SCSA Business Management and Enterprise Environments

Answers could include:

• when Australian businesses choose to use Australian resources and labour, businesses contribute towards local job creation, supporting the Australian economy
• for example, Australian farmers and manufacturers benefit from businesses demanding locally sources materials
• Australian made products are associated with high quality, safe and ethical standards, thus businesses can leverage the 'Australian Made' logo which appeals to consumers who prefer to buy and support domestic industries
• home grown production and manufacturing reduce reliance on international suppliers which in turn reduces risks from global disruptions such as pandemics, political conflicts and shipping delays. This ensures more efficient production
• home-grown products reduce transport distances supporting environmentally sustainable practices
• Australian businesses can often charge a premium price for locally made products as customers a willing to pay a higher price for Australian craftsmanship
• Australian businesses creating home grown products can sometimes access government incentives such as grants and tax benefits and receive strong community support
• local production can allow businesses to maintain a better oversight of the manufacturing processes ensuring higher quality products, as well as maintaining better treatment of staff.

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A business may consider the following points when making decisions about using offshore labour:

• ethical businesses will ensure there are fair labour practices, ensuring offshore workers receive fair wages and work under safe conditions, avoiding exploitation
• businesses, in their decision making, should choose suppliers or factories adhering to international labour standards to avoid negative publicity
• if business do not consider the role of ethics in their global business decisions, they risk reputational damage. Poor labour practices, such as employing underage workers or unsafe conditions, can lead to consumer boycotts and legal consequences thus making ethical decisions can reduce reputational and financial risks.

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Grant: Export Market Development Grant (EMDG) provided by Austrade

• gives qualifying businesses funding for costs such as market surveys, advertising campaigns, and for attending international trade fairs
• assists small to medium-sized businesses to overcome financial barriers toward international market entry
• aids businesses via its eligible promotional expenses, helping them to expand their market presence globally
• provides financial support in order to develop sustainable export strategies.

Taxation: Research and Development Tax Incentive (R&DTI)

• offers a tax offset for companies conducting eligible R&D activities
• encourages investment in R&D to help a business to grow and innovate, which generates benefits for the Australian economy
• depending on the business' annual turnover, the R&DTI provides either a refundable or non-refundable tax offset.

Customs duty:

• can be claimed on excise equivalent goods (EEGs)
• businesses can claim a refund of some or all the customs duty that they have paid on EEGs in some situations. For instance, if they can prove that EEGs were damaged while they were in customs before delivery into the Australian market
• businesses are not able to claim a refund or drawback on fuel if they are eligible for a fuel tax credit.

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World Trade Organisation (WTO) regulations and sanctions:

• The WTO is an organisation that sets standards for international trade and rules of Free Trade Agreements (FTAs).
• Its role is to combat multinational corporations that exploit developing nations with regard to environment and labour.
• The WTO sets standards of transparency of trade partners, lowers barriers for increased access to the global market and helps facilitate trade agreements.
• It is also charged with the task of resolving conflicts if they arise, thus helping drive global business development.

Consumer purchasing and spending patterns:

• Involves human behaviour of how a consumer makes a decision to acquire or purchase a product.
• If spending patterns increase in a country, or the availability of higher spending patterns occurs, it allows for opportunities for a business to expand globally.
• As most people have access to the internet and smart phones, thus consumers’ awareness of products and ability to purchase products globally has helped drive global business development. For example, during the pandemic, online shopping grew tremendously, making opportunities for online businesses to grow and innovate.
• The availability of credit and the Australian dollar strengthening has increased purchasing power in Australia.
• There is a greater choice of products, secure and reliable payment systems, and an increased level of satisfaction with online shopping among all ages groups.

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Globalisation is the spread of products, technology, information and jobs across
national borders and cultures, which has led to international cooperation.

The impact of globalisation on international cooperation:

• Multicultural societies show increased diversity, understanding of other cultures and norms, increased travel, migration and thus exposure to more diversity. Therefore, international cooperation is enhanced though globalisation.
• The impact of globalisation has seen increased policy and/or practice of cooperation among societies/countries, improving relationships and cooperation internationally politically, socially and economically. Australia’s engagement with the Association of Southeast Asian Nations (ASEAN) is an example of strategic partnerships across nations.
• Globalisation has led to collaboration between nations such as the World Trade Organisation, World Health Organisation, increased FTA’s, development of the United Nations (UN) and working towards projects such as the UN Sustainable Development Goals.

Answer(s) could include:

• Environmental responsibility could involve the use of renewable energy or the reduction of energy consumption.
• Reduce waste by implementing a recycling program and/or using recyclable packaging. For example, instead of using disposable cups, offer such things as travel mugs and stainless steel water bottles.
• Conserve energy within the office by turning off lights and equipment during non-office hours.
• Conserve resources by promoting a paperless office by creating digital and cloud computing solutions.
• Communicate environmental practices to consumers to explain the recycling steps you are using to encourage their support and possibly follow your example.

