Understanding Your Business Enviroment

retail modern apprentice

business environmentunderstanding your

Understanding Your Business Environment 3

Page number

Introduction 3

What will I do? .......................................................................................................................... 3

The activities ............................................................................................................................... 4

The assessment .......................................................................................................................... 4

What does the module cover? ............................................................................................ 5

What will I need? ..................................................................................................................... 5

Glossary ..................................................................................................................................... 6

Section 1: The local environment 7

Location ...................................................................................................................................... 7

Convenience ............................................................................................................................... 9

Cost ............................................................................................................................................. 9

Beating the competition ......................................................................................................... 11

Planning ahead .......................................................................................................................... 12

Demographics (the population) ............................................................................................ 16

Local government rules and regulations .............................................................................. 21

Natural events ............................................................................................................................. 24

Section 2: National and international factors 29

The news ..................................................................................................................................... 29

Economic ups and downs ........................................................................................................ 33

Declining market economy ........................................................................................................ 34

International exchange rates .................................................................................................. 42

Oil supplies and international transport costs ...................................................................... 44

Immigration ............................................................................................................................... 46

Changes in legislation .............................................................................................................. 48

Changes in technology ............................................................................................................. 50

Suggestions for further reading 57

Glossary 59

My Glossary 62

Assessment

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CONTENTS

Copyright © 2010 Retail Institute4


Welcome to the final stage of your Retail Modern Apprenticeship programme.

In the earlier modules – Managing Yourself and Managing Information – and the National Certificate in Retail Levels 2 and 3, you focused on the skills and knowledge you need in your own job in retail.

This module challenges you to look at the ‘big picture’. You will learn about some of the external issues that face owners or managers setting up or working in their business, and how they can affect you in your own job.

The module is based on Unit Standard 23915 Analyse environmental factors external to an organisation that may impact on a business and an individual’s work role.

You will need to use a combination of your knowledge, research skills and imagination to find out:

• what external issues business owners or managers need to think about when setting up or developing their business

• why these are important

• how they can affect a business and the people who work in it

• where business owners or managers get the information they need to make decisions about these issues.

When you have completed the module you will be able to:

• describe the external environmental factors that can affect a business organisation and an individual in his or her work role in a business organisation

• analyse and quantify the impacts of external factors on an individual in his or her work role in a business organisation.

What Will i do?

This is an interactive learning resource. ‘Interactive’ means you read about a topic and then do something to find out more. As you work through the resource you will do some practical activities and research based on your current workplace.

External

Outside

Issues

Concerns, matters,

topics

INTRODUCTION


An Activity with a heading like this encourages you to find out more about a topic or think about it from your own point of view.

A Portfolio activity with a heading like this is part of your assessment. You will use your answers to these activities to build up a collection of evidence to show how you have applied the learning in the module to your own workplace.

You will see this icon each time there is an activity that relates to your portfolio.

You will also see the following icons as you work through the resource.

This icon explains how something applies in a real workplace situation.

This icon gives you a ‘hot tip’.

example

hot tip

icons

There are two sorts of activities.

portfolio

Portfolio

Collection,

selection, set of

something

the assessment

Your assessment for Unit Standard 23915 is at the back of this learning resource. Have a look at the assessment now so you know what you are working towards. It contains instructions about how to put your portfolio of evidence together. It also has a checklist of the portfolio activities for you to use to record your progress.

For example, your portfolio might include newspaper clippings, reports or recordings of interviews you have carried out during your study, internet print-outs, books or articles you have read, or photos and diagrams.

The assessment includes verifier forms so your manager and MA Coordinator can confirm that you did your own research as you worked through the module.


What does the module cover?

Section 1 deals with how the local environment can affect a business.

It covers:

location

convenience

cost

competition

planning ahead

demographics (the population)

local government rules and regulations

natural events and disruptions (planning for disruptions such as earthquakes, floods and roadworks).

Section 2 deals with how national and international factors can affect a retail business.

It covers some factors that can affect a business:

national and international news

economic ups and downs

declining market economy

international exchange rates

oil supplies and international transport costs

immigration policies

changes in legislation

changes in technology.

When you have successfully completed the assessment for this module you will be awarded unit standard 23915. It is worth four credits at Level 4 on the National Qualifications Framework (NQF).

What Will i need?

