Jacaranda Economics and Business Alive 8

Australian Curriculum eBookPLUS

Authors: Graeme Smithies | Matt Richardson | Angela Diamantopoulos | Ben Smith

First published 2015 by

John Wiley & Sons Australia, Ltd
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© John Wiley & Sons Australia, Ltd 2015

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ISBN: 9780730314066

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Chapter 1: The market system and government
Contents
1.1 Overview

1.2 Who is involved in the market system?

1.3 Different types of markets

1.4 Key economic questions for business

1.5 Government involvement in the market

1.6 SkillBuilder: Interpreting and analysing a table

1.7 Review

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1 The market system and
government
1.1 Overview
1.1.1 The Australian economy

Resources

Watch this eLesson: Development of the market economy

Searchlight ID: eles-1811

On television news, current affairs programs and throughout the media, we frequently hear politicians and
commentators referring to the ‘Australian economy’. What is the ‘economy’ and how does it work? In simple
terms, the Australian economy is the total of all activities undertaken for the purpose of producing,
distributing and consuming the goods and services we require to satisfy our needs and wants.

Let us look at this definition in more detail. As human beings we all have needs and wants. Needs can be
described as those things that are essential for our survival. They include food, clothing and shelter. Wants
include those things we desire, but which are not necessary for survival or to meet the basic standard of
living in a community. They can include everything from TV sets, to motor vehicles, to mobile phones.

We satisfy our needs and wants by acquiring goods and services. Goods are physical, tangible items that
can be seen and touched. They include all those products we actually buy from shops. Services are the
actions done for you by others that are designed to satisfy needs and wants. They include the services
provided by doctors, dentists, banks, telephone companies, entertainers, mechanics and teachers, among
others. Whenever we make use of goods and services we are said to consume those goods and services,
and so are regarded as consumers. The process of using goods and services is known as consumption.

Goods and services have to be provided by someone, and we usually expect businesses to do this. Any
activity within the economy that results in the provision of goods and services is known as production.
Economists do not limit this term to the manufacture of goods in a factory, as many of us might think, but
use it to include all goods and services. To the economist, the activities of a dentist filling teeth, a band
performing at a venue, or a teacher in a classroom, are all included in the definition of production.
In order for us to be able to consume the goods and services that have been produced, we need systems of
distribution. This means that the goods and services have to be supplied at locations that are convenient for
consumers. This could mean a local shopping mall, an office block in the city centre, or even through a
website. The distribution process also includes the setting of prices to be paid for goods and services.

In Australia we live in a market economy. In this topic, we will examine what this means. What is a market
economy? How well does a market economy perform the activities of producing, distributing and consuming
the goods and services we require to satisfy our needs and wants?

FIGURE 1 Consumers will seek to buy the goods and services that satisfy their needs and wants.

Learning objectives
Students will investigate:

the ways markets in Australia operate to enable the distribution of resources, and why they may be
influenced by government.
 STARTER QUESTIONS
1. List ten items you have bought in the last week, and then label whether each was to satisfy a
need or a want.
2. Food, clothing and shelter are usually included as our basic needs as human beings. In what
circumstances might each of these be seen as wants rather than needs? (Think about the type of
food, clothing or shelter).
3. Look back at the time you spent between waking up this morning and arriving at school. Make a
list of all the goods and services you consumed during this time.
4. When you send a text to a friend you are engaging in an economic activity. Who are the
producers, who are the consumers, and what is the actual production process that is involved in
this activity?
5. Explain why a bus travelling through your suburb would be regarded by an economist as a form
of production.
6. As a class, make a list of all the businesses that operate at your local shopping centre. Group
these businesses according to whether they supply goods or services, or both.
7. Make a list of any goods or services that are not supplied by businesses at that shopping centre.
What might be the reasons for each of these goods or services not being available at your local
shopping centre?

1.2 Who is involved in the market

system?
1.2.1 Consumers and producers
What do we mean when we speak of markets? In simple terms, markets consist of producers, who make
and sell goods and services, and consumers, who buy the goods and services. Producers rely on
consumers to buy from them, and consumers rely on producers to provide the goods and services they
want. A market refers to the relationship between the buyers and sellers, rather than to any physical location.
Of course, a shopping centre is a large market because it brings together significant numbers of producers
and consumers in one location. However, as we can see with the growth of online shopping, a market can
consist of buyers and sellers in cyberspace, where physical location is irrelevant.
Consumers and producers are at the centre of Australia’s market system. All of us are consumers, and those
of us who are employed are also producers. We satisfy our needs and wants by working to earn money, and
then buying goods and services from businesses that produce those goods and services. When we are
working, we are providing our labour to contribute to the process of producing goods or services for other
consumers to buy. When we are spending our money, we are consumers, purchasing goods and services
that others have produced, in order to satisfy our needs and wants.

FIGURE 1 People who are employed are considered to be producers.

The total of all consumers in the economy is sometimes called the household sector. The total of all
producers is sometimes known as the business sector.

We can examine the relationship between the business sector and the household sector by looking at the
following model. It demonstrates how labour is exchanged for money, and how that money is used to
purchase goods and services.
 FIGURE 2 Model showing the flow of money, goods and services between households and businesses

1 Businesses are producers that make or supply goods and services that are distributed to
households.

2 Consumers use money, cards and cheques to purchase goods and services.

3 The household sector provides businesses with a range of skills and resources that
contribute to the production of goods and services. Not only can they provide labour, but
they may own other resources such as land and buildings.

4 In return for the labour supplied to businesses, human resources receive an income in the
form of wages and salaries. Households will receive rent in return for the use of land or
buildings that they own and businesses use.

We can simplify this model by removing the flow of goods and services, and simply showing the flow of
money between households and businesses. This tells us about the financial relationship between
consumers and producers in our market system. Economists sometimes refer to this as the circular flow
diagram, because it illustrates how money circulates in a simple market economy.
 FIGURE 3 The circular flow of money between households and businesses in our market system

1.2.2 The financial sector

Do you spend every cent you receive in pocket money or in return for any work you do, or do you set some
aside as savings? While most people of your age don’t save much, many others in the economy do put
aside some of their income as savings. This money is usually deposited in a bank or similar financial
intermediary.

DISCUSSION
Are you a saver or are you a spender? Would you like to be able to save more money? What
advantages do people who save their money have over those who spend their money?

Banks and other financial organisations receive deposits, and use this money to lend out to others who need
to borrow money. Most businesses will borrow money, particularly when they need to expand the business.
This may involve buying new equipment, or even moving to bigger premises. Money spent in this way is
known as investment. Financial intermediaries collect the savings of thousands of depositors, and then
have large sums available for businesses to invest in growth.

These financial intermediaries make up what we sometimes call the financial sector of the economy. They
perform an important role in our market system because they enable accumulated savings to be directed
towards business growth. As businesses grow, they are able to employ more people, who in turn have more
money to spend on goods and services.
 FIGURE 4 Financial intermediaries are able to direct savings into investment in the growth of
businesses.

Banks and other financial intermediaries also play an important role in providing credit for households. When
consumers make large purchases, such as a house or a car, it is usually easier to borrow the money to pay
for these than to save up for years to pay cash for them. When purchasing a house or land, most people
take out a mortgage loan. This enables them to borrow to pay for the property, and pay back the loan over
a relatively long period of time. The housing market depends on the amount of money available for mortgage
loans. If more people are able to buy houses, more new houses are built, creating more jobs in the
construction industry.

We can see how the financial sector plays its role in the market system by adding financial intermediaries to
our basic circular flow diagram. As we can see, banks and other financial intermediaries receive savings from
households. They use this money to lend to businesses for investment, and they lend back to households in
the form of credit.
 FIGURE 5 The circular flow of money between households, businesses and financial intermediaries in
our market system

1.2.3 The government sector

Another element involved in the market system is government. In Australia this refers to the federal
government based in Canberra, state and territory governments based in capital cities, and local councils.
As well as spending money on consumption and investing in savings, households and businesses pay
money to government in the form of taxes and rates, and receive particular types of goods and services
back from government. A detailed examination of the role of government can be found in subtopic 1.5.
Government plays an important role in the market system for a number of reasons:

1. The level of taxation taken by government can affect the amount of money consumers have available
to spend on goods and services. High levels of taxation can mean that consumers spend less,
businesses cannot grow as quickly, and cannot employ as many people.
2. Money collected in taxes can be spent on providing welfare payments. These payments, in the form of
pensions and unemployment benefits, allow many people to purchase more as consumers, providing
more income to businesses, and creating more jobs as businesses grow.
3. Government also provides services such as schools and hospitals and these are paid for from taxes
collected from both households and businesses.
4. When government spends money on building roads, schools and hospitals, it is providing money to
the businesses that do the actual building, helping those businesses to grow and employ more
people.
 FIGURE 6 When a government pays businesses to construct roads it helps those businesses to grow
and employ more people.

The involvement of government in our market system can be illustrated by adding government to our circular
flow diagram. We can see that both households and businesses pay taxes to government. Some of this
comes back to households in the form of welfare payments such as pensions, or as services such as
education and health care. Some of it is spent on buying goods and services from businesses, or paying
businesses to build roads, schools or hospitals.
 FIGURE 7 The circular flow of money between households, businesses, financial intermediaries and
government in our market system

1.2.4 The overseas sector

Australia is an open economy, in that we trade goods and services with other countries. Australian
businesses export goods and services to both consumers and producers in other countries. Australian
consumers buy many products that have been manufactured in other parts of the world and imported into
this country.
 FIGURE 8 Australia imports many goods from overseas and exports to many other countries.

International trade can affect our market system in a number of ways:

1. Australia has a relatively small population, so if overseas consumers are willing to buy the goods and
services we produce, this can help our local businesses to grow and employ more people.
2. There are some products that we are unable to produce with the same efficiency as can be achieved
in other countries. A lot of the highly sophisticated machinery used in factories is imported, helping the
factory to produce goods more cheaply.
3. Imported goods are sometimes cheaper than locally produced goods, which can make it difficult for
local producers to compete with the imported products. This can lead to local producers going out of
business. Australian clothing and footwear manufacturing has declined over the last thirty years as
cheaper imports from Asian countries have increased dramatically. While this may not be good for
those Australian manufacturers, it is a positive trend for consumers, who have access to cheaper
clothing.

We can see the effects of overseas trade on the flow of money by adding overseas consumers and
producers to our circular flow diagram. We can see that households spend money buying imports from
overseas businesses, while businesses can earn money from exporting goods and services to overseas
consumers. Exports are good for the Australian economy because they bring money into our market system,
while imports take money out of the country and pay it to overseas businesses.
 FIGURE 9 The circular flow of money between households, businesses, financial intermediaries,
government, and overseas consumers and businesses in our market system

We can see that there are five main sectors involved in our market system: the household sector, business
sector, financial sector, government sector and overseas sector. The circular flow diagram allows us to see
the financial relationships between each of these sectors.

1.2 ACTIVITIES
REMEMBER
1. Define the following and provide an example of each:
a. market
b. labour
c. household sector
 d. business sector
e. financial sector
f. government sector
g. overseas sector.

EXPLAIN
2. Why is it possible for a person to be both a producer and a consumer?
3. How do financial intermediaries help markets to operate?
4. Explain one way in which a government can influence markets.
5. What is the difference between imports and exports?

