending, due to the rising cost of credit, and affect businesses' overall revenue and profit. Similarly, falling interest rates will increase consumption spending since the cost of credit has fallen.

Currency fluctuations:

• these refer to changes that occur in the dollar value of one currency relative to another country's currency
• transactions in foreign currencies are affected by variations and can have an impact on production and distribution costs when businesses operate in global markets
• businesses that sell their products to global markets may observe fluctuations in their revenue and profits. A strong domestic currency can see a fall in revenue if consumers are predominantly from overseas markets with a weaker currency. Similarly, a weak domestic currency will allow businesses who sell to global markets to see a rise in their revenue.

Answers could include:

Levels of education:

• a country with higher levels of education would mean citizens earn a higher disposable income and will more likely purchase a business's products
• would determine whether the local staff require further training and induction within the business
• a shortage of people with the required education and skills may impact a business's success. A business would then need to attract overseas employees using attractive financial packages.

Holidays and celebrations:

• local holidays and celebrations can have an impact on a business's marketing campaigns. Social media can be used to promote holiday sales or using a celebration as a background to sell products
• there may be opportunities for businesses that operate overseas to create new products and services based on local holidays and celebrations, to gain a larger market share
• businesses need to factor local holidays and celebrations into project schedules and timeframes to ensure success in overseas countries in which they choose to operate.

Communication protocols:

• it will be important for a business to know and demonstrate the correct communication protocols to display professionalism and respect for business partners
• understanding subtle non-verbal communication between cultures will be necessary. For instance, a firm handshake or making direct eye contact could be unusual or even offensive to foreign colleagues
• where possible, businesses should research the professional protocols required when operating in overseas markets and ensure that staff are attentive to body language.

Answers could include:

• A patent is legally enforceable and gives a business-owner exclusive rights to manufacture and sell any of its products which are new and inventive.
• The protection of intellectual property is an important strategy to achieve competitive advantage. To protect intellectual property globally, Lisa should apply for a patent.
• If Lisa’s intellectual property is protected, competitors will not take its sales and market share from the business and they will not be able to compete directly with Lisa’s products or services.

Answers could include:

Currency fluctuations

• Currency fluctuations can affect everything from a business purchasing power to operating costs and can make it difficult for a business to predict its profits and losses.
• When a business engages in international activity such as importing, exporting and even setting up a business overseas, the changes in currency value can have a significant impact on its bottom line.
• If the Australian dollar rises against a foreign currency, Lisa’s business may find it less costly to operate in the country of that currency. On the other hand, if the Australian dollar falls against a foreign currency, Lisa’s business may find it more costly to operate in that country.

Economic activity

• Economic activity involves the production, distribution, buying and selling of products and services.
• When operating globally, Lisa’s business would need to be aware of the host country’s gross domestic product rates. The strength of economic activity can significantly affect a business’ growth and profits.
• If the overseas country is experiencing an economic expansion, Lisa’s business would experience stronger sales, as consumers would be more confident to spend on Lisa’s products. Similarly, if the country is experiencing lower economic activity, consumer confidence levels would be low, and Lisa’s business might not experience strong sales of her product.

Answers could include:

• the International Labour Organisation (ILO) is a United Nations' agency dealing with labour issues, particularly international labour standards and decent work for all workers
• in sweatshops, workers are paid little for their work, are forced to work unpaid overtime with no breaks, and are punished for any mistakes or for working slowly. Woodyz and Beards R Us must ensure that they pay their workers fair pay
• Woodyz and Beards R Us should adhere to fair wages, and occupational and health regulations for their workers in order to ensure long-term business success and to maintain a good public image
• the ILO understands that children may have to work and Woodyz and Beards R Us need to ensure strict standards and prevent the exploitation of children
• Woodyz and Beards R Us need to be aware of the ILO's Minimum Age Convention which states that 13 to 15-year-olds should only engage in light work around their schooling; 15 years is the minimum age for work; 18 years is the minimum age for any hazardous work.

Answers could include:

Venture capital:

• this involves investment in small to medium-sized businesses that have a strong growth potential, normally at the start of a business idea
• the amount borrowed can be paid back over a number of years.

Secured loans:

• this type of finance is obtained from a bank or other financial intermediary that can be for short-term or long-term
• interest charges can be fixed or variable on the loan. The amount borrowed is paid back over a nominated period of time.

Financial institutions:

• these include banks, finance companies, merchant banks, life insurance companies and general insurance companies
• financial institutions provide various short-term and long-term loan options for Woodyz and Beards R Us.

