Technological and Global Issues (VCE SSCE Business Management): Revision Notes
Technological and Global Issues
Introduction
When establishing a business, owners must consider how technological and global factors will impact their decision-making. This includes managing customer databases effectively and establishing relationships with overseas suppliers and retailers. Technology is a critical resource that, when used properly, can help a business succeed and grow.
Planning considerations for technology
Information technology should be utilised to its full potential during the planning phase. Effective planning and decision-making requires businesses to ensure several key elements are in place:
Systems and accessibility
The business needs systems (both internal and external) that are user-friendly and easy to navigate. This ensures employees can work efficiently and customers can interact with the business without difficulty.
User-friendly systems reduce training time for employees and improve customer satisfaction by making interactions with the business smoother and more intuitive.
Maintenance approach
Maintenance scheduling should be proactive rather than reactive. This means anticipating and preventing technological issues before they occur, rather than fixing problems after they arise. A proactive approach minimises disruption to business operations.
Strategic integration
Technology must be treated as a key component in strategic planning. Business owners should consider how technology can support their long-term goals and competitive advantage, not just as an operational tool.
Cyber-security measures
Robust cyber-security procedures and remedies must be implemented to ensure data protection. This protects both business information and customer data from breaches, theft, or unauthorised access.
Data breaches can result in significant financial losses, legal penalties, and irreparable damage to a business's reputation. Cyber-security must be prioritised from day one.
Data tracking and analysis
Trends and data should be tracked continuously to inform business decisions. This data-driven approach helps businesses identify patterns, predict customer behaviour, and make evidence-based choices.
Digital storage systems
Information and records must be stored in a digital environment that can be accessed when required. Cloud-based storage solutions enable secure access from multiple locations and devices.
Regular audits
Hardware and software requirements of the business need to be thoroughly audited in a timely manner. Regular audits ensure the business has the right tools and that systems remain up-to-date and fit for purpose.
Databases in business
Definition
A database is a collection of organised information that is set up by information technology workers. Databases are essential tools that save businesses time and money.
Value of databases
When the information collected is analysed and actioned, databases strengthen a business, increase profits, and support planning for future growth. They empower business owners to be more efficient and productive by automating tasks and providing valuable insights.
Databases transform raw data into actionable intelligence. By organizing information systematically, businesses can quickly retrieve what they need, identify trends, and make informed decisions that drive growth and efficiency.
Key benefits of databases
Centralised systems
Databases enable managers to access data centrally, safely, and securely. This means information is stored in one location rather than scattered across multiple systems, making it easier to find and use.
Human resources management
Databases improve the management of human resources by streamlining the processing of data such as staff hours, leave entitlements, and payroll information. This reduces administrative burden and minimises errors.
Customer relationship management
Customer relationship management (CRM) databases make it possible to manage customer data and relationships effectively. They store contact details and purchase history, allowing businesses to understand customer preferences and behaviour. This information can be used to target marketing efforts more effectively.
Inventory management
Improved inventory management helps businesses maximise sales and avoid the risk of stock wastage. Databases track stock levels in real-time, alerting managers when items need reordering and identifying slow-moving products.
Customer databases
A customer database is the collection of information gathered from each customer. These databases are powerful tools for understanding and serving customers better.
Privacy legislation
Amendments to the Commonwealth Privacy Amendment Act 2012 became effective in 2014, introducing a set of 13 Australian Privacy Principles. These principles protect people's privacy and ensure businesses handle personal information responsibly.
Data Protection is Legally Required
The Australian Privacy Principles ensure that data collected on customer databases cannot be used without a customer's consent. Businesses must obtain permission before collecting, using, or sharing customer information. Non-compliance can result in serious legal and financial consequences.
Technology and compliance
Data protection and maintenance is often handled and managed through technology. Many existing businesses have incorporated staff retraining for the management and storage of customer data. New businesses must consider data maintenance as a key element of their planning from the outset.
Marketing applications
Data management assists businesses with product placement and is a key consideration in attracting new customers. By analysing customer data, businesses can identify which products appeal to specific customer segments and tailor their marketing accordingly.