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Greater profits:

• Greater sales of home grown products overseas leads to greater profits for the business and these profits staying in Australia.

Increased employment:

• Greater sales lead to more employment in the home country. This provides residents with more income to spend.

Increase in government revenue:

• Greater profits from increased sales will result in increases in taxation collection. This can be used for essential services, such as schools, hospitals, roads and infrastructures, to benefit the people living in the home country.
• Lower unemployment levels mean less crime, less social welfare and the subsequent increase in the collection of income taxes for the government.

Social benefits:

• Greater opportunity for innovation, such as research and development.

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Government grants:

• provide financial assistance to help encourage export development to other countries
• are used to reduce upfront costs for businesses that want to expand internationally. This makes expansion more financially viable
• examples include Austrade and Export Market Development Grants.

Taxation:

• concessions, such as exports, being exempt from GST
• the Duty Drawback Scheme allows exporters to claim refunds on customs duty they have paid
• tax incentives for research and development expenditure through the Australian Taxation Office.

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• strengthens the broader relationship between Australia and New Zealand
• develops closer economic relations between the member states through a mutually beneficial expansion of free trade between New Zealand and Australia
• eliminates barriers to trade between Australia and New Zealand in a gradual and progressive manner, under an agreed timetable and with a minimum of disruption
• develops trade between New Zealand and Australia under conditions of fair competition.

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Benefits:

• There could be increased profits due to Australian-owned businesses like Jensenze selling more products by exporting internationally, with fewer restrictions.
• Greater market share and access to overseas markets, in this case the New Zealand market.
• The harmonisation of Trans-Tasman food standards through Australia New Zealand Food Authority (ANFA) agreement means lower compliance costs and fewer regulatory barriers.
• FTAs can stimulate economic growth in Australia, reducing unemployment and increasing the country's gross domestic product. Thus, overall there is higher consumer confidence and they are able to spend more money, which is beneficial to small businesses.

Challenges:

• There could be increased competition in Australia from foreign-owned businesses so that Australian businesses like Jensenze, would have more competitors to compete with locally.
• Jensenze's market share in Australia could be reduced due to overseas competitors from businesses that enter the market due to the FTAs.
• Businesses like Jensenze could become less competitive due to there being higher labour costs in Australia.
• This could put pressure on small businesses if they were not prepared to expand globally. Jensenze, in this case, would not feel too much pressure if it expands into the New Zealand market.

Answers could include:

• tariffs will be progressively reduced from entry into force of the Agreement, and eliminated for at least 90% of all tariff lines within specified timelines;
• movement of goods will be facilitated via a more modern and flexible rules of origin, simplified customs procedures, and more transparent mechanisms;
• barriers to trade in services will be progressively liberalised allowing for greater market access to service suppliers in the region;
• movement of business persons, those engaged in trade and investment activities, will be facilitated; and
• covered investments will be accorded a range of protection, including the possibility of dealing with disputes via an investor-state dispute settlement mechanism.
• provides legal protection for investment in ASEAN territories.

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Benefits:

• reduced tariffs and lower costs for businesses
• more growth opportunities
• strengthen economic ties with countries that are signatories to the same FTAs
• access a larger customer base
• diversify to reduce dependency on a single export/import country.

Challenges:

• different judicial systems so any cross-border disputes will be costly and difficult to resolve
• potential oversaturation in the market with increased global competitors
• different regulatory standards and cultural differences make it hard for Australian businesses to succeed
• businesses are pressured to change the way they operate to cater to new markets.

Answers could include:

• e-commerce is the action of buying and selling goods and services over electronic means such as the Internet, social media, etc.
• involves online transactions and payments between businesses and consumers, businesses and businesses, and consumers and consumers
• consumers have 24/7 access to a wide range of products and services
• businesses have access to many different markets, outside of their domestic ones
• businesses can diversify the supply chain, reducing dependency on a particular domestic supplier or buyer
• results in increased competition, which leads to improved product quality, but can damage the development of new-found domestic businesses
• businesses can take advantage of lower pay and cheaper working conditions in other countries
• developing countries can have foreign investment to develop their infrastructure.

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Changes to employment levels in developing countries and developed countries:

• employment levels in developed countries are generally lower than developing countries
• the higher the unemployment level, the greater are the opportunities businesses have of paying lower wages and having more applicants to choose from when they advertise jobs
• low unemployment in most developed countries means that wages are higher and there are less applicants to choose from when jobs are advertised. This drives globalisation towards developing countries, because labour costs are lower.

