ASSESSMENT TASK 2: DESCRIPTION
Produce a business study report. The report needs to contain the following four parts plus a formal introduction to your report and a conclusion.
1) Introduction to the business and general business environment
Select any business that you are familiar with personally (Each company can only be used by one student. First in first served. Record your name and student number in the columns as indicated). Provide an overall description of the business and the competitive environment in which it operates. You may provide information about the business as suggested below plus any other information peculiar to the business you choose.
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 Singapore, 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 the market, and many other small businesses share the remaining 40% of the market).
Given the above information, comment on whether or not you think the competitive environment 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.