business environment

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MODULE 1.2MODULE 1.2

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Business Structure and Government Regulation

Introduction:

The definition of business is “any activity that provides goods or services to consumers for the purpose of making a profit” (University of Minnesota, 2016, p. 4).

Businesses can sell to consumers (B2C) or to other businesses (B2B).

Some organisations do not make profits but are established to provide social or educational services. These are called

them operate in the same way as a business and thus, most of the business principles apply to them.

Businesses can be classified into public and private sector organisations.

Public sector organisationsPublic sector organisations are controlled by the government and provide services for the public, the community, and the nation.

Private sector organisationsPrivate sector organisations are owned by individuals and are usually set up for personal gain.

Private sector organisations that seek profit for their owners include:

sole trader businesses

an individual operating as the sole person legally responsible for all aspects of the business

partnerships

an association of people or entities running a business together legally responsible for all aspects of the business

partners share control, management and debts of the business

proprietary companies

a legal entity separate from its shareholders with shares not being traded on a stock exchange

must have at least one shareholder but no more than 50 non-employee shareholders

public companies

a legal entity separate from its shareholders with shares traded on a stock exchange

must have at least one shareholder, no upper limit to shareholders

According to the Australian Small Business and Family Enterprise Ombudsman (2016), 97.4 % of Australian businesses are small businesses that employ 0-19

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According to the Australian Small Business and Family Enterprise Ombudsman (2016), 97.4 % of Australian businesses are small businesses that employ 0-19

people. The majority, 61 %, of Australian businesses are sole traders with no employees. Small businesses account for 33 % of Australia’s GDP, employ over 40

% of Australia’s workforce, and pay 12 % of total company tax revenue.

Business SizeBusiness Size

Small (0-19 employees)

Medium (20-199 employees)

Large (200+ employees)

TotalTotal

Source: ABS Counts of Australian Business 8165.0, Feb 2016 and ASBFEO calculations

Government regulation of businessGovernment regulation of business

In Australia, a number of the federal, state and territory government agencies determine regulatory obligations and requirements for all businesses. In some

areas, international agreements also impact the Australian environment.

These regulations include:

Intellectual Property laws

Business and environment laws

Export and Import laws

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Export and Import laws

Financial reporting requirements and accounting standards

Each industry has its own unique legal, operational and business requirements. These business regulations are designed to ensure fair competition, sufficient

protection for the relevant parties, and integrity in the market.

The Australian business and environment laws govern how businesses interact with their suppliers, customers and other businesses. It covers aspects such as,

fair trading and competition

consumer rights and contract terms

product safety laws

environmental and cultural concerns within business operations

privacy legislation.

Taxes in Australia are administered and collected by the Australian Taxation Office (ATO) and in some cases state government revenue offices. The Australian

tax system is a mix of direct and indirect taxes levied by both the federal and state governments, depending on the type of tax. The key taxes affecting

businesses are Company (income) Tax, Capital Gains Tax (CGT) and the Goods and Services Tax (GST).

ReferencesReferences

Australian Small Business and Family Enterprise Ombudsman (2016). Small Business Counts report (2016)

https://www.asbfeo.gov.au/research/small-business-counts

Australian Trade and Investment Commission. (2018). Australian business and environment laws

https://www.austrade.gov.au/International/Invest/Guide-to-investing/Running-a-business/Understanding-Australian-business-regulation/Australian-business-

and-environment-laws

Australian Trade and Investment Commission. (2018). Australian business taxes. Retrieved from

investing/Running-a-business/Understanding-Australian-taxes/Australian-business-taxes

BBP Learning Media. (2013). Business Environment [Ebook]. Retrieved from https://lesa.on.worldcat.org/oclc/883399460

Preston, D., Watson, G. & Fryer, M. (2013). An Introduction to Business Studies [Ebook]. Retrieved from

University of Minnesota. (2016). Exploring Business [Ebook]. Retrieved from https://open.lib.umn.edu/exploringbusiness/

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Essential Resources:

PencilPitch. (2014) Australian Business Structures. Retrieved from https://www.youtube.com/watch?v=WETrHdvLFOg

Please watch this short video on Australian business structures. It explains the 4 most commonly used legal structures in Australia, their

taxation, advantages, and disadvantages.

Sensis. (2018). Sensis Business Index June 2018. A survey of confidence and behaviour of Australian small and medium businesses.

The Sensis Business Index survey compiles the latest information regarding the confidence and behaviour of Australia’s small and medium

businesses in 2018. This is an important indicator of the economy as it can be used to monitor output growth and to anticipate future

developments.

Woodside, A. G., Chang, M-L. & Cheng, C-F. (2012). Government Regulations of Business, Corruption, Reforms, and the Economic Growth of

Nations. International Journal of Business and Economics, 11(2), 127-142.

An interesting article on the relationship between government regulation, corruption, and competitiveness. The authors question assumptions

made about business regulations and its effects on the economy

Martini, J. D. (2017). International Regulatory Entrepreneurship: Uber’s Battle with Regulators in France.

19(127), 127-160.

In this publication, students are introduced to the concept of regulatory entrepreneurship in the case of Uber in France. Usually, it is the

government that imposes regulations on business activities but in regulatory entrepreneurship companies choose to operate in a legal grey area and

attempt to conform the law to their business.

Clayton Utz. (2018). Doing Business in Australia. Retrieved from https://www.claytonutz.com/about/international-services/doing-business-in-

australia

Please have a look at some of the pdfs on this website which contains information about doing business in Australia. Recommended readings

include: Regulation of Business; Business Structures; and Anti-Trust, Competition and Trade Practices Regulation

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include: Regulation of Business; Business Structures; and Anti-Trust, Competition and Trade Practices Regulation

Learning Activity:

Learning activities are not part of summative/graded assessment; however, they are designed to prepare you for incremental graded assessment and expand

your learning. These activities encourage a community learning experience between peers, and provide opportunities for facilitators to offer formative

feedback, throughout a module, to the student cohort.

Learning Activity 1.4: Most lucrative industries for small businesses in AustraliaLearning Activity 1.4: Most lucrative industries for small businesses in Australia

Please read the following article

Kimmorley, S. (2018). The 5 most lucrative industries for small businesses in Australia. Retrieved from

lucrative-industries-for-small-businesses-in-australia-2018-4

Once you have read this article please answer the below questions

1. Are some of the industries appealing to you?

2. Could you consider starting a business in Australia, and how would you go about it?

The recommended word count is 300 - 400 words total. You may like to use images and diagrams. You are also welcome to include factors that may not

be explicitly stated but which you believe fit within the context of the subject and are worthy of inclusion.

To participate in the Discussion Forum, click here to scroll to the bottom of this page then click on the "

Learning Activity 1.5: Quick QuizLearning Activity 1.5: Quick Quiz

Please undertake the following quick quiz to test your knowledge and understanding on what you have learnt so far.

Note:Note: The Learning activities above are not part of summative/graded assessment; however they are designed to prepare you for incremental graded

assessment and expand your learning.

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These activities encourage a community learning experience between peers, and provide opportunities for facilitators to offer formative feedback, throughout a

module, to the student cohort.

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