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Sunday, January 22, 2012

business studies report

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Executive Summary


The focus of this report is an explanation of the role of the Australian Competition and Consumer Comission (ACCC). It akso explains the phases in the business life cycle and discusses business responsibilities to its stakeholders.


It is recommended


an experienced manager be employed during growth phase of the life cycle


Cheap University Papers on business studies report




a) The role of the Australian Competition and Consumer Commission


The Australian Competition and Consumer Commission is an independent statutory authority that administers the Trade Practices Act 174 and the Prices Surveillance Act 18. It operates nationally for the enforcement and administration of competition and consumer protection laws. Changes to legislation have meant that the ACCC now has new regulatory powers in sectors such as telecommunications industries, electricity and gas, and they have begun to focus on the small business sector which has recently undergone changes. With this continued growth in responsibility, the ACCC is obligated to inform the public so that they are aware of their rights and responsibilities under the law.


The commission administers the Trade Practices Act 174 which covers


anti-competitive and unfair market practices. These include


i) the misuse of market power - where a business uses its power in a market to damage or dispose of a competitor or to prevent another competitor from entering the market.


ii) exclusive dealing - where a supplier tries to restrict who its customers can deal with


iii) resale price maintenance where the supplier tries to control the price at which the goods can be resold


mergers and acquisitions which have the potential to decrease competition within a market


product safety and liability.


The Act aims to promote fair trading and competition within the market and to protect the consumer from unscrupulous business practices. The ACCC takes complaints about suspected breaches of or inquiries about the Trade Practices Act at offices throughout Australia.


b) Phases in the Business Life Cycle


There are 4 phases in the business life cycle and each has its own special features and challenges. They are


establishment


growth


maturity


post-maturity


Establishment Phase


The first stage in the life of a business is its birth. Recently established businesses are vulnerable as their hold on life is quite precarious. The overriding concern is to get the business on a solid foundation. This requires enough sales to be generated to bring in the much needed income, which will be used to pay expenses and to generate a positive cash flow.


Establishing a business is not always easy. There are a number of problems that need to be solved at the establishment phase. To overcome these problems the aspiring business owner needs to become involved in some basic planning. Detailed planning imdertaken when establishing the business can help greatly reduce the risk of failing and becoming just another business failure statistic.


Growth Phase


The second phase is a time of accelerating growth. Sales increase and the cash flow is normally positive. A customer base has been established with regular clients accounting for approximately 80% of total sales. Loyalty to the business is strong, with many of these businesses taking on the culture of an extended family. The business has a good reputation in the community and owners develop a sense of pride in the products and personal service on which the business was built and flourished. However, with growth comes complexity, responsibility and the need for long-term planning.


During the growth phase the business must continually improve its competitive edge. Failure to do so will see competitors take away customers and the growth will stall. Owners tread a fine line in attempting to do this - a desire not to radically alter a successful formula while at the same time restructuring sufficiently to match what the competitors are doing.


Maturity Phase


This third phase of the business cycle presents unique challenges to the owner. It requires a great deal of rethinking about how the business should be operated to guarantee survival. The owner realises at this time that the business could easilt lose the energy, enthusiasm and vitality of its earlier times. A sense of complacency often envelops the business affecting both management and staff. What is now required is a more formal, professional approach to planning.


With such a realisation may come the need to completely restructure and reorganise the business, which can sometimes be quite a painful experience. The business loses its family atmosphere and is replaced with a more clinical, professional culture. The size of the organisation dictates a more formal organisational structure. The difficulty is to introduce these changes without destroying entrepreneurial spirit that laid the foundation for the businesss success.


Post Maturity Phase


Once a business reaches this, the final stage, it is faced with a number of possible outcomes, these being


1. Steady State - to keep the business operating at the level it has been during the maturity phase.


. Decline - falling sales and profits ultimately resulting in business failure.


. Renewal - increasing sales and profits due to new growth areas.


The post maturity phase represents many opportunities but also many threats. The decisions made by the owners will be crucual for the future survival of the business. By constantly monitoring the business environment, the business owner should be able to select the most appropriate path for the business to take.


Steady State


The business is neither declining nor expanding. Such a business is satisfying customer demand and maintaining profit levels. It displays some of the characteristics of a business in the maturity phase. One significant difference, however, is that it does not continue expenditure on research and development. The owner is more content to produce what it has in the past and relying on marketing replacement products.


Eventually the business environment will change and the business will be adversely affected. Perhaphs customers tastes change or new competitors enter the market with superior products or more efficient methods of production and cheaper products. Ultimately, this steady state level becomes very unstable and the business stagnates. It eventually loses sales and its competitive edge. When this occurs the business enters another phase of the business life cycle - decline.


Decline


As customers stop buying the businesss products the cash flow will be seriously affected. Eventually profits will also decline. This process of decline becomes difficult to reverse for the following reasons


1. It becomes difficult to borrow money because financial institutions are reluctant to lend money to high risk businesses.


. Suppliers will restrict their credit facilities and may insist on cash payments.


. Products become obsolete leaving the business with unsold stock.


4. Well qualified employees may being to leave and seek better opportunities.


Renewal


Business decline can be avoided by carefully planned strategies which result in new markets being tapped and satisfying previously unmet demand. The business undergoes a revival. Sales, cash flow and profits all begin to increase once again. Even a business in decline can be turned around and placed on a path of renewal. It is very difficult to accomplish, takes enormous effort by both owners and employees, but it is possible.


The key to achieving a long-term, sustainable recovery in sales is to focus production on what the customers are presently demanding - even if this means abandoning once successful products. As well, an extensive market research program neets to be undertaken to assist in the forecasting of future consumer trends. The more successful the forecasting the more able the business is to be proactive, that is, it can anticipate and plan for future changes. Businesses that tend to be reactive, that is, respond to changes after they have occurred, usually respond too late and lose valuable market share. Renewal is as much about planning and timing as it is successful marketing strategies.


c) Business Responsibilities to its Stakeholders


There are a number of stakeholders in a business. A stakeholder is any group or individual who has an interest in or is affected by the activities of a business.





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