Government:

• can offer financial support to businesses or industries by providing government grants
• the one-off payment to businesses is beneficial as they do not need to be repaid.

Answers could include:

Discretionary spending:

• Woodyz and Beards R Us would need to do accurate and timely market research to determine discretionary spending habits and patterns of current and developing global markets
• Woodyz and Beards R Us would need to determine consumer confidence levels in the new market to see if consumers would purchase Woodyz and Beards R Us products if brought to this market
• Woodyz and Beards R Us would need to identify where its target markets are where consumers have sufficient disposable income to afford its products when these are brought to the market.

Interest rates:

• these may have an impact on spending patterns in global markets and may impact global expansion, especially when it comes to the development of infrastructure
• when businesses have access to finance with lower interest rates in other countries, they are able to more easily manage their repayments and reduce their costs
• Woodyz and Beards R Us can increase its level of investment but must be cautious if interest rates rise to enable it to manage its financial operations and global expansion.

Answers could include:

Merger:

Rationale: A merger occurs when two businesses combine to become one merged business with the view to gaining an operational or financial advantage.

Benefits:

• there is potential to still maintain some control of each of Woodyz and Beards R Us businesses while being more financially stable and with greater support
• there are increased financial benefits through better access to marketing which has the potential for increased profits
• there could be a potential to lower costs and increased profits, if both Woodyz and Beards R Us reduce their individual or combine their marketing and other operational costs
• Woodyz and Beards R Us could produce more products and in a greater variety, thus increasing their market share
• Woodyz and Beards R Us may enjoy greater efficiencies as they have access to shared facilities, resources and knowledge from both teams.

Joint venture:

Rationale: A joint venture would allow both businesses to develop a new project while still focusing on their individual core businesses.

Benefits:

• allows for the sharing of business' costs which allow Woodyz and Beards R Us to earn higher profits
• will enable Woodyz and Beards R Us access to a larger target market and customer bases which have already been established by each individual business
• this is an effective strategy because it does not change the existing businesses and can reduce the impact and demands on Woodyz and Beards R Us
• joint venture management can focus on the project instead of existing management taking on additional challenges or responsibilities
• once a project ends, the joint venture can be wound down and assets distributed according to joint venture ownership.

Answer(s) could include:

Financial gain:

• An increase in satisfied customers can lead to an increased market share, sales and repeat customers. Innovation can also lead to creating a delay in the decline stage of the product lifecycle resulting in greater profit for Matilda.
• Product innovation occurs if Matilda sources new and/or more products to sell. This may increase interest, sales and, in turn, profit.
• Process innovation occurs if Matilda is able to improve her processes through new technology. She could see productivity gains and better customer satisfaction, resulting in increased financial gain.

Expansion of global market presence:

• Innovation can be a driver of business growth. Therefore, Matilda expanding into the European market will enhance her global market presence.
• Innovation can give Matilda a competitive edge over her foreign competitors.
• Matilda's innovation can lead to her successful expansion into Europe and ensure that she is competitive in global markets through her business being new and different.

Increased market share:

• Innovation can assist with producing more appealing/innovative products and, therefore, increase market share for Matilda when she expands into the European market.
• Innovation can create a competitive advantage. A new product can create a consumer demand for the product, resulting in more products being sold and Matilda's business' market share increasing in the European market.

Answer(s) could include:

Timing:

• Timing can have an impact the success of innovation in terms of how it relates to customer purchasing cycles.
• Matilda has just read an ecommerce report in 2020 stating that European shoppers are spending more time shopping online. This means the timing is right for her to expand to Europe.
• It would be a good idea for Matilda to innovate her product, process and service while online marketplaces in Europe are attracting significant online traffic and high visitor engagement. This should lead to increased sales, thus success at this time is likely to be high and worth her investment in the innovation.

Cost:

• Investment in innovation, whether it is product, process or service, is costly.
• Money needs to be spent on research and development and can be significant. Therefore, it requires appropriate financial resources.
• Matilda has stated that she is willing to invest money into her business operations, so she has the best opportunity to be profitable.
• Matilda has seen a surge in online sales in 2020 and 2021. Therefore, she has income available to spend on innovation.
• If Matilda spends too much money on research and development, and innovation, and does not receive increased sales through the European market, she may be at risk of business failure.
• Matilda's financial investment in innovation may be important to her standing out from competitors in the European market, and be an important contributor to her success.