Global spread of skills and technology:

• technology – communication technology is developing at a rapid rate, including in developing countries. Ease of communication allows businesses in different countries to work together to achieve goals. For example, transport technology (in the form of shipping containers) improved as more goods were transported
• skills – leads to greater sharing of ideas and education. If the required skill sets are not available in a country, the ability to globalise may be hindered.

International cooperation:

• free trade agreements (FTAs), co-productions and strategic alliances to allow for the growth of globalisation
• governments working together through FTAs, negotiations, deregulation and agreed standards
• establishment of positive global working relationships
• greater access to international labour/skills, technology, capital and distribution channels in other countries
• lack of international cooperation can hinder the ability for further globalisation.

Changes in domestic market:

• if a domestic market is flooded with a product or industry type, this may push for businesses to send products overseas or to look for profits in other countries
• domestic businesses might need to decrease the price of their products to compete negatively, affecting their profits. This can lead to cost-cutting domestically, including redundancies.

Tax minimisation, which could include tax havens, and transfer pricing:

• tax haven – is a jurisdiction that has a low rate of tax or does not levy a tax. It offers some degree of secrecy. Tax havens do not share or provide information to other financial institutions or governments
• transfer pricing – is the setting of the price for goods and services sold between controlled legal entities within an enterprise. For example, if a subsidiary company sells goods to a parent company, the cost of those goods paid by the parent to the subsidiary is the transfer price. This allows for the manipulation of profits and the consequent amount of tax paid by the enterprise.

Answers could include:

• there is possible local economic development and prosperity from income and employment opportunities in the home grown business
• increased income to home grown businesses through the sales of their products internationally
• generation of money through local home grown businesses (multiplier effect)
• creation of employment opportunities for home grown businesses in areas such as design, production, sales and distribution of home grown products
• increased awareness of home grown products within the local community in terms of knowledge and pride in Australian home grown products
• recognition of high Australian standards, quality and authenticity
• increased awareness and recognition of high quality Australian home grown products could lead to opportunities and/or innovative ideas to pursue other home grown products.

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Financial assistance, such as grants, to encourage export development:

• government departments such as Austrade provide financial assistance to help encourage export development to other countries. They are used to reduce upfront costs for businesses that want to expand internationally. This makes expansion more financially viable
• a home government incentive for international trade is the Export Market Development Grant (EMDG) which is a key Australian Government financial assistance program for aspiring and current exporters. The EMDG scheme encourages small and medium-sized Australian businesses to develop export markets, reimburses up to 50 per cent of eligible export promotion expenses above $5,000, provided that the total expenses are at least$15,000 and provides up to eight grants to each eligible applicant.

Taxation incentives:

• concessions, such as exports being exempt from the goods and services tax (GST) and the Duty Drawback Scheme, allow exporters to claim refunds on customs duty they have paid. There are tax incentives for research and development expenditure through the Australian Taxation Office
• the Duty Drawback Scheme enables exporters to obtain a refund of customs duty paid on imported goods where those goods will be treated, processed, or incorporated in other goods for export
• the Tradex Scheme – this is a cash flow benefit for importers who intend to export goods. They do not have to pay the relevant customs duty or GST at the time of import. It provides exporters with an upfront exemption from customs duty and GST for goods imported into Australia and then exported within one year.

Answers could include:

• E-commerce enables businesses to access a global market, increasing brand exposure and the potential to increase sales and profits.

• The growth of e-commerce and the use of mobile devices such as phones and laptops has enabled better communication between staff, customers and suppliers around the world.

• E-commerce enables businesses to sell their products/services online over the internet, allowing them to access a global market. It enables business to consumer (B2C), consumer to consumer (C2C) sales and business to business (B2B) buying and selling.

• Businesses are able to use technology such as mobile commerce, electronic funds transfers, internet marketing, inventory management systems and data collection systems to grow their business in a global environment.

• Businesses have been able to take advantage of developments in transportation, communication systems, secure payment systems, 24/7 online shopping and digital distribution of products in order to operate in a global environment.

Answers could include:

• businesses should be aware of their ethical role in the use of offshore labour, and be aware of the host country's labour regulations and workplace conditions
• through policies and procedures businesses should consider their ethical actions and decisions when operating offshore
• businesses should avoid the use of sweatshops where workers are paid little for their work, are forced to work unpaid overtime or to work with no breaks.

Answers could include:

• deregulation will allow businesses to source funding for their business operations for lower costs in overseas markets
• deregulation makes funding more accessible/less expensive, allowing businesses to expand globally
• deregulation is the reduction of legislation and laws imposed by the government on a financial market. Therefore, deregulation drives global business growth as business processes and procedures become easier and more cost efficient
• deregulation of financial markets allows industries to operate businesses more freely and businesses to make decisions more efficiently since there is a reduction of legislation in the financial markets.

