SCSA Business Management and Enterprise Environments

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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.

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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.

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• 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.

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• 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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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.

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• 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.

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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.

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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.