Answer(s) could include:

• Marketing through social media campaigns – researching and creating social networking sites used in Europe. This will be an easy and cost-effective way for Matilda to expand into the European Market.
• Adopting faster shipping technology. This will be positive for Matilda's business as it will improve customer satisfaction due to timely delivery of orders.
• Implementing safe payment methods – around the world customers are happy and confident utilising payment methods such as PayPal. This will assist Matilda expanding into the European market.
• Applying GPS delivery tracking systems – for both the business and the customer. This ensures the customer is updated via email or SMS, making them confident regarding the delivery of their order.
• Adopting e-commerce procedures. This will enable transfer of monies between currencies and countries instantly.
• Matilda can purchase relevant and reliable hardware and software for the business' needs. She can improve her website capabilities to change the language and/or apply different currencies. This will increase the business' reach to different countries where customers can make purchasing decisions using their own currency.

Answer(s) could include:

Availability of substitutes: Matilda needs to consider:
likelihood that customers will easily switch or use a competitor's product over hers.

• Are there similar products being sold online at a similar price or lower?
• Do the competitors pose a threat to her business' success?
• Are her products new, innovative and of high quality, compared to others on the market?
• Are there better-quality products available?
• Are there products of better value?
• Can she create buyer loyalty in Europe, or will consumers easily change brands?

Bargaining power of buyers: Matilda needs to consider the bargaining power of the buyers in Europe.

• What is the bargaining position of the buyers? Can the customers drive down the price?
• What is the level of quality and service demanded by buyers in Europe?
• What are the buyer numbers in Europe? Europe has a large population, therefore a large number of potential buyers.
• Which countries in Europe will have more buying power? Many parts of Europe have a large middle class, hence the disposable income to purchase Matilda's products.

Advice:
Due to the fact that Matilda is going to be investing in innovation of her product, process and service, the huge population of Europe and the fact that more European shoppers are spending significant time shopping online, there is no reason why she should not trial an entry into the European market. Her product is unique, luxurious and of high quality, thus should negate the issue of availability of substitutes.

The e-commerce report also affirms 'online marketplaces in Europe have attracted significant traffic and seen high visitor engagement that has translated into sales'. Due to the fact that more Europeans are spending time at home and shopping online, it is worth Matilda expanding her business into the European market.

Answers could include:

• EduOz.com should have a presence amongst the main social media platforms like Facebook, Instagram, LinkedIn. The most common way companies do this is by creating a short video about the benefits of the product which pops up in people's feeds. At the end of the video, there would be a button where a prospective customer can click to find out more and proceed to provide contact details (phone or email).
• LinkedIn would be another very suitable, place where EduOz.com can create a campaign. LinkedIn also has a 'learning' section on its user interface. Perhaps EduOz may want to provide a free sample of an online topic for users to try. EduOz.com may also want to sponsor a popular podcast also.

Answers could include:

Product features (standardisation)

• English as a language has a global functionality. It is the most common language used in business, so it may make sense to standardise its course which would then negate the cost of making alternative versions in different languages.
• As business environments (political, economic, social, technological) change, online courses may also need to be updated. Therefore, having just one language to deal with would be easier and cost effective.

Product name (standardisation)

• A uniform policy on the product name can enable a consistent and coherent brand message across various cultures.
• However, care must be taken to ensure that the name does not cause offence to local culture, and that the translation is not embarrassing. This may damage the brand quality of the product.

Answers could include:

Levels of education

• EduOz.com may need to make a decision to target recent school leavers who are just out of high school, or perhaps adults who already have a formal qualification and want another skillset in order to become entrepreneurs.
• The market segment of EduOz.com would have to have a basic level of English literacy if they are to understand most of the topic content, as it is written in English.
• There may need to be some translation of some key words so that students are able to understand certain key concepts.

Customs

• Customary greetings to students could be included in some course content that is suited to local cultures of international students, such as 'As-Salaam-Alaikum' (peace be with you) for Islamic countries or 'nihao' for the countries that have Chinese speaking students (Mandarin and Cantonese).
• EduOz.com developers will have to be careful not to stereotype certain cultures and seek advice as to the best way to communicate with students from diverse cultures.

Business etiquette

• The EduOz.com course could include content for entrepreneurs looking to do business in other foreign countries, so it would pay to learn about the way different culture's view notions of introductions/relationships, business card provision, being on time/punctuality, gifts, socialising expectations, working hours, handshakes and dress codes.

Communication protocols

• EduOz.com developers need to pay attention to how they convey their messages. For instance, some cultures may value directness and brevity, while other cultures may prefer a more indirect and nuanced communication.
• Even though the course a written in English, understanding the importance of subtle non-verbal communication between cultures is crucial in international business.