PREDICT
6. Examine the circular flow diagram that includes household, business, financial, government and
overseas sectors, and predict the impact that each of the following might have on the level of
goods and services sold by Australian businesses.
a. Households decide to save a larger proportion of their income.
b. Financial intermediaries make it easier for consumers to acquire credit cards.
c. Governments decide to increase the level of taxation for households.
d. Governments increase the level of welfare payments.
e. There is a big increase in the availability of cheaper imported goods.

1.3 Different types of markets

1.3.1 Retail, labour, financial and stock markets
As we have seen, a market exists in any situation where buyers and sellers come together to exchange
goods and services for money. A market can exist in a physical location, it can be spread across a number of
locations, or can have no physical location at all, when buying and selling happens in cyberspace. It is the
act of buying and selling, not the actual location, that creates the market. We will now look at a number of
different markets that exist within the Australian economy: retail markets, labour markets, financial markets
and stock markets.
1.3.2 Retail markets
We are all very familiar with retail markets. These are the markets that allow us to buy most of our goods and
services. They include:

the shopping areas in the central business districts (CBDs) of our large capital cities
the huge suburban shopping malls such as Chadstone in Melbourne, or Westfield centres at
Parramatta in western Sydney and Chermside in northern Brisbane
local shopping centres with a supermarket and a number of specialty stores
shopping strips located along major roads and near public transport hubs
the groups of shops gathered in the main streets of country towns and regional centres
online shopping websites.

The past fifteen years has seen a huge increase in

FIGURE 1 Large shopping malls provide a wide
online shopping. In 2015, online shopping in Australia
range of retail businesses.
was worth more than $19 billion, an amount
equivalent to 6.6 per cent of all retail sales. About 80
per cent of this online shopping involved purchases
from Australian retailers, and therefore around one-
fifth of all online shopping in Australia saw goods
imported directly from overseas businesses. Online
shopping is likely to continue to grow, and the
proportion of goods being bought from overseas
businesses is likely to become larger as more people
become aware of the wide range of choices available
around the world.

FIGURE 2 Online shopping has increased rapidly over the last 15 years.
1.3.3 Labour markets
At any given time there will be people who are looking for a job. Some of them are people who are
unemployed and want to find work; some of them already have a job and are hoping to move to new or
different work. At the same time there will be many businesses who are looking to employ new people to
work for them. Prospective employees are hoping to sell their labour to employers. Those employers wish to
buy the skills and effort of suitable employees. This combination of buyers and sellers of labour constitutes
the labour market.

Like many other markets, the labour market does not operate in a particular physical location. The labour
market relies on a variety of means of communication between the sellers of labour (potential employees)
and the buyers of labour (employers). These allow employers to advertise vacancies in their businesses, and
potential employees to find out about job opportunities. The operation of the labour market can involve the
following:

The simple placement of a sign in a shop or café window indicating that the owner has a job vacancy
Advertisements in newspapers, advertising job vacancies. This method has declined significantly in
recent years, with relatively few vacancies advertised in this way today.
Online ‘jobs boards’ such as Seek, Adzuna and Australian JobSearch are the fastest growing source
of job advertisements, updated every day. Employers pay a fee to advertise their vacancies, and in
many cases it is possible to apply online for the vacancies advertised.
Any person receiving unemployment benefits from government is usually required to take an active
role in looking for work. The government pays independent agencies to assist unemployed people to
find work. Many of these are run by community organisations such as MatchWorks, Salvation Army
Employment Plus and CVGT Australia.

FIGURE 3 Online job boards such as SEEK are the fastest growing source of job advertisements.
The price paid by the employer as a buyer of labour is known as a wage or salary. Wages and salaries are
quite highly regulated in Australia. There is a minimum wage that must be paid to all employees over the
age of 21 years. It is adjusted every year to account for rises in the cost of living. At 1 July 2016, this was
set at $17.70 per hour, or $672.60 for a standard 38-hour working week.

1.3.4 Financial markets

Just as there are a number of markets for goods and services throughout the economy, there is also an
important market for money. While households earn money in the form of wages and salaries, they will often
choose to borrow money to buy larger items such as a car or a house. Businesses make money from selling
goods and services to consumers, and generally try to make a profit by doing so. Sometimes part of that
profit will be invested in expanding the business, but if the profits are not large enough to do this, the
business may also want to borrow money to help it grow.

The functions of money

Money performs four very important functions in our market system:

1. Medium of exchange — Money allows us to exchange goods and services using a common means of
exchange we all accept. Employees exchange their labour for money, and all businesses accept
money in exchange for the goods and services they supply.
2. Measure of value — We use money to put a price on the goods and services we exchange. The price
is a measure of what we believe the goods or services to be worth, when compared with other goods
and services.
3. Store of value — We are able to save our money to spend at a later date.
4. Standard of deferred payments — Using money allows us to purchase goods and services on credit,
with both buyer and seller knowing how much has to be paid at a later date.

FIGURE 4 Money performs important functions in our economy.

The working of financial markets
Just as all goods and services have a price, so too does money. The price of having access to money that
actually belongs to someone else is known as interest. When you deposit your money in a bank account,
the bank will pay you interest on your savings. This is usually based on a percentage figure. If you deposit
$100 in your account, and the bank is paying three per cent per annum (per year), the bank will pay you three
dollars in interest after a year. Interest is often calculated monthly or even daily, so that if you withdraw your
money before the year is up, you will be paid a lesser amount to cover the time the bank had the use of your
money. Banks then lend out the money that they have deposited with them to other consumers or to
businesses. They will usually charge a higher rate of interest to borrowers than they pay to their depositors.
This is how they make a profit.

If you have money to deposit, it is often worth shopping around to get the best rate of interest. Sometimes it
is possible to earn a higher rate of interest if you agree to leave the money in the bank for a fixed period of
time. This is known as a term deposit, because the money is deposited for a fixed term, or period of time.
When borrowing money you want to pay the lowest possible rate of interest, so it is also worthwhile to shop
around a number of lenders to get the best deal.

Financial markets operate like any other market, with

FIGURE 5 A bank account allows us to earn
sellers wanting to charge the highest price they can
interest, while the bank can lend the money
for their goods and services, and buyers wanting to
deposited to other individuals and businesses.
pay the lowest price they can. If you are selling the
use of your money (i.e. you are a depositor), you want
to get the best price (interest earnings) you can for
allowing someone else to use that money. If you are
buying the use of someone else’s money (i.e. you are
a borrower), you want to pay the lowest price (interest
payments) you can.

1.3.5 Stock market

Like other markets, the stock market is simply a relationship between buyers and sellers. In this case it is
shares in companies that are bought and sold. A share is a unit of ownership in a company. Large
companies divide their ownership into thousands of shares, which can be bought and sold through the stock
market, known in Australia as the Australian Securities Exchange (ASX). The ASX was formed in 1987 by
amalgamating the six capital-city stock exchanges. Today the ASX is based in Sydney, but also has offices in
Melbourne and Perth.
There are over 2000 companies listed on the ASX.
FIGURE 6 Buying shares listed on the ASX
They include large retailers such as Woolworths and
enables you to become a shareholder in a
Wesfarmers (owners of Coles); the four big banks —
variety of different businesses.
ANZ, CBA, NAB and Westpac; and large mining
companies such as BHP Billiton and Rio Tinto. The
value of shares can go up and down, depending on
the demand for those shares. When a company
reports that it has had a successful year, many people
may want to buy shares in that company. If there are
more people wanting to buy than to sell, the price
tends to rise. If the company appears to not be
performing well, there may be more shareholders
wanting to sell their shares than there are buyers, so
the price is likely to go down.

As the price of a company's shares goes up or down,

so too does the value of a shareholder’s investment.
The value of most shares has tended to rise over the
past 50 years or so, even though they can fluctuate in
price on a daily or weekly basis. People who hold shares for long periods of time generally benefit from
capital growth. The ownership of shares means you can also benefit when the company makes a profit, as
profits can be distributed to shareholders as dividends or in extra shares.

The buying and selling of shares is usually handled by stockbrokers. These are licensed agents who have
access to the ASX, and who conduct share transactions on behalf of the general public in exchange for a
small fee. Most stockbrokers will recommend that their clients buy shares in a variety of different companies.
If you only buy shares in one company and that company experiences problems, the value of your shares
can drop and you lose money. Buying shares in a number of different companies reduces the risk, and you
have a better chance of having some shares that will perform well. You have probably heard the saying
'don't put all your eggs in one basket', which means you should spread your risks among a number of
ventures.

Resources

Watch this eLesson: Share market basics

Searchlight ID: eles-0256
FIGURE 7 Stockbrokers buy and sell shares on behalf of their clients.

1.3 ACTIVITIES
REMEMBER
1. Describe three examples of retail markets.
2. What is the ASX?
3. Define each of the following in your own words:
a. unemployment benefits
b. interest
c. award
d. capital growth
e. enterprise bargaining
f. dividend.

EXPLAIN
4. What is being bought and sold on the labour market?
5. What is being bought and sold on financial markets?
6. Explain each of the four functions of money.
DISCOVER
7. Use online resources to investigate a ‘job board’ website and search for each of the following
jobs in your local area: nurse, bricklayer, hairdresser, taxi driver.
a. How many vacancies were available for each type of job?
b. What sort of information is provided about each job?
c. Explain the process for applying online for one of these jobs.

8. Use the Fair Work weblink in your Resources section to answer the following questions.
a. What is the current rate of the minimum wage for workers over the age of 21?
b. By how much has the minimum wage increased from the previous year?

THINK
9. Watch the Share market basics eLesson in your Resources section (Searchlight ID: ELES-0256)
and then answer the following questions:
a. What are you buying when you buy shares?
b. What would be the situation if you owned 100 per cent of the shares in a company?
c. What is the role of a stockbroker?
d. When is the stock market report published?
e. Copy the following table into your workbook and explain the meaning of each term as
found in the stock market report.

Stock

Close

Move

Turnover (100s)

Buy
Quotation
Sell

High
52 week
Low
 10. Examine the stock market report in a daily newspaper, and answer the following:
a. Identify two companies that experienced an increase in share price in the previous day’s
trading.
b. By how much did each increase in price?
c. How many shares were bought and sold for each company?
d. What is the highest and lowest price each company’s shares reached during the last year?
e. Is the current price closer to the highest or lowest experienced during the past year?
f. From what you can see of the shares in these two companies, do you think they would be
good value to buy right now? Explain your answer.

Resources

Explore more with this weblink: Fair Work

Complete this digital doc: Worksheet 1.1: Share market basics

1.4 Key economic questions for

business
1.4.1 Market forces
A key factor in any market is the price charged for the goods and services sold in that market. Sellers will
generally decide how much they wish to charge for the goods or services they are supplying, but they
cannot do this in isolation. They must take into account the price that consumers are willing to pay. If there
are a large number of sellers in any market, prices will tend to be lower because these sellers have to
compete with each other to attract customers. When prices are influenced by the interaction between buyers
and sellers, they are said to be influenced by market forces. These market forces can also have an impact on
what goods and services producers choose to supply and the methods they choose to produce these goods
and services. Market forces can also determine who the ultimate buyers of these goods and services will be.

1.4.2 Influencing prices

The prices paid for goods and services can be influenced by both sellers and buyers. Sellers can adopt a
number of strategies to determine prices, including:
 applying a retail price recommended by the manufacturer of the goods being sold. Although it is illegal
for a manufacturer to enforce such a price, it can provide a useful guide for the seller.
following the prices set by other sellers in the same market. This may involve matching those prices,
or setting a slightly lower price to attempt to attract more customers.
adding a percentage mark-up to the cost of the goods to the business. The seller may calculate a
sale price by adding a fixed percentage to the price that they paid for the goods. The selling price
needs to be enough to help cover all the business expenses, and also provide a profit.

