VCAA Business Management Operations management

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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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• 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.

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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.

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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.

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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.

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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 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.

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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.

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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.

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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.

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The just-in-time technique is an inventory technique that is based on inventory being manufactured at the time the products are needed – just the right amount/number of goods/services needed. These products would also be delivered to customers upon completion of the production process. This eliminates the need for inventory storage, wastage and other costs.

Advantages:

• there is a less storage space needed which allows a business to save on rent and insurance costs
• discourages the build-up of any unsold products
• there is a minimal chance of stock becoming ‘out-of-date’.

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The just-in-case technique is an inventory technique that is based on having spare inventory which could include raw materials, spare parts, etc. in stock just in case it needs to be used. The business is manufacturing its products based on either a predicted or planned sales rate.

Advantages:

• there is a greater ability to meet any unexpected increases in demand for the business’ product as there is always inventory on hand to meet these demands
• businesses hold large amounts of inventory just-in-case there are surges in demand or supply
• reduces down-time in production as there is no delay in inventory from suppliers
• customer satisfaction is maintained as production does not wait for materials to be delivered
• businesses could reap the benefits of economies of scale, such as buying supplies in bulk.