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Level of consumer demand

• Price: from an economic point of view, price can determine the level of demand for goods and services. EduOz.com must consider at what price customers in international markets are willing to pay.
• Scale of demand: it is estimated that by 2025, one billion students from around the globe will be actively seeking education and skill development.
• Economic growth: owners should monitor GDP levels in the various countries they would expand to. Increased GDP may mean more availability of disposable income, which makes it fertile ground to establish operations there.
• Product quality: the online education platform must be able to work well in all operating system and internet browser contexts (e.g., iOS, Windows, Chrome, Mozilla, Safari). The quality of the product must also be dynamic so that it works on desktops and mobile devices.
• Marketing: EduOz.com's branding efforts could also influence demand if people are persuaded to believe in the benefits the online product may provide them. Perhaps some testimonials from satisfied customers may be appropriate in establishing credibility.

Competitor activity

• 'Globally, the online learning industry is increasing rapidly with many regional education hubs being established by competing international learning institutions'.
• Competition within the Southeast Asian online education industry would be fierce. Competitors from Southeast Asian regions may have a significant competitive advantage in that they would have the resources available to translate into different languages, including Mandarin.
• Aspects of the competitor activity could be to scan those that are offering similar online learning products and the degree of market share they are currently holding.
• EduOz.com would want to know who the new and old players in the market are. As well as growth rates of all the competition in order to evaluate who are the biggest threats.
• Competitor activity in terms of marketing strategies would be a very important measure of feasibility, such as the occurrences where pricing wars happen or social media platforms where a high volume of advertising is taking place.

Inputs refer to the resources used to make a business’ goods or services, such as raw materials, equipment or labour. Some inputs at Samaah’s Foodz include the ingredients used to make the savoury foods that are frozen, as well as the freezers used to freeze and store the product. Additionally, the employees employed to stack the frozen savoury food items are an input.

One low risk strategy Sammah’s Foodz could use is communication, which is the transferring of information (about the change to introduce new technology to broaden products and reduce waste) to employees. The communication of this change should openly and honestly outline the reasons and benefits for changing, including to achieve the new goals of broadening products and reducing waste, as well as communicating consequences of not changing. By allowing employees to clearly understand the reasons for change in order to remain competitive, they are more likely to accept the change and thus employee resistance can be overcome.

Sammah’s could minimise waste through the implementation firstly of ‘reduce’, which involves minimising unnecessary resources that do not add value to the final product. By identifying areas of their production process that do not add value, such as excess packaging around their frozen goods, they could begin only purchasing the minimum necessary packaging, thereby reducing that wastage that results when customers throw this material away.

Next, they could utilise ‘reuse’ to identify materials such as packaging that would otherwise be discarded, and use it again. For example, they could develop a system in which customers return the packaging from their products in return for discounts. Sammah’s could then reuse this packaging again and reduce its wastage.

Finally, they could utilise ‘recycle’ by using materials that would otherwise be discarded and transforming them into new products. For example, offcuts from the ingredients they use in their savoury foods could be repurposed into new meals, such as creating a new frozen soup range with the offcut ingredients, thereby recycling them and reducing waste.

One advantage of Porter’s differentiation strategy for Sammah’s Foodz is that it means that they will be able to charge premium prices for their frozen savoury items as their competition don’t have these items. Moreover, another advantage of Porter’s differentiation strategy for Sammah’s Foodz is that they will be able to attract a more loyal customer base whereby customers can only buy those products from them. Therefore, this can lead to an increased number of sales from their loyal customers.

However, one disadvantage of Porter’s differentiation strategy for Sammah’s Foodz as they seek to increase their sales is that it could be expensive to implement a range of products that their competition don’t have and so this could ultimately take away from their ability to focus on actually selling the items of a perceived value. Furthermore, another disadvantage of Porter’s differentiation strategy for Sammah’s Foodz is that it may not be hard for other competing businesses to also introduce the products Sammah’s stocks, which could therefore lead to decreased sales.

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• sustainability aims to meet the needs of the business while seeking to protect and preserve resources and the environment for the future. This includes finding ways to reduce waste and recycling of more resources such as water, energy and paper
• CHF can also measure their carbon footprint and investigate carbon offsets. Sustainable practices can differentiate businesses in the market and be used to promote the CHF in a positive light to build CHF's customer base
• CHF's employees will feel ethical by working in a sustainable business. Sustainable businesses have been shown to improve staff morale and increase staff productivity and reduce absenteeism
• one way that CHF can be more sustainable is for it to be efficient with resources, recycling supplies and reducing waste. CHF can promote the business more through its website and social media and not through other advertising methods such as print material.