To get ready for the assessment you will need:

• thislearningresource

• theassessmentportfolio

• amanagerorsupervisorwhocananswerquestionsandprovideinformationtohelpyoucomplete your portfolio

• timetodoyourown‘detectivework’–interviewswithyourmanageroryourworkcolleagues; a visit to the local council; internet or library research; thinking about how these issues affect you and your job.


unfamiliar Words

As you work through this learning resource you will notice some small boxes at the side of some pages, containing a word and what it means.

These words are important because they explain some of the main ideas that you need to understand. These words are also listed at the back of the module, with some blank spaces for you to add other words that are new to you.

A glossary is a list of technical or special words with their meaning. If you find a word you don’t understand, and it is not explained in the glossary, look it up in the dictionary. Add the word and its meaning to the glossary. This will help you build up your own useful word list.

1portfolio

Your workPlAce And Your role In It

This is the first activity in the portfolio of evidence you will build up for your assessment. You may want to review the portfolio instructions to remind yourself how to format your document.

The aim of this first activity is to set the context that you are working in. It is an opportunity to introduce yourself and your workplace to your assessor. You may want to refer back to Managing Information and review section 4 ‘Writing in Plain English’. This section talks about using plain English and how to write a paragraph.

Write two or three short paragraphs to describe your workplace and your role in it. You should type up your answers. If you don’t have access to a computer, write them neatly in your own handwriting.

Your description should include:

• thetownorcitywhereyouwork

• thetypeofbusiness(chainstore,soletrader,franchiseandsoon)

• thenumberofstaff

• themaintypesofproductsthestoresells

• yourjobtitle

• yourmaintasks

• whoyoureportdirectlyto.

You can attach any information about your business that you think is relevant (such as an organisation chart, some photos, or a copy of your job description).

Remember to check your spelling and grammar (or have someone else do this for you).


Welcome to section 1 of this module. It focuses on five things that can cause a business to do well or badly in the town or city it is operating from:

• location

• competition

• demographics(changingpopulation)

• localgovernmentrulesandregulations

• naturaleventsanddisruptions(suchasearthquakes,floodsandroadworks).

You will look at how these can make a difference to a business’s success or failure, why they are important, what the business can do about them and how you might be affected.

location

Before buying an existing business, launching a new one, or opening another store in a chain, the owner or manager needs to know that the location is right.

• Willtheplannedlocationbringinthecustomer traffic they need?

• Willithavethestorageandparkingfacilities they need?

• Willtheybecloseenoughto(orfaraway enough from) their competitors?

• Willtheybeabletoaffordtoleaseorbuy suitable premises?

So many questions before even getting started!

Location

Position, site,

setting

THE LOCAL ENVIRONMENT

SECTION 1


Before you read on, go and stand outside the door of the building you work in. Have a look around you.

What sort of location do you work in? Are you located on the main street of your town or city, with lots of passing foot traffic and parking? Are you in a mall with lots of other busy stores? Are you slightly out of town because you need really big premises and lots of parking?

Make brief notes about why you think this business is located where it is.

Don’t worry about whether your answers are right or wrong. This activity is just to get you thinking about how important location is to any business. You will have a chance to check your thoughts out with your manager or supervisor in the next activity.

Location is one of the keys to business success. Customers these days have plenty of choices about where to shop, and most people have limited time for shopping.


convenience

convenience is one of the reasons that many customers give for choosing where to shop. In cities, parking is expensive and often hard to find; people may go to a mall simply because it has lots of free carparking. People are also short of time; they will shop at places they can get in and out of quickly and easily.

In a small town, people may want to do all their shopping and other business in one street. In larger towns and cities, they may choose big stores that sell a wide range of products so they don’t have to go from store to store.

cost

Location is not just about customers and competition – it’s also about cost. A business has to think about whether to buy a building, or to lease or rent premises.

This decision will depend on several things, such as:

• what’savailableatthetimeinthearea

• whattypeofpremisesitneeds(suchaslotsofparking,storageroom,lotsofwindowspace)

• plansforthefuture.

Some businesses may only need small premises to start with but may have plans for expansion in the future – a small site might suit them in the beginning, but they may plan to move to a bigger site if business goes well.

Asset

Something of

value that can be

turned into cash

Convenience

(kon-vee-nee-ents)

Ease, handiness

Lease

Pay for the use

of a building for

a fixed period; a

lease always has

a fixed start and

end date

Leasing and renting mean you have a landlord and certain conditions while you use the building, just as you do if you rent a flat yourself. However, you don’t have to pay the large extra cost of buying a building on top of all the stock and equipment you need.

On the other hand, buying means the business has the building as an asset, as well as the products it sells and the goodwill it builds up.