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Employment levels in developing and developed countries:

• employment levels in developing countries are generally lower than developed countries
• globalisation has allowed businesses to have more applicants to choose from when they advertise jobs as they can access an international market
• the higher the unemployment level, the greater the opportunities for global businesses to pay lower wages, thus having the potential to increase profit margins. This also means domestic workers may lose out on job opportunities due to cheaper labour overseas
• low unemployment in most developed countries means that wages are higher and there are less applicants to choose from when jobs are advertised. This drives globalisation towards developing countries because labour costs are lower.

The global spread of skills and technology:

• global spread of skills leads to greater sharing of ideas and education
• e-commerce and improved security and privacy allows for businesses to sell products and services internationally and widen their markets
• if the required skill sets are not available in a particular country, due to globalisation, businesses can choose to employ international candidates, diversifying teams, hence providing a global spread of skills
• communication technology is developing at a rapid rate, including in developing countries. Ease of communication allows businesses in different countries to work together to achieve goals. For example, transport technology (in the form of shipping containers) improved as more goods were transported.

Answers could include:

Financial growth opportunities and loss minimisation:

• JTS identifies financial growth opportunities through investment in a new market with a bigger customer base. Asia has more than 1 billion people so opportunities are numerous. Also, opportunities lie in government grants, such as the USD 700 000 grant for new technology businesses in Vietnam. This presents a significant financial incentive for the company's expansion and establishment in Southeast Asia. With this, the level of risk that JTS undergoes is minimised when their required investment is lower
• the consideration of potential risks, such as overdependency on the domestic market, indicates a proactive approach to loss minimisation. By expanding into Southeast Asia and leveraging government benefits, JTS aims to diversify its revenue streams and minimise the impact of market uncertainties.

Consumer purchasing and spending patterns:

• with a booming demand in Southeast Asia, the business will benefit greatly when expanding into this area. They are more likely to make more profit, secure a bigger customer base and diversify their investment portfolio
• the choice of Southeast Asia, particularly Vietnam, as the first foreign market reflects a strategic effort to tap into the growth potential of emerging markets. The emerging markets are seen as having more potential due to their exponential growth. By aligning their operations with consumer behaviour in these regions, the company aims to establish a strong market presence and drive financial success
• each country in this region has a different spending pattern, so understanding the nuanced differences between each country greatly supports JTS's plan.

World Trade Organisation (WTO) regulations and sanctions:

• Jessica and Lexi's business is based in Australia, which is a member of the WTO, so they understand the stringent regulations of the WTO and can make sure that the business operates within the limit and scope of the WTO's regulations
• WTO regulations create a fair ground for member countries to do business with each other, making sure that international businesses are protected, are not restricted by protectionist policies of host countries, and have help with conflict resolution. If a member country does not comply with WTO regulations, sanctions will be placed on them, creating an economic loss for businesses from that country
• when JTS expands into Southeast Asia, they have to comply with WTO regulations which can incur additional costs for them, but they will also be protected by an internationally standardised set of regulations. This minimises regulatory and legislative risks for JTS.

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Tax havens:
Tax havens are jurisdictions or nations that offer favourable tax conditions and financial secrecy to individuals and businesses. These locations attract entities seeking to minimise their tax liabilities by taking advantage of lenient tax regulations, low or zero tax rates, and other financial incentives.

The impact of globalisation on tax havens for JTS:

• globalisation enables JTS to strategically choose tax havens. In the jurisdiction of Southeast Asia, Singapore is considered a tax haven with a low corporate tax rate and flexible tax regulations
• the company may establish subsidiaries or operations in tax havens to minimise its overall tax burden through lower tax rates, exemptions, or preferential tax treatment while also maintaining secrecy of its operations.

Transfer pricing:
Transfer pricing is the action of pricing the same product/service differently, which is produced by the same organisation/business with branches in more than one country. Transfer pricing sometimes allows businesses to legally pay less tax than required due to pricing set by a branch in a jurisdiction with more favourable conditions.

The impact of globalisation on transfer pricing for JTS:

• although transfer pricing is a legal way to minimise JTS's tax liabilities when setting up a new branch in Southeast Asia, which has more favourable tax conditions than Australia, different tax laws and business regulations might end up costing the business more, which counters the purpose of transfer pricing
• the company must carefully manage transfer pricing to comply with international tax regulations, ensuring that transactions reflect market values. This allows for the optimisation of tax liabilities while maintaining compliance
• JTS also runs the risk of double taxation because, when not done properly, transfer pricing can lead to JTS being taxed in both Australia and Southeast Asia.