Customer loyalty programs
Customer loyalty programs are a common application of customer databases. These programs reward customers who repeatedly interact with a brand, encouraging continued purchases rather than switching to competitors. The more a customer buys or engages with the brand, the more rewards they earn.
Types of loyalty programs
Points-based programs
The most common type where customers accumulate points to redeem for free items, cashback, or discounts. An example is Flybuys in Australia.
Tiered programs
Customers receive different benefits depending on their membership rank. These programs give customers goals to work towards, with higher tiers offering more exclusive and better rewards. An example is American Express membership levels.
Paid programs
Fee-based programs that give customers immediate and ongoing benefits in exchange for a membership fee. An example is Amazon Prime.
Value programs
These connect with customers on a deeper level by donating a percentage of purchases to charity or welfare programs. This appeals to customers' values and social consciousness.
Value programs are particularly effective with younger consumers who increasingly prioritize brands that align with their personal values and demonstrate social responsibility.
Benefits of loyalty programs
Research shows that more than 90% of businesses use some type of customer loyalty program. Approximately 84% of consumers say they are more likely to remain loyal to a brand offering such programs, and 66% report that earning rewards influences their spending behaviour. Successful programs can turn regular customers into brand advocates who promote the business through word-of-mouth recommendations.
Global business considerations
Reasons for overseas expansion
Australia has a relatively small population compared to other developed nations. As a result, Australian businesses may find it necessary to explore opportunities to trade overseas if they want to expand significantly. Businesses can grow by investigating opportunities to develop supply chains in other countries and sell products and services in foreign markets. This can be achieved through offshore retail outlets or online stores.
Support for overseas trading
Austrade
Austrade is a federal government body that provides support for businesses exploring offshore trading opportunities. Registration with Austrade is free, and the organisation offers various forms of assistance including promotion of Australian businesses to overseas buyers through the Australian Suppliers Directory.
Austrade provides valuable resources for businesses entering international markets, including market research, trade events, international network connections, and practical advice on exporting. Taking advantage of these free services can significantly reduce the risks associated with overseas expansion.
Free trade agreements
Free trade agreements are another way the Australian Government supports businesses looking to trade overseas. A free trade agreement is a legally binding agreement between two or more countries that establishes an area of trading that removes tariffs and other trading restrictions.
Free trade agreements aim to:
- Increase the competitiveness of Australian businesses in international markets
- Provide better access to lucrative offshore markets
- Reduce trading costs for Australian businesses
- Promote two-way investment opportunities, allowing offshore businesses to explore trading opportunities in Australia
Currently, Australia has free trade agreements with numerous countries, including New Zealand, Singapore, Thailand, Malaysia, Korea, Peru, and Chile.
Financial considerations
Businesses importing goods from overseas or selling in foreign markets must understand that income tax is calculated on worldwide income. This means profits earned overseas are subject to Australian tax laws. However, local tax obligations may vary from country to country, requiring businesses to understand and comply with multiple tax systems.
Tax Compliance Across Borders
Operating internationally means navigating complex tax obligations in multiple jurisdictions. Businesses must maintain accurate records of all overseas transactions and seek professional tax advice to ensure compliance with both Australian and foreign tax laws.
Legal and ethical considerations
There are significant legal and ethical considerations involved in setting up factories, workshops, or retail outlets in other countries. Businesses must ensure they operate within local laws and maintain ethical standards across all locations.
Worker welfare and safety
Businesses that attempt to achieve financial gain through practices involving mistreatment of overseas workers and unsafe working conditions face enormous fines and reputational damage. This includes issues such as underpayment, excessive working hours, poor safety standards, and use of child labour.
Ethical Operations are Non-Negotiable
Modern consumers are increasingly aware of and concerned about ethical practices in global supply chains. Businesses found to be exploiting workers or operating in unsafe conditions face not only legal penalties but also consumer boycotts, damaged brand reputation, and loss of market share that can be impossible to recover.
Compliance policies
It is imperative for a business operating overseas to have a comprehensive compliance policy in place. This policy must be strictly adhered to, and suppliers and third-party manufacturers should be frequently audited to ensure compliance. Regular audits help identify problems early and demonstrate the business's commitment to ethical operations.