FIGURE 1 Sellers must set a price that will not turn customers away.

Whatever method is used, it is a general rule in all markets that sellers will attempt to charge as high a price
as possible, while buyers will look for the lowest price they can find. A seller who attempts to charge too
high a price will find that buyers will not buy from their business. The seller must cover all of his or her
business expenses and make a reasonable profit, but cannot afford to charge too high a price if competitors
are selling the same product at a lower price. A buyer who expects to pay too low a price may find that there
are no sellers willing to sell at that rate, so has to be realistic about what constitutes a fair price.

A good example of the way in which markets operate can be found at large fruit and vegetable markets such
as Paddy’s Markets in Sydney, or the Queen Victoria Market in Melbourne. In these marketplaces, there are
large numbers of different fruit and vegetable stalls, all competing with each other. Sellers can see what their
competitors are charging for their stock, while buyers can move easily around the different stalls to compare
the quality and prices of produce on sale.
 FIGURE 2 Buyers can easily compare prices at a fruit and vegetable market.

We can see how the interaction between buyers and sellers can influence prices by taking an example from
one of these markets. Imagine each fruit and vegetable stall sells apples, and most sellers agree that if they
could charge $10 per kg, they would happily supply 100 kg of apples for sale each day. If they could only
charge $5 per kg, they would only be prepared to provide 50 kg a day. If they could only charge $2 per kg,
they would only supply 20 kg for sale, and concentrate instead on selling other fruit and vegetables that
would make a bigger profit.

Buyers have a different point of view. They want to purchase at the cheapest price possible. If apples cost
$10 per kg, only a small number of people would buy them, and then only in small quantities — a total of 20
kg on any given day. If the price dropped to $8 per kg, buyers might be prepared to purchase a total of 30 kg
a day. If the price fell to $6, they might buy 40 kg, at $4 they would buy 60 kg, and at $2 they would buy 80
kg.

How will the interaction of the different preferences of buyers and sellers help produce a price and a quantity
for sale that is acceptable to both groups? We can start to answer this by putting the above data into tables.

TABLE 1 Sellers’ preferences

Price per kg Quantity supplied

$2 20 kg

$5 50 kg

$10 100 kg
 TABLE 2 Buyers’ preferences

Price per kg Quantity purchased

$10 20 kg

$8 30 kg

$6 40 kg

$4 60 kg

$2 80 kg

The data from these tables can now be entered into a graph. If we place the different prices along the
vertical axis, and the different quantities along the horizontal axis, we can plot the preferences of both buyers
and sellers on the graph (see figure 3). The sellers’ preferences are shown by the blue line, while the buyers’
preferences are shown by the red line. The point at which the two lines intersect will give us the price and
quantity at which the preferences of both buyers and sellers are matched.

FIGURE 3 Supply and demand for apples

The market for apples will settle at a point where 50 kg of apples will be sold each day at a price of $5 per
kg. Sellers know that if they have 50 kg of apples in stock on any given day, they will be able to sell them all
at this price. If one seller decides to sell below this price, he or she will be likely to sell out his or her stock
more quickly, but will make a smaller profit. If he or she wants to cover costs and make a profit, it is unlikely
that the lower price will be maintained for long. A seller attempting to sell above the price of $5 per kg will be
likely to sell less and so will be forced to bring the price down.

The interaction between the different quantities sellers are willing to supply and buyers are likely to demand
at various prices can have an impact on a range of markets for many different goods and services.

1.4.3 The key economic questions

The aim of any economy is to provide goods and services to consumers in as efficient a manner as possible.
We would expect consumers to buy goods and services that will satisfy their needs and wants, and that
producers will want to make a profit by selling them those goods and services. In order for both consumers
and producers to be satisfied, the economy has to answer three basic questions:

1. What goods and services should be produced, and in what quantities?

2. What methods should be used to provide those goods and services?
3. To whom should those goods and services be distributed?

Because the Australian economy operates largely as a market system, we would expect the interaction
between buyers and sellers in a variety of different markets to answer these questions.

What to produce?
How does our market system help producers to decide exactly what goods and services to supply, and in
what quantities to supply them? Up to a point, the market system operates largely by trial and error. A
producer may make certain goods or services available to consumers and hope that these will satisfy the
needs and wants of those consumers. If the goods or services fail to sell, the producer will probably go out
of business. In Australia about 40 per cent of all businesses fail during their first four years – over half of
them in their first year. This means that a lot of potential producers are entering the marketplace, but not
selling the goods or services necessary to satisfy the needs and wants of consumers.

The market largely determines which businesses are likely to be successful. Some factors that can influence
markets include:
 established habits and experience. Producers know from people’s existing behaviour that there will
always be a demand for certain types of goods or services. Families need to buy food on a regular
basis, so a supermarket in a new suburb may well be successful. In any new shopping centre,
businesses such as cafés and hairdressers will probably meet a demand from consumers if there are
no similar businesses nearby. If a second or third café or hairdressing salon is established in the same
shopping centre, the success of these businesses will depend on whether the level of demand from
consumers is sufficient for all of them to survive. If not, then one or more will close. The operation of
the market for those goods and services will determine how many similar businesses can survive in
the same marketplace.
changing tastes and preferences. An example of this is the market for Australian-made cars. For many
years, family sedans and wagons such as the Holden Commodore and Ford Falcon were Australia’s
best selling cars. Car manufacturing was so successful that other manufacturers such as Toyota also
set up factories in Australia. Over time, consumers’ preferences have changed, and smaller imported
cars have been preferred in the marketplace. This has led to a decline in car manufacturing in Australia
to the point that it will cease altogether by 2017. Changing consumer tastes and preferences have
influenced what is produced, and in what quantities.

FIGURE 4 Changes in the market will see the closure of the three remaining car manufacturing
businesses in Australia by 2017.

marketing and advertising. Any business introducing a new product or service into the market needs to
ensure that consumers are aware of its availability. Television, newspaper and radio advertising have
been used extensively for many years to persuade consumers to buy particular goods and services.
Online advertising through search engines such as Google has increased dramatically, and today an
online presence is essential for almost any business.
technological change. Over the past twenty years, as a society we have become very enthusiastic
about new technology. Whenever a new model iPhone is released into the marketplace, consumers
queue up outside their nearest Apple store to be one of the first to buy it. Consumers monitor new
developments in technology, and many will quickly replace outdated products with newer models.
Producers can be quite confident that improvements in technology will quickly attract buyers to new
goods and services.
 FIGURE 5 Improvements in technology soon attract consumers.

How to produce?
The production of goods and services generally involves a combination of labour, equipment and raw
materials. These are known as inputs, and any production process will involve different types and
combinations of these three inputs. A factory producing frozen vegetables will be set up with different types
of equipment, such as the machines that chop the vegetables, pack and seal them in plastic packaging, and
freeze them. The same factory will employ workers to control those machines, and perhaps carry out some
other tasks, such as management of the process. The raw materials are the vegetables that are processed
during production.

At different times, the managers of the factory will have to make decisions about the best methods of
producing their final product, and the operation of the market can influence these decisions. Competition
from rival frozen vegetable companies will mean that the business will wish to keep its costs as low as
possible. If new equipment becomes available that works more efficiently, it may be worthwhile changing the
methods of production to take advantage of this new equipment.

Over the past fifty years or so, the use of robotics-based equipment has increased dramatically in most
factory production. In most cases it enables a factory to employ fewer workers, saving in wages costs and
allowing the prices of products to be kept at a level where they can compete in the marketplace. When one
business in a particular market is able to cut costs by changing its methods of production, usually other
businesses in the same market will make changes also, in order to remain competitive.
 FIGURE 6 The use of robotics has changed the way manufacturers produce goods.

For whom to produce?

A business owner will make some decisions about
FIGURE 7 Luxury motor vehicles cost much
who he or she intends to supply with goods and
more to produce, but the manufacturers are not
services. The market can also influence who receives
attempting to sell to the mass market.
these goods and services because purchasing will be
affected by the level of prices when compared with
the level of income of consumers. As seen in our
circular flow diagram in subtopic 1.2, household
income can consist of wages and some government
welfare payments. Households can also gain access
to credit for the purchase of some goods and
services. Taxes and desired levels of savings result in
a reduced amount available for spending.

The amount actually available for households to

spend is known as disposable income. All
consumers make decisions about what to buy by
comparing their disposable income with the prices they will have to pay for the goods and services they
want. The prices of different products can influence who buys them. Luxury motor vehicles cost much more
to produce, but the manufacturers are not attempting to sell to the mass market. Their product is aimed at
those with a high enough level of disposable income to be able to afford such a vehicle. Fast food
restaurants such as McDonald’s and KFC provide relatively cheap meals designed to appeal to large
numbers of consumers. Other, more exclusive restaurants, charging $100 or $200 per meal, are producing
for a completely different market.
1.4 ACTIVITIES
REMEMBER
1. Define each of the following in your own words:
a. percentage mark-up
b. disposable income.

2. Outline two methods a business might use to determine the prices for the goods or services it
sells.
3. What are the three different types of inputs that go into any production process?

EXPLAIN
4. Explain two factors that could influence which goods and services businesses decide to
produce.
5. How do businesses aim to keep their production costs as low as possible?
6. Explain how markets can influence to whom different goods and services are distributed.

THINK
7. In a fruit and vegetable market, bananas are subject to the following buyer and seller
preferences.
Sellers agree that if they could charge $14 per kg, they would happily supply 140 kg of
bananas for sale each day. If they could only charge $7 per kg, they would only provide 70
kg a day. If they can only charge $3 per kg, they would only supply 30 kg for sale.
If bananas cost $14 per kg, buyers would demand a total of 30 kg in any given day. If the
price dropped to $10 per kg, buyers might be prepared to buy 40 kg a day. If the price fell
to $8, buyers might purchase 60 kg, at $6 they would buy 80 kg, and at $4 they would buy
100 kg.

a. Draw up a table showing the different quantities of bananas that sellers would be
prepared to supply at each price level.
b. Draw up a table showing the quantities of bananas that consumers would demand at
each price level.
c. Use the data from these tables to construct a graph that shows both sellers’ supply
preferences, and consumers’ demand preferences.
d. What is the price per kilogram at which buyers and sellers preferences would be
matched, and what quantity would be sold at that price?
1.5 Government
market
involvement in the

1.5.1 Law and justice

Governments at all levels involve themselves in the market in a variety of ways. Politicians, commentators
and the media often refer to the issue of ‘economic management’ as a responsibility of government. It is
expected that government will take action to encourage growth in the economy and to avoid high levels of
unemployment. Government activity within a market economy goes well beyond these aims. The successful
operation of markets often depends on the level of government involvement.

Government provides a legal framework that allows the buying and selling in the marketplace to occur within
a set of rules that should be fair to all participants. Australian Consumer Law protects consumers from
unscrupulous businesses that could try to cheat them. Laws relating to the enforcement of legal contracts
ensure that all buyers and sellers will be able to enforce their rights before the courts. The criminal law aims
to provide protection from threats and intimidation in any business dealings. Our court system gives
everyone the right to take legal action to enforce their rights.