Answers could include:

Grants:

• Jessica and Lexi are considering expanding into Southeast Asia, specifically Vietnam. The host country, Vietnam, offers a grant of up to USD 700 000 for new technology businesses. The grant serves as a financial incentive for JTS to minimise the cost of the establishment, and promotes mutual economic development, job creation, and the growth of the technology sector in Vietnam
• grants open up a window of opportunities for similar WA businesses to consider like markets and creates further economic development between Australia and Southeast Asia
• Jessica and Lexi might also explore whether the WA or Australian government offer grants or financial support for businesses expanding into the Southeast Asian market because they are strategic partners in AANZFTA. These grants can help offset initial investment costs, support market entry, and enhance the competitiveness of the Australian technology industry on the global stage.

Taxation:

• the Australian government offers taxation policies that benefit businesses engaged in international trade, such as tax credits for overseas investments, exemptions on certain types of income, or provisions to avoid double taxation
• these tax incentives encourage Australian businesses to engage in international trade, promoting economic growth, fostering competitiveness, and supporting the global expansion of companies like JTS
• Southeast Asian countries may offer favourable tax rates or tax holidays for a specified period to attract foreign businesses. This could include reduced corporate income tax rates for technology companies operating in specific regions. The reduced tax burden encourages foreign companies like JTS to invest in the host country, fostering economic growth and technological development.

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Environmental responsibility:

• as a technology business, JTS has the responsibility to ensure that they are environmentally sustainable, adopting sustainable practices and minimising the ecological footprint of their operations
• JTS, under WTO regulations and the regulatory requirements of Southeast Asian countries, has to commit to environmental regulations, ensuring that its activities align with the legal requirements of the host country
• when they develop a software or hardware product, JTS needs to consider the carbon footprint created by the use of the product, the materials to make the product, and the supply chain from which the product is made
• the operations have to use clean energy, involve low energy consumption, sustainable waste management, or JTS could consider renewable energy investment
• stakeholders in the supply chain have to be environmentally responsible, too. When JTS partners with companies that do not comply with environmental regulations, the products could be boyotted.

Outsourcing:

• outsourcing is the use of labour in a different jurisdiction, usually to take advantage of cheaper labour costs
• Jessica and Lexi may prioritise fair labour practices, ensuring that outsourcing partners adhere to ethical employment standards. They have to pay workers in these countries a fair wage, not as high as in Australia, but have to comply with fair labour practices
• to be ethical, Jessica and Lexi also need to consider the impact their outsourcing has on the domestic as well as Southeast Asian labour markets. They might push away jobs that can be given to domestic workers to cut costs, but they also create higher-paying jobs for Southeast Asian workers by doing so
• Jessica and Lexi also need to consider partnering with stakeholders that also employ ethical employment standards and are socially responsible
• they also have to consider educating the workforce in the host countries to improve training and skill-upgrading for outsourced workers.

Use of offshore labour:

• JTS may prioritise the fair treatment of offshore labour, ensuring that employees receive fair wages and are provided with safe working conditions, and that other employment benefits are fairly provided
• JTS needs to consider the impact that they can have on the local community, such as culture and job creation. One way to do that effectively is to appoint a local representative to report any unethical practices
• ethical considerations from Jessica and Lexi also involve respecting cultural differences and ensuring that offshore labour practices align with local norms and values
• as a technology company, JTS also needs to consider the ethical use of intellectual property, such as patents, for their storage software.

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Financial growth opportunities and/or loss minimisation:

• identifying and capitalising on new markets can lead to increased business revenue and a larger customer base
• a strong presence in multiple markets can enhance a business' financial stability and growth potential
• diversifying operations across different regions can mitigate risks associated with economic uncertainty and political instability
• an Australian business may go to a low-cost country to manufacture their products to increase their profit margin.

Consumer purchasing and spending patterns:

• consumers leverage technology and social networks to access and compare products globally
• businesses utilise technology to connect with consumers through social media and can enhance brand loyalty
• global transportation, digital product distribution and secure online payment systems create a robust platform for global business growth
• increasing consumer spending patterns or higher numbers of consumers drive businesses to expand globally, while decreasing patterns or lower numbers may slow expansion.

World Trade Organisation (WTO) regulation and sanctions:

• the WTO establishes standards for international trade and governs free trade agreements
• the WTO combats the exploitation of developing nations by multinational corporations, particularly concerning environmental and labour issues
• WTO rules require the elimination of tariffs and other trade restrictions between member countries and ensure non-discrimination against service suppliers
• the WTO sets standards for global businesses, including transparency, commitment and trade facilitation, aiming to maintain safe global trade with clear rules and dispute resolution mechanisms.

Deregulation of the financial market:

• governments worldwide have reduced barriers to the flow of money between nations through financial market deregulation
• deregulation allows Australian businesses to access market outside of Australia, which can help businesses expand their customer base
• deregulation enables businesses to be cost-effective in their global expansion, grow their international market share and facilitate the transfer of capital overseas
• Australian businesses can minimise or hedge against financial losses and increase profit if they expand into overseas markets.

