CHAPTER 4 OVERVIEW OF THE MACRO, OPERATING AND INTERNAL ENVIRONMENTS – INFLUENCE OF THE MACRO ENVIRONMENT ON BUSINESS PLANNING

Macro factors affecting business planning All businesses need to take into consideration a range of issues and conditions when developing their business. Macro factors are those that impact the business, but are outside the control of any one business.

Key legal and government regulations Legal and government factors include: Taxation Licences or permits Occupational health and safety Laws (OH&S) Trading Laws, Environmental protection Laws and Privacy Laws.

Key legal and government regulations Legal and government factors include: Taxation Business owners must consider and register for: ABN – Australian Business Number (Essential) GST – Whether to register for Goods and Services Tax TFN – A Tax File Number (essential) PAYG – Pay as you Go (if employing staff)

Key legal and government regulations Legal and government factors include: Licences or permits Australian Business Licence and Information Services website provides the necessary licences & permits required for different business types

Key legal and government regulations Legal and government factors include: Occupational health and safety Laws (OH&S) Laws Employers and Employees must adhere to to ensure the safety of all workers and people within and around a workplace

Key legal and government regulations Legal and government factors include: Trading Laws, Business must refer to the competition and consumer act to ensure it is compliant with fair work place regislation A business owner should also refer to the Victorian Consumer Affairs which is responsible for: Licences and registrations of business within Victoria

Key legal and government regulations Legal and government factors include: Environmental protection Laws and These laws cover aspects of the business such as: Licencing and works approvals to do with environmental impact Land fiils Noise Waste Water usage Pollution

Societal attitudes and behaviour considerations Changes in society can have an impact on businesses. Changing demographics, values and attitudes can alter the way people interact with each other and businesses.

Economic conditions Economic conditions include: Interest rates Tax rates Business and consumer confidence levels.

Economic conditions Economic conditions include: Interest rates If the rate of interest (the cost of borrowing for a business) is low then it is more likely that business owners might borrow to set up a business, because the repayments will also be less and easier to manage and maintain. Interest rates in Australia have been relatively low when compared to a few years ago. While low interest rates are attractive when borrowing money, they make it more dif cult for investors, individuals and businesses when they want to invest money because the returns are not high

Economic conditions Economic conditions include: Tax rates All individuals and businesses pay income and other taxes. As part of the planning process, taxation consequences should be taken into account. Although taxation is not the only important factor, it may have an impact on the financial performance of the business. If an individual runs a business as a sole trader or partnership, then the individual will pay income tax. Australia has a progressive income taxation system, which means that the more a person earns the higher the rate of tax they pay. Individuals usually pay tax as they earn; this is known as Pay as you go (PAYG).

Economic conditions Economic conditions include: Tax rates If a business is set up as a company then the tax rate is different – 30 per cent for most companies. In an effort to support and encourage small businesses there are some taxation concessions, and a small business which earns less than $2 million is subject to a 28.5 per cent tax rate. Businesses also pay other taxes to state governments, such as payroll tax and collect GST for the government

Economic conditions Economic conditions include: Business and consumer confidence levels. The general level of business and consumer confidence is related to economic growth and the level of economic activity, and therefore is important to all businesses. If business and consumer confidence is high then businesses are more likely to look at expanding or increasing production and consumers are more likely to spend because they feel comfortable about their financial situation. If the level of economic growth and economic activity is low then consumer and business confidence is likely to suffer. For much of the time it is the perception of how the economy is performing or will perform that drives the economic and spending decisions of people (see Chapter 3).

Economic conditions Economic conditions include: Business and consumer confidence levels. Consumer demand is an important factor that can in uence and provide new business opportunities. If demand for particular types of goods and services is high then this might mean that businesses will be more likely to move into this area. Large businesses might take advantage of any trends and expand into new areas or sectors.

Technological issues Technology is changing at a rapid pace. It is important that businesses stay up-to-date with technology and take advantage of new opportunities that technology brings.

Global issues There are a number of factors that need to be considered in our global economy: Overseas markets Overseas competitors Offshoring labour Exchange rates Patenting Copyrights Trademarks Online sales.

Corporate social responsibility Corporate social responsibility (CSR) involves a business considering the interests of society by taking responsibility for the impact of their activities on all stakeholders. It is a commitment to behave ethically and to improve wellbeing for employees, the community and society in general.