FIGURE 1 Australian Consumer Law protects consumers from unscrupulous businesses that could try
to cheat them.
1.5.2 Welfare
Government provides financial and other support to the disadvantaged in the community. The aged pension
supports those who are beyond retirement age and no longer working. Unemployment benefits are designed
to support those who cannot find work. The disability support pension assists those who are unable to gain
employment because of physical or mental disability. Not only are welfare payments designed to provide
fairness and support to those who need help, but they can also have a positive economic effect on markets.
Those receiving welfare are likely to spend most of their money and so their spending adds to the circular
flow of income throughout the economy. Businesses gain revenue from selling additional goods and
services. This can in turn allow them to employ more people, who also spend their money buying goods and
services.

FIGURE 2 Welfare payments help those who are not able to earn an income.

1.5.3 Provision of infrastructure

Government has a major responsibility for providing the infrastructure for the economy. This includes roads,
railways and ports, and has traditionally included other means of communication, as well as energy supplies.
Roads and railways are essential if goods are to be transported from place of manufacture to the shops
where they are sold. Ports are not only required to allow for the import and export of goods in and out of
Australia, but also for the transport of goods within Australia. Tasmania relies on shipping across Bass Strait
to bring goods from mainland Australia, and to transport goods produced within the state to consumers in
other states.
The government provides a postal service that supports correspondence between businesses, as well as the
delivery of goods through a parcel delivery service. The telephone service was originally provided by
government before Telstra was privatised and other providers were permitted to enter the market for
telephone services. Even today, the national broadband network is an important infrastructure project being
funded by government. Markets cannot operate without efficient systems of communication between
consumers and businesses.

Traditionally, energy supplies such as electricity and gas also have been provided by government. These are
not only essential for the domestic uses we are all accustomed to, but also for the functioning of businesses.
In some states of Australia, electricity and gas supplies have been privatised and are now run by businesses
rather than by government. Even where this has occurred, the original infrastructure was usually built by
government before being sold to the business sector.

FIGURE 3 Government provides infrastructure to enable markets to function more efficiently.

DISCUSSION
Privatisation of essential industries, such as electricity and gas supplies, can lead to increased prices
as the companies that provide these services seek to make larger profits. Do you think these essentials
should be sold for profit?
1.5.4 Economic management
Government has a responsibility for ensuring that Australia experiences a sustainable level of economic
growth from year to year. Growth is important because as the population increases, it is necessary to ensure
there are sufficient goods and services for all consumers to buy. There also needs to be an increase in the
number of jobs available to provide employment for a growing population.

Governments can encourage economic growth by spending money, injecting more into the circular flow. This
can provide more for consumers to spend, encouraging business to increase the supply of goods and
services, and thus provide more job opportunities. However, if too much money is injected into the economy
there may not be enough goods and services readily available to meet the increased demand. This is likely to
force prices up, leading to inflation.

When this occurs, government will usually cut back on spending, which removes the excess money from the
economy, and hopefully slows down the rise in prices. Governments use their annual budgets to influence
the flow of money in the economy. They will aim to encourage growth, while trying to avoid the risk of
inflation. Governments can use statistics gathered by the Australian Bureau of Statistics to assist them in
their decision making. These statistics can include figures relating to the levels of employment in the
economy, as well as those tracking price rises.

FIGURE 4 Governments will use a variety of statistics to assist with decision making.
 Resources

Explore more with this weblink: Australian Bureau of Statistics

1.5.5 Wages and employee relations

As we have discussed, there is a market for labour in which workers offer their skills and experience for sale
to businesses and businesses buy that labour by paying wages and salaries. In order to ensure that the
labour market functions fairly, it is regulated by laws passed by governments. The major law dealing with
wages and working conditions in Australia is the Fair Work Act, a federal government law.

State governments provide regulations to ensure safe workplaces through Work Health and Safety laws.
Both federal and state governments have also sought to prevent discrimination in the workplace by passing
laws supporting equal employment opportunity. These make it illegal to discriminate against someone in any
workplace on the basis of gender, race, age or ethnicity.

FIGURE 5 Work Health and Safety laws are designed to prevent injuries at work.
1.5.6 Provision of goods and services
Governments can also become involved in the marketplace as actual suppliers of goods and services. Every
state and territory government provides an education system. In addition, state governments provide
hospitals and other health services. Although many of these services are also provided by other
organisations, such as private schools and private hospitals, it is considered a responsibility of government
to ensure that everyone has access to education and health services. Ambulance services and fire fighting
and emergency services are similarly considered to be the responsibility of state governments.

Public transport systems also are mostly provided by state governments, and those public transport
systems that are provided by non-government businesses usually receive large amounts of money from
government to assist in their running. Public transport does not make a profit, so no business would want to
run it without such funding. Further, without this government assistance, for public transport to be profitable
fares would have to be so expensive that many people could not afford to use it. Public transport is
recognised as an essential service, so governments either provide it themselves or pay businesses to
provide it at a reasonable price.

FIGURE 6 It is a responsibility of government to provide hospitals and health services.

1.5.7 Planning and the environment
State governments and local councils have powers to control the type of buildings and other developments
occurring within their borders. Governments establish building standards to ensure that all buildings are
structurally sound, and not likely to fall down or cause a hazard in any other way. Anyone wishing to build a
house or other structure on vacant land must gain a building approval. This is to ensure that the building
conforms with certain standards. Councils and the state government can also determine whether or not a
particular type of building is appropriate in a particular area. For example, it would usually be considered
inappropriate to build a large factory in the middle of a residential area.

Since the early 1970s, state governments have also introduced laws to protect the environment. These place
restrictions on both businesses and individuals in relation to what they can release into the atmosphere and
waterways. These laws can affect markets because they can increase costs for some businesses.
Businesses that may once have simply released waste material into a creek, river or drain now have to
dispose of it in an environmentally responsible manner. Smoke and fumes have to be properly filtered before
being released into the atmosphere. Motor vehicles have emission controls to limit the levels of harmful
chemicals in exhaust fumes.

Environmental laws have also created new business

FIGURE 7 Governments have introduced laws
opportunities, with waste management and recycling
to prevent businesses from polluting the
businesses providing services for a variety of different
environment.
customers. As with most government involvement in
the economy, while some businesses may appear to
be disadvantaged, opportunities are often created for
new and different businesses to grow.

1.5.8 International trade policies

Governments have the power to regulate what comes into and goes out of the country. Customs and
quarantine laws can have an influence on the markets for a number of products. Australia had a ban on the
importation of apples from New Zealand for many years because of fears that these apples carry a disease
known as fire blight. Such a regulation would obviously have an impact on the market for apples throughout
Australia.
Traditionally governments have also attempted to
FIGURE 8 A reduction in tariffs has increased
protect goods produced by local industries by
the quantity of imported clothing sold in
imposing special taxes on similar goods imported
Australia.
from other countries. These taxes are known as
tariffs. The clothing and textile industries were once
protected in this way. In the early 1980s there was a
28 per cent tariff on all imported clothing. This made
these imported goods more expensive than locally
produced clothing, thus encouraging consumers to
buy the Australian-manufactured product. Over the
next thirty years this tariff was reduced, making
imported clothing much cheaper than the local
product.

As a result of reduced tariffs, many local clothing

manufacturers have been unable to compete with
cheaper imported clothing and consequently have had to close. While this has been a negative for the
Australian clothing industry, the positive impact for consumers is that clothing is much cheaper as a result of
the reduction in tariffs. Since the 1980s Australian governments have also negotiated trade agreements with
other countries. We agree to reduce tariffs on imports from those countries, and in return they agree to
reduce tariffs on goods they import from us. Although this can make it difficult for some local manufacturers
who have to compete against cheaper imported products, it can be good for our export industries and for
consumers paying lower prices.

1.5.9 Immigration policies

As well as controlling the goods that come into and go out of Australia, governments can regulate the
movement of people. This particularly applies to immigration into the country. Immigration allows the
population to rise faster than would occur through natural increases in the birth rate. Rapid population
increases can provide more consumers for businesses to supply with goods and services. Further, new
arrivals add to the workforce, providing new employees with new skills for expanding businesses.

Governments can also affect the market for particular goods and services through decisions made about
who is encouraged to migrate here. If particular skills are required in certain industries and there are not
enough people in Australia who have the required qualifications, governments can allow employers to bring
in migrants with the necessary skills. This can have an impact on the labour market in that industry. Australia
has also become a major provider of tertiary education for our region. Encouraging students to come here
from Asian and Pacific Island countries provides additional income for our universities, as these international
students pay fees to study here.
FIGURE 9 Australia has become a major provider of tertiary education for fee-paying students from
Asian countries.

1.5 ACTIVITIES
REMEMBER
1. Define each of the following in your own words:
a. infrastructure
b. inflation
c. government budget.

2. What is the purpose of Australian Consumer Law?

3. Why does government usually have to provide funding for public transport to operate?

EXPLAIN
4. How can government welfare payments have an impact on the market for goods and services?
5. Explain what happens when a service provided by government is privatised.
6. How can a government budget influence economic growth?
7. Why might it be important for government to be involved in the regulation of wages and working
conditions for employees?
8. What effect might environmental laws have on the costs experienced by businesses in managing
waste from their production processes?
9. Explain two ways in which government immigration policies can have an influence on markets.
 DISCOVER
10. Use the Australian Bureau of Statistics weblink in your Resources section to complete the
following:
a. What is the current estimated population of Australia?
b. Explain how this estimate is calculated.
c. Select two headlines or media releases, and for each one, describe:
i. three significant facts or figures included in the report
ii. the trends or changes that have occurred in recent years in the facts or figures
reported.

Resources

Explore more with this weblink: Australian Bureau of Statistics

1.6 SkillBuilder: Interpreting and

analysing a table
1.6.1 Tell me

What is a table?
A table is a way of displaying information, or data, in an organised way. The data (text or numbers) are
arranged in columns (reading down) and rows (reading across). The table is sometimes called a grid. This is
because rows and columns are separated by lines to form a grid.

Why are tables useful?

Tables provide a lot of information in a small amount of space.
They are a very good way of arranging data so that it can be easily understood.
The column and row headings help tell you what the data is about.
The data in a table can be used to create a graph.
The information in a table can be used to help people make decisions.
1.6.2 Show me
Examine the following table.

TABLE 1 Civilian population aged 15 years and over: Labour force status and persons not
in the labour force — September 2009 to September 2013

2009 2010 2011 2012 2013

'000 '000 '000 '000 '000

MALES

Civilian population aged 15 years and over 8523.8 8865.5 8967.6 9075.5 9258.6

Persons in the labour force 6275.3 6546.7 6581.6 6628.7 6707.3

Employed 5915.5 6220.9 6242.3 6251.8 6325.2

Unemployed 359.8 325.8 339.3 376.9 382.1

Persons not in the labour force 2248.5 2318.8 2386.0 2447.0 2551.4

FEMALES

Civilian population aged 15 years and over 8678.5 9022.2 9152.2 9267.6 9450.5

Persons in the labour force 5246.7 5460.3 5565.7 5621.1 5698.4

Employed 4956.6 5176.9 5272.4 5327.6 5377.5

Unemployed 290.1 283.4 293.3 293.5 320.9

 Persons not in the labour force 3431.7 3561.9 3586.4 3646.5 3752.1

Source: Australian Bureau of Statistics, Persons not in the labour force, September 2013

This table provides an indication of trends in labour force participation over a four year period from 2009 to
2013. The labour force is defined as all those people over the age of 15 who are either employed, or who are
unemployed and looking for a job. Persons not in the labour force are all those over the age of 15 who do
not have a paid job, but are not looking for work. They can include:

parents who are at home looking after children or other family members
people who are retired
full-time students.