Answers could include:

Changes in a domestic market:

• globalisation can result in competition to the domestic market from foreign businesses. This could encourage domestic businesses to improve their performance by becoming more efficient or innovative to combat the competition. However, to accomplish this, their costs might increase, affecting the demand for their goods/services and/or their profitability
• if saturation occurs for the products of a home country business, it could explore export opportunities in overseas markets. As well as adding another revenue stream, this reduces the business' dependency on the local market
• domestic businesses might need to reduce their prices to remain competitive with foreign businesses, resulting in reduced profits
• globalisation provides an opportunity for domestic businesses to access overseas suppliers. This could result in lower manufacturing costs, or the potential to manufacture new products to sell to customers.

International cooperation:

• Free Trade Agreements (FTAs) and strategic alliances encourage businesses to collaborate on trade and investment opportunities due to the strong ties between countries which is fostered by globalisation. This interconnectedness can lead to a more stable global market
• international cooperation in the sharing of technology and knowledge can result in research and development projects that lead to advancements in various fields globally, such as environmental sustainability
• through international cooperation, businesses can develop and implement effective solutions to challenges which benefit the global market, such as supply chain disruptions, environmental sustainability and cybersecurity threats
• globalisation encourages cultural exchange and understanding among businesses, fostering mutual respect and reducing international conflicts. Through increased interaction and communication, businesses can build stronger partnerships and work towards common goals in areas such as corporate social responsibility and ethical practices.

Answer(s) could include:

The AANZFTA:

• provides a platform for ongoing economic engagement between the three parties through a range of agendas, economic cooperation projects and business outreach activities
• promotes greater certainty for Australian and New Zealand service suppliers and investors, including certain legal protection for investment in ASEAN territories
• provides new opportunities for Australian and New Zealand exporters to tap into international supply chains in the ASEAN region
• reduces or eliminates certain forms of tariffs between the three parties.

Answer(s) could include:

• Competition: there could be increased competition in Australia from foreign-owned businesses so that Australian businesses would have more competitors to compete with locally.
• Market share: market share in Australia could be reduced due to overseas competitors, thus Australian owned businesses would suffer as a result.
• Competitiveness: Australian businesses could become less competitive due to higher labour costs in Australia.
• Regulatory complexity: small to medium businesses may find it difficult to navigate any regulatory complexity associated with exports FTAs.

Answer(s) could include:

Level of demand by consumers: refers to consumers’ desire and willingness to pay a price for a specific good or service. Feasibility of expansion will be impacted by:

• the number of potential customers and frequency of purchase
• the ability of customers to purchase products (disposable income).
  There must be sufficient potential customers or possible percentage of market share to warrant the investment of expansion.

Consumption patterns: refers to the process by which individuals identify, purchase and consume products and services to satisfy their needs. Feasibility of expansion will be impacted by:

• changing trends of consumers
• consumers looking for alternative products
• changing consumption patterns due to political motivations or wealth rise in developing nations, where consumers can now afford to purchase products which they previously could not afford
• seasonal and holiday events that affect consumption patterns.
  Businesses need to look for changes in these patterns for an opportunity to gain market share.

Competitor activity: refers to the number of competitors in the market and their market
share of a product. Feasibility of expansion will be impacted by:

• competitor activity that supports market entry, such as fewer competitors, products that are not easily copied or substituted, dissatisfied customers, no choice or value for money, competitors missing a market need or niche
• competitor activity that makes market entry difficult includes: the size, market dominance and wealth of competitors; an established brand which is part of a country’s culture; competitors who possess strong working relationships with suppliers and retailers.
  Businesses must be satisfied that their products/services can compete with existing
  suppliers and that their products/service cannot be easily copied to the same standard.

Chef@Home could introduce lean management, which is an ongoing management philosophy, whereby they seek to reduce wastage in each area of the business while still providing quality and value to customers. They can adopt the ‘pull focused’ principle whereby they only prepare and package the required amount of meals as demanded by customers, perhaps after they order it online. This will minimize wastage in terms of over-production of pre-made meals that will not be sold and thus have to be discarded. They can also minimise waste in regards to time through adopting the ‘flow’ principle, and minimising any wait times in their preparation and packaging of meals. Reducing starts and stops and bottle necks will minimise time that may otherwise be wasted improving the efficiency of operations.

Forecasting is a materials management strategy that uses data from the past and present and analysis of trends in attempts to determine future events. An advantage of forecasting is that it allows Chef@Home to identify what needs to be produced, in what quantities, how and when. This will result in “all inputs from local suppliers” actually being used and not wasted, thus assisting to improve efficiency of operations as Chef@Home is able to better utilise their resources. Moreover, Chef@Home using forecasting to order inputs from local suppliers in advance avoids the risk of having to outsource to other suppliers as they do not have enough inputs currently to supply boxes. As a result of this, Chef@Home will be improving the effectiveness of its operations as it is able to order inputs in advance to ensure all inputs are from local suppliers, this improving the business objectives of all locally sourced inputs.