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• control of quality may involve quality assurance (QA), quality improvement (QI) and quality control (QC)
• QA refers to a set of activities designed to make sure the development and maintenance process is adequate so that a system can meet its objectives, for example, CHF could use QA to prevent defects throughout the production process
• QI refers to the effort taken to increase efficiency, actions and procedures, with the purpose of achieving additional benefits for the business and its users, for example, CHF could use Total Quality Management (TQM) to improve its production process
• QC refers to the process of checking and reviewing processes at the end to determine if the requirements of the business are being met, for example, it ensures that the final product meets a defined set of quality criteria and meets the requirements of CHF's customers
• maintenance of quality is essential for CHF to maintain its brand. A brand is often associated with a particular level of quality and any lowering of quality or perception of quality would result in a loss of consumer confidence in the brand resulting in a decline in sales and profits.

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Profit ratio:

• shows the percentage of net sales
• in 2022, this was 12% which means for every ＄1 of sales earned, CHF had ＄0.12 profit
• in 2023, this increased to 14%, which means for every ＄1 of sales earned, CHF had ＄0.14 profit
• ratio has improved in 2023 by 2%.

Return on equity ratio:

• measures how much profit a business generates on capital invested
• in 2022, this was 8%. For every ＄1 of sales earned, CHF had invested ＄0.08 from capital
• in 2023, this increased to 11%. For every ＄1 of sales earned, CHF had invested ＄0.11 from capital
• ratio shows a 3% improvement in generating profits.

Expense ratio:

• shows the percentage of sales that is consumed by operating expenses
• in 2022, this was 60%. For every ＄1 of sales earned, CHF consumed ＄0.60 in operating expenses
• in 2023, this decreased to 55%. For every ＄1 of sales earned, CHF consumed ＄0.55 in operating expenses
• this ratio has improved by 5%, showing that CHF has reduced its expenses.

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Customs:

• when conducting business in another country such as Indonesia, CHF will need to consider cultural differences that may be presented
• cultural differences could include basic customs, mannerisms, and gestures. For example, if a salesperson for CHF approaches a meeting with knowledge of a customer's cultural background, then this salesperson's words, body language, and actions can all be adapted to better suit those of the customers in Indonesia
• understanding cultural differences and adapting to these differences will allow CHF to be better-liked by customers in Indonesia. This will enable CHF to grow their customer base, increase their sales and profits, and to operate successfully in Indonesia.

Business etiquette:

• the formality of address is an important consideration when dealing with colleagues and business partners from different countries. CHF can consider if team members in Indonesia prefer titles and surnames or being on a first name basis
• while it can vary across organisations, Asian countries such as Indonesia tend to use formal 'Mr/Ms Surname', while Australians and Americans tend to use first names
• CHF will need to be aware of business etiquette in the countries in which they choose to operate. This will allow CHF to operate successfully in Indonesia.

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Banks:

• offer a variety of deposit, investment and loan accounts to businesses
• the money collected from depositors and money earned from investments is used to fund loans to customers, such as to Tartology Ltd
• banks are presently offering all time low interest rates which Tartology Ltd could take advantage of.

Finance companies:

• provide loans for businesses
• a finance company gains its funding from banks and other financial institutions at a set interest rate and uses these funds to extend credit to customers like Tartology Ltd
• a finance company will earn profit by charging its customers a higher interest rate than what they are paying and may charge loan fees and other administrative charges
• unlike a bank, Tartology Ltd would not need to put up a deposit.

Other sources of external funding:

• Debentures – are issued by a company as a long-term loan to the debenture-holder. Debentures provide a long-term source of finance without the business losing any control. Debenture holders do not have a voting right so Tartology Ltd could raise funds without losing any control of the company.
• Share capital – the funds raised from selling shares in a limited company. This can generate a large sum of finance for the company. This is the main source of finance for limited companies. Should Tartology Ltd raise funds from selling more shares, the company would increase the number of shareholders to whom profits are distributed.
• Venture capital – investment in small to medium-sized businesses that have a strong growth potential, normally at the start of a business idea. The amount borrowed can be paid back over a number of years.

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Ethical practice means a business is operating in accordance with the rules or standards for right conduct or practice.