Global supply chain challenges
The global supply chain involves complex and interconnected activities. In normal circumstances, retailers contact distributors, who place orders with manufacturers, who in turn order required inputs. Transport is coordinated using shipping, airlines, trucking, and parcel delivery services operating through sea ports, airports, warehouses, and distribution centres.
Supply chain vulnerabilities
Recent global events have highlighted vulnerabilities in supply chains. Issues that can disrupt supply chains include:
- Shortage of shipping containers and transport capacity
- Port closures or congestion due to external events
- Reduced workforce availability affecting shipping lines, ports, and manufacturing
- Sudden changes in consumer demand patterns
- Container trade imbalances (when a country imports more than it exports)
Supply chain disruptions can have cascading effects throughout the entire business ecosystem. A delay in one area can create bottlenecks that affect production schedules, inventory levels, and ultimately customer satisfaction.
Impact on Australian businesses
Australia is dependent on imported, overseas-made consumer goods. However, Australia imports more than it exports, creating a container trade imbalance. This means empty containers must be returned to countries like China before they can be filled with goods for Australia. Australian businesses are also reliant on truck delivery, which typically does not operate 24 hours a day like shipping operations.
Planning implications
Businesses must consider how global supply chain issues might affect their operations. This includes having contingency plans for supply disruptions, considering local alternatives where possible, and building flexibility into inventory management systems.
Case study insights
Plant-based food expansion
Australian businesses in growing sectors may find significant opportunities in overseas markets. For example, the plant-based food sector is experiencing rapid growth both in Australia and globally. According to industry estimates, the plant-based market in Australia could generate approximately $3 billion in retail sales by 2030, with over $1 billion in manufacturing and employment for over 6000 Australians.
The plant-based food sector demonstrates how Australian businesses can capitalize on global trends and growing consumer preferences. Businesses entering international markets need capital for investment in innovation, marketing, and production to meet increasing demand. They must also explore distribution channels into select international markets and understand regulatory requirements in different countries.
Global supply chain recovery
Following major global disruptions, businesses have had to reconsider how they manage supply chains. Australian businesses are exploring more efficient and reliable methods, including diversifying suppliers, increasing local production where feasible, and building stronger relationships with logistics partners. The experience has highlighted the importance of supply chain resilience in business planning.
Remember!
Key Points to Remember:
Technology Integration:
- Technology should be integrated into strategic planning from the beginning, with proactive maintenance, cyber-security measures, and regular audits
- Databases improve business efficiency by centralising information, streamlining HR processes, managing customer relationships, and optimising inventory
Data Privacy and Compliance:
- Customer databases must comply with the Privacy Amendment Act 2012 and the 13 Australian Privacy Principles, requiring customer consent for data use
- Data breaches can result in significant legal and financial penalties
Global Expansion:
- Australian businesses may need to expand overseas due to the country's relatively small population, with support available from Austrade and through free trade agreements
- Businesses operating internationally must consider worldwide income tax implications, varying local tax obligations, and maintain comprehensive compliance policies to ensure ethical treatment of overseas workers
Supply Chain Management:
- Global supply chains are complex and vulnerable to disruption
- Businesses must build resilience through contingency planning, supplier diversification, and flexible inventory management
Key terms:
- Customer database: The collection of information gathered from each customer
- Free trade agreement: A legally binding agreement between two or more countries that removes tariffs and trading restrictions
- Austrade: A federal government body supporting businesses in offshore trading
- Australian Privacy Principles: 13 principles protecting personal privacy and regulating how businesses handle customer data
- Compliance policy: Guidelines ensuring businesses operate ethically and legally, particularly important when working with overseas suppliers
Critical frameworks:
- Four types of customer loyalty programs: points-based, tiered, paid, and value programs
- Technology planning must address: systems usability, maintenance approach, strategic integration, cyber-security, data tracking, digital storage, and regular audits
- Global expansion requires consideration of: market access, legal compliance, tax obligations, ethical standards, and supply chain resilience