However, a disadvantage of forecasting is that it will represent a cost to Chef@Home if the wrong quantities are calculated as it will lead to overproduction or underproduction. Overall, forecasting would be good to improve operations as it ensures that all local sourced inputs will be used.

A strength of sourcing from overseas suppliers is that this would allow Chef@Home to have reduced expenses, as typically overseas suppliers charge lower costs due to paying lower labour costs, hence passing on the difference to customers. Thus, this would help to increase Chef@Home’s net profit figure, hence they would have more capital for expansion, assisting Chef@Home to expand their business allowing for competitiveness to increase because they are able to operate and ship to a wider range of locations, due to this growth. However, a weakness of Chef@Home sourcing from overseas suppliers is that given the nature of the product, food, being perishable there is a risk that the ingredients could go bad given the travel time to ship them to the Chef@Home headquarters prior to being packed. Thus, this would likely increase waste at the business as they would have to discard a large amount of their inputs, increasing waste and thus limiting efficiency at Chef@Home. However, another strength is that by globally sourcing inputs Chef@Home may be able to purchase inputs which are unavailable locally. Thus, they may be able to offer a wider range of meals to customers in their boxes with these exotic ingredients. Thus, this would likely allow Chef@Home to create a point of difference from competitors, this allowing for a competitive advantage. However, a weakness of Chef@Home globally sourcing their ingredients is that they are not displaying social responsibility and sourcing inputs from local suppliers to promote local jobs in the community. Thereby this may damage the businesses reputation, as in an age of conscious consumers, many customers want to buy from businesses who support local jobs. Thus, through Chef@Home globally sourcing inputs they may lose competitiveness along with lowering percentage of market share.

Answers could include:

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.

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The Australian New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) is the free trade agreement that Australia solely has with New Zealand.

Features of the ANZCERTA:

• all tariffs and quantitative import or export restrictions on trade in goods originating in the free trade area are prohibited
• the agreement includes provisions for free trade in services, allowing most services to be traded without restrictions between Australia and New Zealand
• goods and occupations are mutually recognised, removing technical barriers to trade and facilitating the movement of skilled personnel between Australia and New Zealand
• Trans-Tasman food standards are harmonised, reducing compliance costs for industry and regulatory barriers
• the 2013 Protocol on Investment reduces investment costs, providing greater legal certainty and higher screening thresholds for investors in both countries.
• products that meet the ANZCERTA Rules of Origin criteria can be traded duty-free between Australia and New Zealand
• the ANZCERTA aims to strengthen the economic relationship between Australia and New Zealand through mutually beneficial expansion of free trade and reduced trade barriers.

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• access to a larger customer base across Australia and New Zealand would lead to higher sales of greeting cards and revenue for AuraAsh Designs
• enhanced brand visibility and recognition on an international scale will allow AuraAsh Designs to attract more customers and business opportunities
• a global brand can instil confidence in customers, leading to increased trust and loyalty towards the brand
• reduced dependency on a single market, providing financial stability and mitigating risks associated with market fluctuations
• establishing a strong global presence can differentiate AuraAsh Designs from competitors and position them as a leading brand in the greeting card industry
• potential for cost savings through bulk production and streamlined operations, leading to improved profit margins for AuraAsh Designs
• exposure to diverse markets can inspire new ideas and innovations, helping AuraAsh Designs stay ahead of trends and customer preferences in the greeting cards industry
• having a global brand will increase AuraAsh Designs' ability to attract and retain quality staff from different regions and allow the business to bring in diverse perspectives and expertise to the company.
  Accept other relevant answers.

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Just-in-time (JIT):

• just-in-time is an inventory control technique which focuses on minimising inventory as a business only receives inputs only when these are required in the production process. This allows a business to reduce holding costs, increase efficiency, and eliminate waste
• AuraAsh Designs can implement JIT by closely coordinating with local suppliers in New Zealand to deliver raw materials and card-making supplies precisely when they are needed for production. However, this requires the business to accurately forecast their demand and a responsive supply chain with their suppliers
• by using JIT, AuraAsh Designs can lower its holding costs as inventory is minimised, leading to reduced warehouse space requirements and associated expenses. This is particularly beneficial for AuraAsh Designs to manage different seasonal demands for their greeting cards when expanding into the New Zealand market.

Just-in-case (JIC):

• just-in-case is an inventory control technique that involves a business maintaining a level of reserved stock to guard against unexpected variations in demand, supply chain disruptions, or other uncertainties which may arise
• AuraAsh Designs can implement JIC by setting aside a certain quantity of inventory beyond what is expected to be sold in the immediate future. This reserved stock then acts as a safety net in case of unexpected events or changes in demand
• JIC helps maintain customer satisfaction by preventing AuraAsh Designs running out of stock during peak seasons or special occasions. However, JIC increases expenses incurred for storing inventory as AuraAsh Designs would require additional space for storage when expanding into the New Zealand market.
  Accept other relevant answers.