The figures in each column are expressed in thousands (000s), so the figure for male ‘Civilian population
aged 15 years and over’ is actually 8 523 800.

Think about the following questions in relation to this table:

1. What percentage of the male population over 15 years was in the labour force in 2009?
2. What percentage of the male population over 15 years was in the labour force in 2013?
3. Has the percentage of the male population over 15 years that was in the labour force increased or
decreased?
4. What percentage of the female population over 15 years was in the labour force in 2009?
5. What percentage of the female population over 15 years was in the labour force in 2013?
6. Has the percentage of the female population over 15 years that was in the labour force increased or
decreased?
7. Why do you think there is such a difference between the percentage of males and females in the
labour force?
8. How would you explain any changes over the four years of data?

Questions 1, 2, 4 and 5 involve simple calculations (see below). Questions 3 and 6 involve comparing those
calculations, and questions 7 and 8 require you to form conclusions:

To answer question 1, simply divide the number of males in the labour force (6 275 300) by the total
population of males over 15 (8 523 800), and multiply by 100 to express as a percentage. This gives us
an answer of 74 per cent.
By following the same process we can calculate the answer to question 2, that in 2013 the percentage
in the workforce was 72 per cent.
The same process shows us that the percentage for both questions 4 and 5 was 60 per cent.
The percentage of males in the labour force has decreased by 2 percentage points.
 The percentage of females in the labour force has remained steady.

Conclusions

(Question 7) The percentage of females in the labour force is less than the percentage of males in the
labour force. If we think of the reasons for people not participating in the labour force, we can
probably assume that a significant percentage of those females would be at home looking after
children or other family members, as women tend to carry out this task more often than men in our
society. Of course some would be retired or full-time students as well.
(Question 8) The percentage of males in the workforce has decreased slightly. This could mean that
more males have either retired, or taken on full-time study, or are at home as carers. It could be a
combination of all three. We would need further data to come to a more definite conclusion.
1.6.3 Let me do it

1.6 ACTIVITIES
Examine the following table.

TABLE 2 Age structure of the Australian population

2013

Age group Male Female Total

0−14 years 2 061 973 1 957 558 4 016 532

15−24 years 1 531 325 1 453 940 2 985 265

25−54 years 4 748 667 4 598 259 9 346 926

55−64 years 1 308 660 1 326 220 2 634 880

65 years and over 1 509 460 1 766 439 3 275 899

Source: Australian Bureau of Statistics

 Answer the following questions:

1. What was the total Australian population in 2013?

2. What was the percentage of males and percentage of females in the total?
3. What was the overall percentage of each age group as a proportion of the total population?
4. If the labour force comes from all those over the age of 15, what would be the possible maximum
labour force?
5. What would be the total of the labour force if:
a. 70 per cent of those aged 15−24 were full-time students
b. 90 per cent of those over 65 were retired and therefore not looking for work
c. 20 per cent of females between the ages of 25 and 54 were full-time carers for family
members?

6. If six per cent of the labour force as calculated in question 5 is currently unemployed, what would
be the total number of people employed at this time?
7. What would be the total of people employed (from question 6) as a percentage of the total
population?

1.7 Review
1.7.1 Summary
In Australia we live in a market economy. We rely on markets to provide us with the goods and services we
require to satisfy our needs and wants. All markets consist of buyers and sellers, who exchange goods and
services for money.

Consumers satisfy their needs and wants by working to earn money, and then buying goods and
services from businesses that produce those goods and services.
The basic circular flow of money is between the household sector and the business sector.
Financial intermediaries, government and the overseas sector are all involved in the operation of the
market system in Australia.
There are a large number of different types of markets that make up the Australian economy. These
include the retail market, the labour market, financial markets and the stock market.
The interaction between buyers and sellers in the marketplace can influence prices charged for goods
and services.
 Markets can also help determine what goods should be produced and in what quantities; how those
goods and services are produced; and to whom they are distributed.
Government performs a number of roles in the Australian market system including:
– the provision of law and justice, welfare, and infrastructure
– economic management
– regulation of wages and employment conditions
– provision of some goods and services
– management of planning and the environment
– regulation of international trade
– setting of immigration policies and targets.

1.7.2 Your turn

1.7 ACTIVITIES
Fresh ‘n’ Fruity is a small company supplying fresh fruit and vegetables for home delivery. Customers
place their orders online, and orders are delivered within 48 hours. The company employs packers to
pack each order and van drivers to deliver the goods, as well as office staff to process the orders and
forward them to the warehouse. It also employs a website manager who ensures that all prices are
regularly updated and displayed on the company website. Home delivery of fresh fruit and vegetables is
a growing market, with an increasing number of suppliers. They all display their prices on their
websites, so competition is very strong.

Complete the following tasks:

1. What type of market is this business involved in?

2. The business wishes to expand its warehouse. How could it find the money to do this?
3. Explain two methods that could be used to determine the prices of the goods sold.
4. How can the operation of the market help this company to decide what goods to provide (i.e.
what to produce)?
5. What factors might influence the company in deciding their methods of operation (i.e. how to
produce)?
6. What factors in this marketplace influence to whom the business sells its fruit and vegetables?
7. Identify and explain three ways in which this business might by affected by the activities of
government.
 Resources

Try out this interactivity: Multiple choice

Searchlight ID: int-5470
Try out this interactivity: True/false
Searchlight ID: int-5475
Chapter 2: Traditional Indigenous markets
Contents
2.1 Overview

2.2 How do the ceremonial meetings of Aboriginal and Torres Strait Islander peoples provide
opportunities to access goods?

2.3 What goods do Aboriginal and Torres Strait Islander peoples trade?

2.4 How and why do Aboriginal and Torres Strait Islander communities trade?

2.5 Innovation and enterprise

2.6 SkillBuilder: Preparing a data show

2.7 Review

Note to students and teachers: This PDF has been provided as an offline solution for times when you
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2 Traditional Indigenous markets
2.1 Overview
2.1.1 Indigenous beliefs and ceremonies

Resources

Watch this eLesson: Traditional Indigenous markets

Searchlight ID: eles-1812

For Aboriginal Australians, the beginning of time is called the Dreaming. Before the Dreaming, the world was
flat and featureless. Creatures appeared with the power to change from animal to human form. These were
the ancestors. They created the landscape and made the lore and patterns for behaviour for their offspring.
Peoples of the Torres Strait have their own, similar, spiritual beliefs. The songs, dances and stories of
Aboriginal and Torres Strait Islander peoples tell the history of the ancestors. These are often performed at
ceremonies. Ceremonies provide Aboriginal and Torres Strait Islander peoples with the opportunity to share
stories and to trade goods.
 FIGURE 1 According to Indigenous people, the features of the landscape, lore and ceremonies were
created in the Dreaming.

Learning objectives
Students will investigate:

the traditional markets of Aboriginal and Torres Strait Islander communities and their participation in
contemporary markets.

STARTER QUESTIONS
1. Explain what the Dreaming means.
2. According to Aboriginal and Torres Strait Islander peoples, how was the world created?
3. Why are songs, dances, stories and ceremonies important to Aboriginal and Torres Strait Islander
people?
2.2 How do the ceremonial meetings of
Aboriginal and Torres Strait Islander
peoples provide opportunities to
access goods?
2.2.1 The significance of ceremonial performances
Ceremonial performances are considered to be a central part of Aboriginal and Torres Strait Islander life.
Ceremonies bring together all aspects of Indigenous Australian culture, including dance, song, body
decoration, sculpture and painting. There are many similarities between the cultures, languages and
practices of Torres Strait Islander and Aboriginal people, but also many differences. Ceremonial meetings
provided Aboriginal and Torres Strait Islander peoples with the opportunity to access goods from other
communities.

2.2.2 Dance
In Aboriginal and Torres Strait Islander culture, being able to dance is virtually the same as knowing the
ancestral hero stories. Dancing is learnt from an early age and passed down from generation to generation.
Dance allows Aboriginal and Torres Strait Islander people to tell the stories of their language group in front of
an audience, as well as to entertain and be entertained.

FIGURE 1 Representatives from the Mirriuwung and Gidja people perform a traditional ceremony to
ward off evil spirits with Rio Tinto employees watching on. The Mirriuwung (in blue) and Gidja (in red)
people are the traditional owners of the land under which Rio Tinto opened an underground mining
operation in 2013.
2.2.3 Song
Aboriginal and Torres Strait Islander people also use song to tell their stories. Songs make up a songline,
which is an elaborate song cycle mapping the country travelled by the Dreaming ancestors. The ancestors
themselves are believed to have created the old songs that tell Dreaming stories as they created the
landscape.

2.2.4 Ceremonies
There have always been many types of Aboriginal and Torres Strait Islander ceremonies and many reasons
for conducting them. Each language group had, or has, ownership of its ceremonies. Language groups can
share these with others or make them known to other groups, but other groups cannot own them. For
Aboriginal peoples, all ceremonies are considered to have originated in the Dreaming. Ceremonies ensured
that the important aspects of the Dreaming, including the stories and lore, were not lost.

Some ceremonies are private, some are for men only and some are for women only. Some ceremonies
involve everyone belonging to a language group, including children. Such ceremonies involve the gathering
of large groups of people where songs, dances and trade goods are exchanged. People would, and still do,
bring gifts to feasts along with special objects and raw materials for trade.

Increase rites
Increase rites are rituals that are performed to ensure a supply of plant, bird, fish and animal food. These
rituals are still practised by Aboriginal and Torres Strait Islander peoples. Chanting, singing and dancing take
place to appeal to the ancestral beings to ensure a good supply of food or rain.

Celebrations and feasts

Celebrations are ceremonies involving singing, dancing and mime. The early Europeans referred to
Aboriginal celebrations as ‘corroboree’, but few Aboriginal peoples continue to use this term. Some
celebrations are for entertainment while others are a prelude to another type of ceremony. Sometimes a
celebration can be performed impromptu but is often planned well ahead of time. The composer of a
celebration might travel to other groups and teach them the composition. Communities learn new
celebrations when they gather together with other groups for ceremonies and trade. Torres Strait Islander
people have similar ceremonies, referred to as feasts.
 FIGURE 2 An extract from Tom Petrie's Reminiscences of Early Queensland, written by Tom
Petrie’s daughter, Constance, in 1904

An account of an Indigenous celebration

The aborigines painted their bodies according to the tribe to which they belonged, so in a
corrobboree [sic] or fight they were recognised at once by one another. In the former there
would perhaps be ever so many different tribes mixed up, for they might all know the same
dance. Father says it was a grand sight to see about 300 men at a time dancing in and out,
painted all colours. There they would be, men white and black, men white and red, men white
and yellow, and yet others a shiny black with just white spots all over them, or, in place of the
spots, rings of white round legs and body, or white strips up and down. Yet again there were
those who would have strange figures painted on their dark skins, and no matter which it was,
one or the other, they were all neatly, and even beautifully, got up. There they would dance
with their head-dress waving in the air — the swan's down, the parrot feathers, or the little
sticks with the yellow cockatoo feathers. And, of course, the rest of the dress added to the
spectacle — the native dogs' tails round their heads, the bones in their noses, and the various
belts and other arrangements.

The dancers would keep up these gaieties for a couple of hours and then all would return to
camp, where they settled down to a sort of meeting…

Rites of passage FIGURE 3 Corroboree, painted by S. T. Gill, c.