2portfolio

Your Store’S locAtIon

Read through the activity first so you know what you need to do. Make sure you put your name and date on each piece of information you provide. Complete A and either B or C.

(a) Make a drawing or attach a street map that shows where your business is located. Name and briefly describe the businesses on either side of you. Name and describe any other businesses or facilities (for example, your local storage and distribution facility) that you need to be near.

Either:

(b) Talk with your manager about your store’s location. Is the building leased or rented, or owned by the company? Why was this decision made? What do they think are the particular advantages and disadvantages in this arrangement? Find out what other costs are involved in owning or leasing the building – rates, maintenance, insurance, security systems and so on.

Or:

(c) Look in the newspaper or a real estate agent’s window to find a business premises for sale or lease in your town or city. Contact the real estate agent in charge and explain what you are doing and that you would like some information. Make sure you explain that you are asking these questions as part of your training and that you are not actually looking to buy or lease the building!

Find out the costs for buying or leasing the premises you have identified. Ask about other factors you would need to be aware of if you were buying or leasing the premises. For example:

• Arethereanyrestrictionsonthetypeofbusinessyoucouldrunthere(couldyouopenaliquor store near a school, for example)?

• Howmuchyoucouldchangetheinsideoroutsideofthebuilding?

Write or type up your notes and attach any relevant information for your portfolio.


beating the competition

Every business has lots of competition. Competition can sometimes be the cause of the success or failure of a business.

A competitor is another business that does any of these things:

• sellsthesameorsimilarproductsasyourbusiness(forexample,youspecialiseinhealthproducts, but a pharmacy down the road sells some similar products)

• targetsthesamecustomers(forexample,youandseveralotherstorescompetefortheyoung working professionals market)

• isbiggerandoffersawiderrangeofproducts (for example, you are small and specialised but have to compete with department stores)

• isseenasatop-qualitysupplier

• marketsitselfmore

• offersextraservices,suchasfreedelivery

• isrightnextdoor

• offersonlineshoppingsocustomersdon’t even have to leave home.

Before you read on, write down who you think the main competitors are for the business you work in. You will be able to explore these in more detail later.

Knowing who your competitors are, and what they do and don’t do well, is important information for the business you work in.

First you need to know what a competitor is.

direct competitor: A business that sells the same (or similar) products or services and competes with you for customers.

Indirect competitor: A business that sells different products or services from your business but still competes with you for customers.

Competition

Opposition, rivals


planning ahead

Put your ‘customer’ hat on for a minute. Where would you go to buy the products that your store sells if you didn’t work there? What would attract you to other stores? Tick any of these boxes that apply:

The price

The service

The range of products

The ease of parking.

Most businesses have written business plans. They may be short term, such as a plan for a year, or longer term, such as for 5 or 10 years.

Knowing who and where the competition is, is an important part of developing these business plans. When starting up a new business or planning to open a new store, every business owner needs to know who they are competing against. This helps them understand what they have to do well.

Then, once the business is up and running, they need to think about how to stay ahead of their competitors, especially when times are tough and customers think very carefully before they buy.

How does a business become the ‘first choice’ for existing and potential customers? And how does it stay there?

There are many ways of finding out who your competitors are and what they are doing. For example:

• Youcoulddrivethroughacompetitor’scarparktocheckouthowbusytheyareonaSaturday morning.

• Youcouldpretendtobeacustomerinacompetitor’sstoreandspendsometimeobserving what they sell and the customer service they provide.

• Yourbusinessmaypayforsomemarket research to find out what your competitors’ market share is compared with your own.

• Yourbusinessmaydoacustomersurveytofindoutwhypeoplehaven’tshoppedinyour store for a while.

hot tip

These definitions from come an excellent website: www.business.govt.nz

It has a lot of excellent advice and information on a wide range of topics related to succeeding in business.

Potential

(po-ten-shil)

Possible, likely,

prospective

Observe

Watch closely and

carefully, monitor

Market research

Surveys and

information

analysis to help

a business make

decisions about

how to market

its products or

services profitably

example

If you are a bookseller, another major bookseller is a direct competitor. A petrol station that sells some of the same magazines as you is an indirect competitor.

0800 486 738www.retailinstitute.org.nz

Copyright © Retail Institute

All rights reserved. No part of this publication may be reproduced in any form without prior written permission. Enquiries should be made to the Retail Institute, PO Box 24341, Wellington.

RIR

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‘10

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Understanding Your Business Enviroment