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Technology that assists business in the expansion into global markets:

• AuraAsh Designs can effectively reach their target audience in New Zealand if the business investigates and creates popular social networking sites. This would be an easy and cost-effective way to expand AuraAsh Designs' presence in the new market
• implementing technology that results in faster shipping solutions will improve AuraAsh Designs' customer satisfaction by ensuring timely delivery of orders. This positive experience can enhance AuraAsh Designs' reputation and encourage repeat consumers
• using GPS tracking for deliveries keeps both the business and customers informed. Customers receive updates via email or SMS, which boosts their confidence in the delivery process and enhances their overall experience
• AuraAsh Designs can invest in reliable hardware and software to meet their business needs. Enhancing their website to support multiple languages and currencies will increase their reach, allowing customers to make purchases in their preferred language and currency.

E-commerce, security and privacy issues:

• it is crucial for AuraAsh Designs to stay current with security software and ensure that customer information is not publicly shared. Regular updates can help AuraAsh Designs protect against any new threats and vulnerabilities
• poor security practices and privacy breaches can cause loss of income and customer data, which can severely damage AuraAsh Designs' reputation. This can result in a loss of customer trust and a subsequent decline in sales
• AuraAsh Designs could invest in secure online payment methods, such as PayPal, to ensure secure transactions. This requires allocating funds towards privacy and security software, which can provide customers with a peace of mind when they make purchases through AuraAsh Designs' website
• to safeguard against potential security and privacy threats AuraAsh Designs should regularly review and audit their policies and procedures. This proactive approach can help the business identify and address potential vulnerabilities.

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Skilled communicator
This trait enables a leader to effectively encode messages that transcend language
and cultural barriers. The communication itself has to be incredibly nuanced in that it
adheres to the cultural norms of people who receive the message. As well as
adhering to cultural norms, the message itself must be clear enough for a message to
be understood.

Socially aware
Cultures are socially constructed so an effective leader must understand the social
dynamics of a particular type of culture if they are to be able to be accepted within
various cultural groups, such as ethnic cultures and popular sub-cultures. A leader
who understands the way relationships are formed and maintained can help to create
a positive and effective workplace.

Skilled decision-maker
When someone makes a decision, they take action from a series of options. They
assume the implications of each decision and follow a well thought-out and
reasonable rationale as to the decision itself, despite any inherit risk. This rationale
must be in-tune with what is happening on a cultural level within an organisation
because the way in which a decision is made can be the results of one’s own cultural
values.

Future thinker
A leader who is a future thinker is someone who is able to anticipate, predict and
imagine opportunities and challenges. They can do this by investigating trends and
using their intuition to uncover potential areas of business growth. Future thinking can
also enable a leader to establish shared visions among fellow staff. Future thinking
can be the catalyst for motivation in the workplace. Thinking about the future can be
something that transcends cultural boundaries, however, there may also be variations
on the level of importance different cultures place on the future.

Self-discipline
This refers to being able to control yourself in terms of how you feel and act in
particular situations, especially ones in which there is a temptation to do (or not to do)
something else. In a cross-cultural setting this could mean being able to keep your
emotions under control, especially if there is some sort of miscommunication or
misunderstanding between people from different cultures. As a leader, it could also
mean being able to stand outside your cultural comfort zone and be able to make a
determined effort to apply and embrace cultural norms.

Responsible
The ability to be independent, accountable, accept authority and be more aware that
actions have consequences. The need in a new cross-cultural setting to understand
pre-established ideas, to understand where adaptation or new ideas are required, to
demonstrate they can think for themselves, often seeing new perspectives, real
purpose and outcomes.

Motivational
The ability to use psychological forces/motivate people to strive for certain goals
rather than simply act on orders. Leaders need to be aware in a new cross-cultural
setting to provide motivation, direction and support for staff while recognising
differences in intrinsic and extrinsic motivations, rewards and punishments in different
cultural settings.

Answers could include:

• E-commerce is the performance of transactions (buying and selling of products and services) electronically over the internet.
• Money and data are transferred online electronically between buyer and seller. The internet (with e-commerce) has provided an opportunity for local businesses to reach new markets and access a potentially wider geographic market segment.
• Websites/apps can be designed in a way that makes it easy for customers to purchase from mobile devices, as well as laptop and desktop computers.
• Local businesses create dynamic websites that have e-commerce facilities where customers can select and pay for a product/service. Their transaction facilities are usually through credit cards and, therefore, there are efforts by vendors to make these as cyber-secure as possible. As a result, consumers can purchase products and services from anywhere in the world.