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Write a Report 4

1) Introduction to the business and general business environment

Select a business from anywhere within Australia – its headquarters must be located in Australia. Provide an

overall description of the business and the competitive environment in which it op

a) Name and location of the business, the type of business (e.g. retail, manufacturing);

b) What the business produces or sells;

c) Who the main customers are (e.g. other businesses, government departments, young girls, older men);

d) Where most of the customers are located (e.g. in Townsville, Brisbane, or on the internet);

e) Who the main competitors are (i.e. those producing similar products, and selling to similar customer base);

f) Where the competitors are located; and

g) The (approximate) market share of key competitors including your business (e.g. ’your’ businesses has

approximately 10% of the market, your main competitor has approximately 50% of tenvironment in which the firm

operates is likely to be closer to (a) perfect competition; or (b) monopoly. Comment also on the number of ‘close

substitutes’ for your business’ products, and the cost of your product relative to ‘average’ income of your

customers. Does this mean that the demand curve facing the firm is likely to be relatively elastic or relatively

inelastic? What does this imply about the ability of the firm to ‘mark up’ its price above marginal cost?

2) Production costs and scale

Provide a description of the required factors of production, grouping them according to whether the factors of

production are:

a) Fixed and hence unlikely to vary much according to the quantity of goods produced or sold; or

b) Variable and hence likely to increase with increased production or sales.

Use the above information to comment on the likely overall cost structure of your business. For example: Are fixed

costs large or small relative to variable costs? Does this mean that the firm’s ‘optimal’ size is likely to be small,

medium or large?

3) Macro business environment

Provide a description of the macroeconomic environment in which the business operates noting:

a) The overall ‘stability’ of the political system/government of the country in which the business operates.

b) The general level of inflation, unemployment and ‘average’ interest rate of the country in which the

business is physically located (and also the countries in which most customers live if different from the

location of the firm). Discuss any recent changes in those variables. Does the economy seem to be in a

recession, boom or otherwise?

c) If ‘your’ business exports its products to other countries, provide some information about the (currency)

exchange rate, discussing its current level, and recent changes in it.

Use the above information to comment on whether or not the overall macroeconomic conditions faced by the firm

are likely to become more or less favourable over the coming years. In this part you should consider such things

as:

• Whether your main products are likely to be ‘normal’ or ‘inferior’ and hence whether demand is likely to

rise or fall during recessions and thus whether the economic climate of the countries in which most of

your customers live is likely to reflect well or poorly on your sales.

• Whether you are likely to face problems getting access to key factors of production (e.g. are there skills

shortages?), and whether this is likely to affect the business’ future operating costs.

• If your business exports its products or imports factors of production…whether recent trends in exchange

rates are likely to be good or bad for costs and/or revenues.

4) Sustainability practice of the externalities? If negative,

has the government (or anyone else) put in place any measures to mitigate? What is done to mitigate by

the business? If positive, what is done to take advantage of it?

b) Does the consumption of the good produced by the business generate any positive sustainability practice by this business

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