1864
Both Aboriginal and Torres Strait Islander peoples
have ceremonies recognising or celebrating the
passing of their young people into new stages of life.
Bora is the initiation of Aboriginal boys into
adulthood. The initiation ceremony often involves an
ordeal such as the removal of a tooth or part of a
finger. These ceremonies can last for weeks, with
nightly singing, dancing and storytelling, displaying of
body decoration and ceremonial objects. Songs and
stories about the Ancestral Beings are told and retold.
Some are open for women and children to see, others
are restricted to initiates only. Groups are expected to
come together to participate in these ceremonies.
Girls also have to undergo initiation, but it is not as
severe as it is for boys.
 FIGURE 4 Warriors in Ambush: Series 49 - Aboriginal Mystic Bora Ceremony

Source: State Library of New South Wales [a106490]

Torres Strait Islander boys are welcomed to adulthood with their first beard shaving, which is also
accompanied by a ceremony. The ceremony includes feasting and singing.

Funeral ceremonies
Burial practices differ among Aboriginal and Torres Strait Islander peoples. Some Aboriginal peoples paint
themselves white and cut their bodies to show remorse for their loved ones. Rituals are conducted with
singing and dancing to ensure the person’s spirit leaves the area and returns to its birthplace.

An important ceremony for Torres Strait Islander people is the ‘tombstone opening’. This involves the
headstone being formally unveiled to all family and friends of the deceased. This ceremony is an occasion
for feasting and dancing and may include celebrants from the strait as well as from the Australian mainland.

2.2 ACTIVITIES
REMEMBER
1. What is a ceremony?
2. Define the term ‘songline’.
EXPLAIN
3. Outline how ceremonies taught people about the Dreaming.
4. Construct a diagram showing the various ceremonies that Aboriginal and Torres Strait Islander
peoples have.
5. Explain how ceremonies provide a meeting place for the exchange of goods.

DISCOVER
Film Australia recorded the Djungguwan, one of the most important ceremonies of the Yolngu people of
northeast Arnhem Land, in 1966, 1976 and 2002.

6. Use the Djungguwan weblink in your Resources section to visit the Film Australia website and
watch the videos about the Djungguwan, a ceremony of the Rirratjingu and the Marrakulu clans.
Then answer the following questions:
a. What are some of the functions of the Djungguwan ceremony?
b. In what ways is the Djungguwan like experiencing a musical event, such as a concert or
opera?
c. What story does the Djungguwan tell?

7. Use the Instruments of ceremony weblink in your Resources section to visit the Film Australia
website and watch the videos about the instruments of ceremony. Then answer the following
questions:
a. What is the importance of singing?
b. Why is it important that places, objects and animals have names?
c. What do the poles used in the ceremony represent?
d. Describe the gundimolk (the ceremonial ground).
e. What stories does the gundimolk represent?

THINK
8. Why were ceremonies an important way for Aboriginal and Torres Strait Islander peoples to pass
on information?
 Resources

Explore more with this weblink: Djungguwan

Explore more with this weblink: Instruments of ceremony

2.3 What goods do Aboriginal and Torres

Strait Islander peoples trade?
2.3.1 The effect of weather and location on resources
Aboriginal and Torres Strait Islander peoples use the resources of the land and sea. They would, and still do,
travel widely according to the seasons and weather, knowing the best time to move to a different location.
The resources they continue to gather are affected by the season and by location. Language groups
gathered together forming larger groups for ceremonies and to trade resources that were plentiful in different
areas at certain times of year. This is a practice that continues today.

2.3.2 Trade goods

The items that Aboriginal and Torres Strait Islander peoples produce or collect and then trade depends on
where they are located. A group living in a coastal area, for example, is in a position to exchange the
resources it finds there, such as fish and shells. A group living inland might exchange the resources that it
finds there, including herbs and stones, for items found in different types of country.

Before European settlement, Aboriginal and Torres Strait Islander peoples produced many items to trade.
These included stones, shells (such as pearl, baler and trochus shells), ochres (used for paint and body
decoration), tools (such as stone axes) and ceremonial items. Foods, including fish, crab, dugong or turtle
meat, yams, bird eggs and turtle eggs were traded over small distances. Snake skins, mats, spears and
wood carvings were also traded.
 FIGURE 1 In his book Aboriginal dreaming paths and trading routes, Dale Kerwin lists some
of the items traded by Aboriginal peoples.

A description of items that were traded

Trade items read like a veritable shopping list that included various types of ochre, trapping
devices such as bird nets and fish traps, various ornaments, hair-belts, pearl shell,
boomerangs, weapons, various stone implements, string bags, gum cements, food and
medical resources, wild tobacco and intellectual property.

FIGURE 2 Colin Hamlett, a traditional owner of an area of the Weld Ranges in Western Australia at an
Aboriginal ochre mine named Wilgie Mia. It is the largest and deepest underground ochre mine in
Australia and has been in operation for over 3000 years. Red, yellow, white and black ochre was mined
for ceremonies and to trade. Ochre is still mined by Aboriginal men to use in ceremonies and for rock art,
and continues to be traded between Indigenous communities.

FIGURE 3 Bardi Elder and traditional land owner Joe Davey holds up trochus shells, one in raw form
and one polished. Trochus shells are used to make buttons, ornaments and jewellery, including bracelets
and necklaces.
FIGURE 4 Aboriginal tools including a cooloman (a shallow vessel or bowl used to carry water, fruits,
seeds or babies), a stone axe, wooden shield, a dilly bag (a bag woven from the fibres of plants), a
grinding stone and fire sticks.

FIGURE 5 Old rock painting of an Indigenous person hunting a kangaroo with a spear, at Nourlangie in
Kakadu National Park, Northern Territory. Kangaroos have long been an important food for Indigenous
Australians and are considered to be a lean and healthy meat.
FIGURE 6 A Torres Strait Islander boy with a fish spear walks along a seawall at Saibai Island. Papua
New Guinea is visible on the horizon. Fishing is traditionally an important part of Torres Strait Islander
culture and diet and continues to be the main economic activity.

2.3 ACTIVITIES
REMEMBER
1. What is ochre and for what purpose do Aboriginal and Torres Strait Islander peoples use it?
2. What were shells used for?

EXPLAIN
3. Using the picture of Aboriginal tools (figure 4), outline the materials that Aboriginal peoples used
to make their tools.
4. Draw a concept map that outlines the types of goods traded by Aboriginal and Torres Strait
Islander peoples.

DISCOVER
5. Use the Saibai Island canoe weblink in your Resources section to complete an online interactive
in which you will use traditional fishing practices to catch fish, turtles and dugong from your
canoe to prepare for a Torres Strait Islander feast. Write down where the various parts of the
canoe came from, the types of tools used and the types of fish caught by Torres Strait Islander
peoples.
 6. Use the Yiwarra Kuju clips weblink in your Resources section to watch the video in which
Mangkaja artist Mervyn Street cuts a ‘spear tree’. Then answer the following:
a. Describe how spears were made.
b. What were sharp stones used for?
c. How was the glue used to attach things, such as blades to spear handles, made?

7. Use the internet to research other goods produced by Aboriginal and Torres Strait Islander
peoples for trade. List these items. If you have created a concept map showing the types of
goods traded by Aboriginal and Torres Strait Islander peoples (question 4), add the items you
have listed to your concept map.

PREDICT
8. What impact do you think European settlement had on the types of goods that Aboriginal and
Torres Strait Islander peoples traded?

Resources

Explore more with this weblink: Saibai Island canoe

Explore more with this weblink: Yiwarra Kuju clips

2.4 How and why do Aboriginal and

Torres Strait Islander communities
trade?
2.4.1 Improving life through trade
When we trade we exchange something for another thing. Today, we usually exchange something for money.
In Aboriginal and Torres Strait Islander society, trading involved swapping, or bartering, one item for another.
Aboriginal and Torres Strait Islander peoples traded, and continue to trade, to improve their lives. By trading
they could obtain things that were not available in their area, or could become exposed to new ideas. Trade
routes linked Aboriginal and Torres Strait Islander communities. Some of these routes were (and still are) long
and complex.
2.4.2 Relationships through trade
Trade was seen as a way to exchange and share resources. It was also a method of controlling society and
lore. When trading, people from different areas and cultures needed to respect the rights, boundaries and
cultural differences of the people they were trading with. Good relations would occur between neighbouring
groups when they met to share or exchange resources because they could also share their knowledge and
practices related to the Dreaming.

2.4.3 Trade routes

Indigenous Australians traded with each other as well
FIGURE 1 Major trade routes for pearl and
as with people in Indonesia and Papua New Guinea.
baler shells
There were trade routes all across Australia. The
trade, or exchange, routes often followed natural
features such as rivers or chains of waterholes, and
they regularly intersected. These routes criss-crossed
the mainland. They could cross incredibly long
distances, sometimes thousands of kilometres.
Tasmanian Aboriginal peoples had their own trade
routes for exchanging ochre and other items.

Even though goods were exchanged across the whole

continent of Australia and between the Torres Strait
Islands and the mainland, individual people did not
necessarily travel the entire distance along a trade
route. Goods, stories and ideas might be carried by a
trader to a community centre and then be exchanged
for other items. These goods, stories and ideas might
then be taken by another trader to another centre and passed on to another community. Goods and other
items were, and are, passed on from one language group to another. It was not just goods that were traded
though. Rituals, chants and ceremonies were also traded, including the words that went with them.
 FIGURE 2 An extract from a personal communication in 1994 by Murrandoo Yanner, an
Aboriginal leader from the Ganggalida nation, Mungubie (Burketown), North Queensland

A description of Indigenous trade

We had our domestic trade routes that went north, south, east and west, my people the
Ganggalida traded for oysters, sea turtle and dugong from the north and in return we had
goanna and turkey. We went to Normanton for gidgee lancewood and heavy wood for spears
and clap sticks, we went west to Garawa for spear flints and stuff. We went south to the
Waanyi and we also traded for a stone axe from the Kalkadoons.

We never just traded for goods, trading was a time for sharing of ideas and technology such
as the woomera and outrigger canoes with sails. The didgeridoo started in a small place in
Arnhem Land and by the time whites arrived it had spread over half the distance of Australia.
There was also a lot of ceremony sharing, of food, of stories, of culture and time together.
Trade was a time of catching up both pleasure and business. My mob when travelling would
grind up the Mitchell grass and make Johnny cakes out of it.

2.4 ACTIVITIES
REMEMBER
1. What is bartering?
2. What is a trade route?

EXPLAIN
3. How did Aboriginal and Torres Strait Islander communities trade?
4. Read the extract from Murrandoo Yanner’s personal communication (figure 2) and then complete
the following:
a. List the goods and other things traded by the Ganggalida nation.
b. Briefly outline the benefits for Murrandoo Yanner’s community from trading with other
communities.
DISCOVER
5. Use the Trade routes weblink in your Resources section to visit the National Film and Sound
Archive and view the short ‘Trade Routes’ video. The video features Emeritus Professor John
Mulvaney, talking about ceremonial trade routes in Australia. According to Mulvaney, how is it
possible that an Aboriginal person living in South Australia could end up with ceremonial items
from the Pacific and Indian oceans?
6. Find out more about one of the goods traded by Aboriginal or Torres Strait Islander peoples. Use
the internet to research where the good came from, how and why it was traded, and how far it
was traded. Write down the results of your research in the form of a brief report.

PREDICT
7. What do you think might have happened to Aboriginal and Torres Strait Islander trade routes if
European settlement of Australia had not occurred?