Minimum standards of labour by the International Labour Organisation (ILO), including the use of child labour:

• the International Labour Organisation is a United Nations agency dealing with labour issues, particularly international labour standards and decent work for all
• in sweatshops workers are paid little for their work, are forced to work unpaid overtime, with no breaks, and are punished for slow work and mistakes. Tartology Ltd must ensure they pay New Zealand workers fair pay
• an ethical approach for global businesses relying on cheap labour working in poor conditions is to collaborate with local unions – if a global business continues to exploit workers to keep its profit margin, it will not maintain long-term success due to a poor public image
• Tartology Ltd should adhere to fair wages, occupational and health regulations for long-term business success.

The role of corporate social responsibility:

• the voluntary commitment of businesses to include in their business (corporate) practices economic, social and environmental considerations which are beyond those required by legislation
• the role of CSR is for Tartology Ltd to achieve its business goals in the context of the broader system in which it operates, thus giving due consideration to the community and environment of a range of stakeholders
• a business that considers ethical and environmental issues relating to its business activity acts morally towards its stakeholders
• Tartology Ltd could create and publish an ethical code of practice
• Tartology Ltd should conduct its business ethically and legally, such as without bribery or corruption
• Tartology Ltd could consider sponsorship and providing donations to causes that target its market.

Environmental sustainability:

• sustainability aims to meet the needs of the business while seeking to protect and preserve resources and the environment for the future. This includes reducing use, waste and recycling of resources such as water, energy and paper.
  Tartology Ltd can manage this by having an e-business arm
• Tartology Ltd can measure its carbon footprint and investigating carbon offsets. Sustainable practices can differentiate businesses in the market and be used to promote the business in a positive light
• employees will feel they are contributing to society by working in a sustainable business. Sustainable businesses have been shown to improve staff morale and increase staff productivity and reduce absenteeism
• Tartology Ltd needs to be efficient with resources, recycling supplies and reducing waste.

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Currency fluctuations:

• the change that occurs in the dollar value of one country’s currency relative to another country’s currency
• currency fluctuations can result in Tartology Ltd losing money and this should not be a smaller risk since ‘the Australian Dollar has been on par with the New Zealand Dollar’
• Tartology Ltd will need to have greater financial/economic understanding of both local and export market financial environments, and the interactions between these two environments.

Non-payment of monies:

• these refer to not being paid for the goods or services supplied to the export market
• this can cause difficulties for Tartology Ltd to recoup monies offshore as opposed to onshore: this could include legal, time, cost, effort and the knowledge to do this
• there is less influence/assistance for institutions such as the ACCC due to jurisdiction, influence; hence greater individual business risk for Tartology Ltd
• there is greater risk in terms of Tartology Ltd having the correct legal documentation to minimise potential financial risk
• there is increased complexity of supply chain; hence Tartology Ltd’s understanding and development of systems to know/record/trace where the monies come from and go to and the point at which monies are owed and by whom.

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Economic activity:

• inflation – if a country is experiencing high inflation, interest rates are likely to increase, which may affect the consumers’ disposable income to purchase a product or service
• consumption patterns and income levels influence pricing and distribution strategies
• completing an environmental scan to scope competitor’s activity in New Zealand, e.g. research competitors’ technology/infrastructure capabilities and strategic directions
• Tartology Ltd should be aware of how many competitors are in the market, its positioning and the basis of its competition and should be aware of the consumption patterns of its target market in New Zealand.

Discretionary spending:

• there would be a need for accurate and timely market research to determine discretionary spending habits and patterns of current and developing global markets; consumer confidence levels
• consumers must have the purchasing power to make a product or service viable
• Tartology Ltd would need to identify where its target markets are with disposable income to afford its products.

Interest rates:

• this may impact spending patterns in global markets and may impact global expansion, for instance in the development of infrastructure
• when businesses have access to finance with lower interest rates in other countries, they are able to more easily manage their repayments/reduce their costs
• Tartology Ltd can increase its level of investment as ‘interest rates are at an all-time low’ enabling it to finance operations/global expansion.

Currency fluctuations:

• the change that occurs in the dollar value of one currency relative to another country’s currency – a country’s currency is an indicator of the strength of the country’s economy
• transactions in foreign currencies are affected by variations
• can have an impact on the product and/or distribution costs to consumers in the New Zealand market. This can tend to have greater impact on chocolate tarts, especially if these are deemed to be luxuries
• the probability of currency fluctuations in the short-term have been researched ‘the Australian Dollar has been relatively on par with the New Zealand Dollar’ and this should result in very little impact for Tartology Ltd.