Commerce - The Economic and Business Environment PDF

***Commerce*** ***The Economic and Business Environment (Chapter 2 - page 68-108):*** **Nature of the economy:** **What is the role of stakeholders in the circular flow of income, and how do they contribute to the economy? Stakeholders interact to keep the economy functioning by circulating money...

***Commerce*** ***The Economic and Business Environment (Chapter 2 - page 68-108):*** **Nature of the economy:** **What is the role of stakeholders in the circular flow of income, and how do they contribute to the economy? Stakeholders interact to keep the economy functioning by circulating money, goods, and services.** **Households: you +me = the consumers who buy goods + workers who make goods.** **Firms: Businesses who sell goods + services + provide employment to households.** **Financial: ie. Banks = save and loan money** **Government: ie. All levels of government = tax households and produce public services.** **Oversea: All overseas businesses that Australian businesses trade with.** **How are different sectors in the economy interdependent, and how does this interdependence influence the business cycle? Each sector relies on each other for resources, goods, services and income. The interdependence of each sector drives the business cycle, as changes in one sector affect the others, leading to periods of growth or contraction in the economy.** **The Nature of Markets within the economy:** **How is the price mechanism developed by the forces of supply and demand within a market? The price mechanism sets prices based on supply and demand. If demand increases, prices go up, prompting sellers to produce more; if demand decreases, prices drop, leading to less production.** **What are the different types of markets in an economy, and how do they function?** **Market: a market exists in any situation where buyers and sellers come together to exchange goods and services. A market can exist in a physical location, it can spread across a number of locations, or can have no physical location at all.** **Retail Markets: are markets that allow us to buy most of our goods and services. They all include physical shops that sell products and online shops.** **Labour: where the buying and selling of labour occurs.** **Indigenous: Aboriginal and Torres Strait Islander peoples to sell traditional art, crafts, and food, promoting cultural heritage and creating economic opportunities within their communities.** **What are some customary practices related to indigenous markets, and how do they differ from other markets?** **Indigenous Australian markets often use bartering instead of money and focus on culturally significant products tied to traditions. They emphasise sustainability and community well-being, unlike mainstream markets that prioritise profit.** **What is the role of government intervention in markets, and how does it affect supply, demand, and prices? Government intervention in markets helps regulate the economy by setting rules, taxes, and subsidies. It can change supply and demand, which affects prices; for example, subsidies can lower prices by increasing supply, while taxes can raise prices by reducing demand.4** **Interactions within Markets:** **What are the different types of businesses in an economy, and how do they operate? Department/Variety store: Department/variety stores sell a wide range of low-priced products, work with suppliers, and use promotions to attract budget-conscious shoppers. E.g. Big W** **Online: Online businesses sell products or services through websites or apps, using digital marketing to attract customers and managing orders and payments electronically.e.g. Temu** **On demand: On-demand businesses provide products or services to customers quickly and efficiently, typically through mobile apps or websites, allowing users to request what they need at their convenience. Global businesses operate by conducting trade and commerce across multiple countries, managing supply chains, adapting to local markets, and complying with international regulations. e.g. Uber** **Global: Global businesses operate by conducting trade and commerce across multiple countries, managing supply chains, adapting to local markets, and complying with international regulations. e.g. kmart, Sephora** **Size: 5-20 employees is a small business, 21-44 medium business & 200+ employees is a large business.** **What factors influence business decisions, and how do these factors affect business performance?** **Technology: Technology factors improve business performance by increasing efficiency, enhancing communication, enabling better decision-making, and providing new ways to reach customers.** **Globalisation:Globalisation affects business performance by opening new markets, increasing competition, and providing access to resources and international trade opportunities.** **Business cycle: Business cycle factors affect business performance by influencing economic conditions such as demand for products, consumer spending, and investment levels, which can lead to fluctuations in sales and profitability.** **How does corporate social responsibility (CSR) impact business operations, and why is ethical responsibility important for businesses? Corporate social responsibility (CSR) improves business operations by promoting sustainability and community engagement, while ethical responsibility is important because it builds trust with customers and stakeholders.** **Current Case Studies: on ipad** ***The Integrated Topic of Running a Business and Promoting and Selling (Chapter 7 - page 397-411; & Chapter 8 - 440-446; 451-454):*** **What are the key considerations in planning and organising a small to medium business, including market research, choosing the right location, and developing a competitive advantage through product differentiation? When planning a small to medium business, key considerations include doing market research to understand customers, choosing a good location to attract them, and creating a competitive advantage by offering unique products.** **How do entrepreneurs identify business opportunities, and why is market research important in this process? Entrepreneurs identify business opportunities by looking at market trends and gaps in products or services. Market research is important because it gives them insights into what customers want and helps them understand the competition.** **What are the characteristics of an entrepreneur, and how do factors such as risk profile and personal qualities contribute to entrepreneurial success? Entrepreneurs are often creative, determined, and resilient problem solvers. Their willingness to take risks and qualities like adaptability and leadership help them succeed in overcoming challenges and seizing opportunities.** **How do businesses develop and target specific markets, and what strategies are used to engage these markets? Businesses target specific markets by researching customer needs, segmenting the market, and creating tailored products or services. They engage these markets through targeted marketing campaigns, personalised communication, and special promotions that appeal to the audience.** **What is the promotional mix, and what are the different promotional strategies businesses can use to effectively reach their target markets? The promotional mix is the blend of marketing tools used to promote products or services. Businesses can use strategies like advertising, sales promotions, personal selling, public relations, and digital marketing to effectively reach their target markets.**