THINK
8. Look at the figure 1 map showing major trade routes for pearl and baler shells. Describe how
shells managed to be traded such long distances.
9. Goods such as stones, shells, ochres, tools and ceremonial items were traded over huge
distances. Food was not. Why do you think this was the case?

Resources

Explore more with this weblink: Trade routes

2.5 Innovation and enterprise
2.5.1 How do Aboriginal and Torres Straight Islander peoples make
use of their cultural knowledge?
Aboriginal and Torres Strait Islander peoples have made use of their cultural knowledge in recent times in
many innovative and enterprising ways. Over the last decade, many Aboriginal businesses have been
formed. Indigenous-owned enterprises operate in areas such as art and craft, cultural tourism, land
management, finance and mining.

2.5.2 Commercialisation of Indigenous arts and cultural practices

Many Aboriginal and Torres Strait Islander peoples have found a livelihood through the commercialisation
of art and crafts and other cultural practices. The Aboriginal and Torres Strait Islander art and craft market
has grown dramatically over the last few decades. Australian Bureau of Statistics (ABS) research shows that
Aboriginal and Torres Strait Islander people are more likely to be employed in visual arts and crafts
occupations as their main job than non-Indigenous people.

The Australian Government provides funding to Indigenous art centres and associated industry support
organisations through the Indigenous Visual Arts Industry Support (IVAIS), with the intention being to help
build a stronger Indigenous visual arts industry. The industry is made up of many Indigenous-owned art
centres producing and marketing visual art, while maintaining and transmitting culture and generating
income and employment opportunities for Aboriginal and Torres Strait Islander artists.

FIGURE 1 Indigenous man painting traditional artwork in Cooktown, Queensland

2.5.3 Indigenous tourism
Indigenous tourism is worth billions of dollars every year in Australia and hundreds of thousands of
international visitors arrive every year hoping to have an Aboriginal experience. There are many Aboriginal
owned and operated tourism enterprises across the country.

Tourism Australia has an Aboriginal tourism website where tourists can explore detailed content, images,
footage and information about Aboriginal tourism experiences in Australia. Aboriginal Tourism Australia (ATA)
is a non-profit company established in 1995 to provide leadership and a focus for the development of
Aboriginal tourism.

Voyages Indigenous Tourism Australia is part of the Indigenous Land Corporation (ILC), a statutory authority
established to assist Aboriginal and Torres Strait Islander people with land acquisition and land
management. All of Voyages’ profits go towards supporting Indigenous training and employment. Voyages
runs the Ayers Rock Resort on behalf of the ILC, with 221 Aboriginal staff. The resort includes four hotels
and a campground. Voyages also runs the ILC's Home Valley Resort in the East Kimberley (seen in the Baz
Luhrmann movie, Australia) and the Mossman Gorge Cultural Centre in Far North Queensland.

FIGURE 2 Aboriginal street musician playing a didgeridoo at Circular Quay in Sydney

2.5.4 Indigenous enterprises

Indigenous Business Australia (IBA) is a government organisation that promotes and encourages economic
independence, home ownership and the starting of businesses by Aboriginal and Torres Strait Islander
peoples. IBA says that there were about 4600 small firms run by Aboriginal people in 2001; by 2011, this
figure had grown to around 13 000.
The Office of the Registrar of Indigenous Corporations (ORIC) is an Australian Government statutory office
that supports and regulates almost 2500 corporations registered under the Corporations (Aboriginal and
Torres Strait Islander) Act 2006.

ORIC has a step-by-step guide to setting up an Indigenous company. It also provides specialist support; for
example, training courses, a dispute resolution service, recruitment assistance and telephone advice.

FIGURE 3 Cleaners who work for the Aboriginal-owned and run company Iman Operations. Iman
Operations is a company owned by Iman Limited, which was established to manage native title funds
and advance the Iman community in the areas of education, training, employment, sport and relief from
poverty and ill health. Iman Operations is involved in land management (specifically weed and erosion
control) and contract cleaning services.
FIGURE 4 Indigenous Construction Resource FIGURE 5 Jodie Sizer, director and founding
Group (ICRG) employees Leon Taylor and member of PwC Indigenous Consulting (PIC). PIC
Terrence Yanawana working on a mining project in is a partnership between a group of Indigenous
Western Australia. ICRG is a mining services Australians and PricewaterhouseCoopers (PwC).
company. It provides road and equipment PricewaterhouseCoopers is one of the world's
maintenance, logistics (transport of large largest providers of professional services,
equipment) and construction support to resource including tax accounting and management
companies. The company is 25 per cent owned advice. PIC is a consulting business that aims to
by Aboriginal Australians and its management work with governments, corporations and
team has a good understanding of Indigenous community clients on Indigenous-related matters.
customs, cultures and heritage. ICRG works It is 51 per cent owned by Indigenous Australians
closely with Aboriginal communities and its with Indigenous leaders and employees. PIC
workforce is largely made up of Indigenous provides advice and develops and supports
people. strategies to ensure that Indigenous funding is
spent more effectively, that Indigenous programs
are better planned and that Indigenous
communities prosper.
2.5 ACTIVITIES
REMEMBER
1. What is cultural tourism?
2. Briefly outline what it means to commercialise arts and crafts and other cultural practices.
3. How does the Australian Government support the Indigenous art industry?
4. List two organisations that support Indigenous tourism.
5. List two organisations that support Indigenous enterprises.

EXPLAIN
6. Choose any one of the Indigenous enterprises outlined above. Describe what they do and how
they contribute to Aboriginal and Torres Strait Islander communities.

DISCOVER
7. Use the Aboriginal Tourism weblink in your Resources section to explore this section of the
Tourism Australia website, then answer the following questions:
a. What information and support does the site offer to both tourists and tourism operators?
b. What program has Tourism Australia introduced, along with Indigenous Business Australia
and other organisations, to support established Indigenous tourism operators in building
their business skills and knowledge, and developing and marketing their product?

8. Use the Indigenous Land Corporation weblink in your Resources section to visit and explore
this website. What is the ILC and what programs does it run?
9. Use the Inspire weblink in your Resources section to browse issues of this magazine produced
by Indigenous Business Australia. Choose an Indigenous enterprise highlighted in one of the
issues and outline what the business does and how it has been assisted by IBA.

PREDICT
10. List the consequences of Aboriginal and Torres Strait Islander peoples utilising their cultural
knowledge in enterprising ways.

THINK
11. Working in a group of two or three, produce a presentation about the innovative and enterprising
ways in which Aboriginal and Torres Strait Islander peoples make use of their cultural knowledge.
Use internet research in your planning and present your findings in a video or using presentation
software, such as PowerPoint.
 Resources

Explore more with this weblink: Aboriginal Tourism

Explore more with this weblink: Indigenous Land Corporation
Explore more with this weblink: Inspire

2.6 SkillBuilder: Preparing a data show

2.6.1 Tell me

What is a data show?

A data show is a visual format for organising and displaying information and data. This information and data
might include, for example, graphs, tables and charts as well as text to present findings and conclusions.

Why is a data show useful in economics and business?

A data show is important for showing trends and relationships in information and data. A data show guides
the reader or viewer through the data and information in order to persuade or inform them about the findings
or conclusions.

A good data show:

is presented neatly and clearly

includes a range of graphs, tables, charts and text
summarises or analyses what can be seen in the graphs, tables charts and text
includes an evidence-based conclusion about what the data or information is saying.

2.6.2 Show me
To create a data show, there are a number of steps to be carried out:

Step 1: Find the data and information about your topic of interest.

Step 2: Choose appropriate information and data to display.

Step 3: Choose the presentation software, such as PowerPoint or Keynote, that you will use to display your
information and data.

Step 4: Add the information and data to your data show.

Step 5: Summarise or analyse what you can see happening in the graphs, tables charts and text.

Step 6: Write a conclusion, summarising trends and relationships identified.

Following is a model of how information in a data show might be organised. This might then be presented,
for example, as a series of slides in a PowerPoint presentation. For this model, information has been drawn
from The Top 500 Aboriginal and Torres Strait Islander corporations (2011−12) report by the Office of the
Registrar of Indigenous Corporations (ORIC).

Top 500 Aboriginal and Torres Strait Islander corporations 2011−12

Aboriginal and Torres Strait Islander corporations registered under the CATSI Act
As can be seen in table 1 below, 2391 Aboriginal and Torres Strait Islander corporations were registered
under the CATSI Act in 2011−12. This is a slight reduction since 2006−07, when the number was 2552. The
number of new registrations has trended upwards between 2006−07 and 2011−12, from 111 to 173.

TABLE 1 Number of Aboriginal and Torres Strait Islander corporations registered under the CATSI Act

Year 2006−07 2007−08 2008−09 2009−10 2010−11 2011−12

Number of registered 2552 2605 2723 2210 2286 2391

corporations

Number of new registrations 111 84 125 163 187 173

Source: The Top 500 Aboriginal and Torres Strait Islander corporations (2011−12) report by the Office of
the Registrar of Indigenous Corporations (ORIC) p. 5.
Geographic spread of the top 500 Aboriginal and Torres Strait Islander
corporations
As seen in figure 1, the Northern Territory had the highest number of corporations in the top 500 Aboriginal
and Torres Strait Islander corporations in 2011−12, with 159 corporations. This made up 31.8 per cent of the
total 500. The other two states with a large number of corporations in the top 500 were Western Australia
with 123, and Queensland with 103.

FIGURE 1 Geographic spread of the top 500 Aboriginal and Torres Strait Islander corporations

Overall income of the top 500 Aboriginal and Torres Strait Islander
corporations
As can be seen in figure 2, in 2011−12 the combined income of the top 500 corporations was almost $1.61
billion, which was a 12.6 per cent increase from $1.43 billion in 2010−11. Over the last eight years the overall
income earned by the top 500 corporations has more than doubled, growing from $767 million in 2004−05 to
$1.61 billion in 2011−12.
 FIGURE 2 Changes in overall income of the top 500, 2004−05 to 2011−12

Geographic share of the income

As seen in figure 3, the Northern Territory and Western Australia accounted for 72.4 per cent of the overall
income of the top 500 corporations in 2011−12. The Northern Territory, with 41.6 per cent of the overall
income, was ranked first, and Western Australia, with 30.8 per cent of the overall income, was ranked
second. Queensland was ranked third, with 13 per cent of the overall income.

FIGURE 3 Geographic share of overall income generated by the top 500 corporations (expressed as a
percentage)
Conclusion
The number of Aboriginal and Torres Strait Islander corporations registered under the CATSI Act fell slightly
in the eight years leading up to 2011−12. However, the combined income of the top 500 Aboriginal and
Torres Strait Islander corporations more than doubled in the corresponding period. The combined income of
the top 500 Aboriginal and Torres Strait Islander corporations was almost $1.61 billion in 2011−12. Most of
the corporations in the top 500 Aboriginal and Torres Strait Islander corporations in 2011−12 were located in
Northern Territory, Western Australia and Queensland, with these states earning the vast majority of the
income generated by the top 500 corporations.

2.6.3 Let me do it

2.6 ACTIVITIES
Follow the steps outlined and the model above to construct a data show that displays information and
data to show trends and relationships in Aboriginal and Torres Strait Islander corporations. When
completed, present the data show to your class.

Step 1: Find the data and information.

Use the Top 500 Report weblink in your Resources section to visit the ORIC website and download the
most recent Top 500 Aboriginal and Torres Strait Islander corporations report.

Step 2: Choose appropriate information and data to display.

The data you choose should show trends and relationships in Aboriginal and Torres Strait Islander
corporations.

Step 3: Choose the presentation software that you will use to display your information and data, such
as PowerPoint or Keynote.

Step 4: Add the information and data to your data show.

Include appropriate tables, graphs, charts and text.

Step 5: Summarise or analyse what you can see happening in the graphs, tables charts and text.

Step 6: Write a conclusion, summarising trends and relationships in Aboriginal and Torres Strait Islander
corporations, using the evidence you have included in your data show.
 Complete the following questions.

1. How did you decide what information and data to use?

2. What trends did you find in the information and data you used?
3. What relationships did you find in the information and data you used?
4. What finding or conclusion did you make about the information and data you used?

Resources

Explore more with this weblink: Top 500 Report

2.7 Review
2.7.1 Summary
The ceremonial meetings of Aboriginal and Torres Strait Islander peoples provided opportunities to access
material benefits such as rare and valuable goods. Aboriginal and Torres Strait Islander communities traded,
and continue to trade, food and valued goods. This reinforced personal and group relationships. Today,
Aboriginal and Torres Strait Islander peoples utilise their cultural knowledge in innovative and enterprising
ways, such as in cultural tourism, commercialisation of arts and cultural practices and Indigenous
enterprises.

Ceremonial meetings allow groups to meet together for various reasons, including celebration and
feasts, increase rites, rites of passage and funerals.
Good relations would occur between groups when they met to share or exchange resources, ideas
and knowledge, as there was a need to respect the rights, boundaries and cultural differences of the
people they were trading with.
Aboriginal and Torres Strait Islander peoples traded rare and valuable goods including stones, shells,
ochres, tools and ceremonial items as well as food, weapons, medical resources and ideas.
Trade routes criss-crossed Australia, and Aboriginal and Torres Strait Islander peoples used them to
trade with each other, with other clans, and with people in Indonesia and Papua New Guinea.
2.7.2 Your turn

2.7 ACTIVITIES
Read the case study below and then answer the following questions:

1. What are the ngangkari?

2. Why was the Anangu ngangkari Tjutaku Aboriginal Corporation created?
3. Explain what ANTAC is aiming to do.
4. In what way have the ngangkari utilised their traditional knowledge in an innovative or
enterprising manner?

Traditional Aboriginal healers from central Australia created the Anangu ngangkari
Tjutaku Aboriginal Corporation (ANTAC) in December 2013. The ngangkari from the
Anangu Pitjantjatjara Yankuntjatjara Lands (APY), located in the north-west of South
Australia, decided to establish the corporation to coordinate the provision of their health
care services. ANTAC is Australia’s first organisation of traditional healers.

Because of the isolation and remoteness of the areas in which the ngangkari are
working, there was no consistent payment schedule for their services. Sometimes
ngangkari would be paid very little or nothing at all. The cost of petrol can also make the
expense of travel to faraway communities very difficult. These are some of the issues
that ANTAC will attempt to coordinate, and some of the reasons why the corporation
was created. Another important motive was to create sustainable employment for the
traditional healers.

ANTAC was founded on the principle of self-determination. The ngangkari developed

their organisational structure, the rules of the organisation and the decision-making
processes that govern their corporation. These rules are outlined in the Rulebook that
was adopted by the ngangkari and approved by the Office of the Registrar of Indigenous
Corporation (ORIC). These rules include accreditation processes and standards.
Accreditation of ngangkari is managed by a board of five senior male and female
ngangkari. ANTAC has registered more than ten traditional Aboriginal healers.
ANTAC’s objective is to combat sadness and depression in the communities within
South Australia, Northern Territory and Western Australia. It does this by providing
individual consultations and treatments and through the cleansing of private dwellings,
health care facilities, buildings and other areas. ANTAC provides ngangkari services to
Aboriginal and non-Aboriginal people in the APY Lands, South Australia, and in the cross
border areas of South Australia, Northern Territory and Western Australia. The ngangkari
of ANTAC intend to work hand-in-hand with western medical practitioners and health
professionals to provide a holistic two-way health care to their patients.

Resources

Try out this interactivity: Multiple choice

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Chapter 3: Rights and responsibilities in the marketplace
Contents
3.1 Overview

3.2 Legal protection of consumer rights

3.3 Business competition protects consumers

3.4 Keeping consumers safe

3.5 SkillBuilder: Questioning and research

3.6 Review

Note to students and teachers: This PDF has been provided as an offline solution for times when you
do not have internet access or are experiencing connectivity issues. It is not intended to replace your
eBook and its suite of resources. While we have tried our best to replicate the online experience offline,
this document may not meet Jacaranda’s high standards for printed material. Please always refer to
your eBook for the full and latest version of this title.
3 Rights and responsibilities in
the marketplace

3.1 Overview
3.1.1 Protecting consumers

Resources

Watch this eLesson: Consumer rights — services

Searchlight ID: eles-2529
Have you ever been ‘ripped off’ by a shop or other business providing a service? Have you ever been
frustrated because something you want is only available at one store and the price is too high? As
consumers, we would like to think we are going to get a fair deal every time we make a purchase, but this
doesn’t always happen. Unfortunately, some business owners and employees fail the fairness test when it
comes to serving their customers.

As we have seen in subtopic 1.5, one of the important functions of government in the marketplace is to
provide a legal and justice system so that buying and selling occurs within a set of rules that is fair to all
participants. In Australia, federal and state parliaments have passed a number of laws that are designed to
protect consumers from being exploited by unscrupulous businesses. Laws have also been passed to
ensure that businesses can compete fairly with each other. If there is a large number of businesses
competing for customers in any market, those customers are more likely to get a fair deal.

The current law that regulates competition and the

FIGURE 1 Providing choice, friendly service
rights of consumers in the marketplace is the
and good value to customers will help a
Competition and Consumer Act. This law was passed
business owner conform to the Australian
by the federal parliament in 2010, and came into
Consumer Law.
operation on 1 January 2011. This Act replaced a
number of previous federal, state and territory laws,
and introduced a consistent Australian Consumer Law
that now applies in every state and territory.

In order to make sure that businesses comply with the

Competition and Consumer Act, there are a number of
different government bodies that have the power to
enforce the law. These include the Australian
Competition and Consumer Commission (ACCC), as
well as a number of state and territory bodies, such as
Consumer Affairs Victoria, New South Wales Fair
Trading, South Australia’s Consumer and Business
Services, and Fair Trading or Consumer Protection authorities in other states and territories.

If a consumer believes that a business has breached the Australian Consumer Law, these government
bodies can assist in resolving the dispute. They can also intervene if a business owner believes that another
business has been acting in a way that could destroy fair competition in the market.

Learning objectives
Students will investigate:

the rights and responsibilities of consumers and businesses in Australia in terms of financial and
economic decision-making.
 STARTER QUESTIONS
1. One of the biggest problems experienced by many consumers is ‘bill shock’ from mobile phone
contracts.
a. Why do you think this happens?
b. What steps do you, your friends and family take to avoid this problem?

2. Used car businesses have a reputation for being dishonest and covering up faults in cars they
sell. Do you think this is a fair assessment of most dealers? Give reasons for your response.
3. As a class, brainstorm examples of when you believe you have been ‘ripped off’, or when
someone you know believes they have received a poor deal when purchasing goods or services.
With the assistance of your teacher, compile a table of the different types of businesses involved,
and the action that was taken to solve the problem.
4. Not all businesses are dishonest. Compile a list of local businesses that you believe provide good
quality products, good service, and so on. For each of these businesses, identify the features
that encourage you to trust them.

3.2 Legal protection of consumer rights

3.2.1 Fair transactions
As a consumer, you can often be at a disadvantage when it comes to buying goods and services. Even
though you may have a good idea of what you wish to buy, you will often rely on the advice of a salesperson
to help you with your purchase. You want to be assured that this person will be showing appropriate respect
for your interests, not trying to ‘con’ you. The Australian Consumer Law aims to make sure that every
transaction between buyers and sellers is fair to both parties.

3.2.2 Honesty is the best policy

The Australian Consumer Law makes it clear that sellers are expected to advertise and promote their
products honestly. It is illegal to do anything that might mislead the customer, or trick them into buying
something they might not have bought if they had known all the facts. The following are some examples of
behaviour that is illegal under this law.

1. Misleading or deceptive conduct — Advertisements must not use words that make claims about a
product that are not true. This includes claims about low prices, or goods being ‘on special’.
2. Unconscionable conduct — This is any business conduct that is unfair or unreasonable.
 3. Offering gifts and prizes in connection with the supply of goods and services and then not providing
them.
4. Conduct that may mislead the public — for example, using a brand name similar to a well-known
brand, or using an Australian-made logo when the product was made overseas.
5. Bait advertising — This refers to a business attempting to attract customers by advertising some
products at lower prices, but stocking very few of those products. When the advertised products
quickly run out, customers are then directed to higher priced items.
6. Referral selling — This occurs when a business offers a customer a special deal or special price if the
customer refers other potential customers to the seller and those customers make a purchase.

FIGURE 1 Any discounts, special offers or specials offered by sellers must be genuine.

Resources

Watch this eLesson: Animal testing: Are consumers being misled?

Searchlight ID: eles-2433

3.2.3 Treating consumers fairly

Consumers wish to satisfy their needs and wants, and when they go looking for goods and services they are
usually eager to make a purchase. This means that an unscrupulous seller could take advantage of them.
Consumer law makes it compulsory for sellers to provide all available information to consumers, and to
ensure that buyers and sellers have equal rights in any purchase. Some of these rights are:
 1. Any contract or agreement that a consumer enters must be fair and balanced. It must be written in
clear language that is easy to understand. It should not contain any provisions that allow the seller to
change the conditions of the agreement without informing the buyer. For example, it would be illegal
for a mobile phone contract to allow the service provider to make changes to their prices and charges
without notifying the customer. However, the consumer is responsible for reading the contract carefully
to make sure they understand it.
2. A consumer has the right to ask for a receipt for any transaction, no matter how small the amount
involved. For all transactions over $75, a receipt is compulsory.
3. Anyone attempting to sell goods or services door-
FIGURE 2 A door-to-door salesperson must
to-door or over the phone can only do so between
leave immediately if requested.
9 am and 6 pm on weekdays, and from 9 am to 5
pm on Saturdays. These types of sales are not
permitted on Sundays or public holidays. This rule
does not apply when consumers have agreed in
advance to an appointment time for the seller to
visit their home. A salesperson must leave
immediately if requested and must not contact the
consumer again for at least thirty days (with that
same product). If a consumer agrees to purchase
goods or services from a door-to-door
salesperson, or over the phone, the Australian
Consumer Law allows for a ten-day ‘cooling off
period’. This means that the consumer has the
right to cancel the agreement within ten days,
without having to pay anything.
4. Lay-by agreements must be in writing and must be
expressed in plain language that is clear and easy
to understand. The agreement must include all terms and conditions.
5. Businesses that display ‘No refunds’ signs are breaking the law. If a product is faulty or is unfit for its
usual purpose a refund must be offered to the buyer. A business may refuse to provide a refund if the
consumer has simply changed his or her mind and there is nothing wrong with the product.

3.2.4 Guarantees for consumers

You may have heard of guarantees or warranties offered by manufacturers or sellers. These are promises
that if anything goes wrong with the product, it will be replaced or repaired free of charge. Even if a
manufacturer or seller does not provide such a written warranty, the Australian Consumer Law makes it
compulsory for all suppliers and manufacturers to automatically provide a basic set of guarantees on all
products they sell to consumers. A business cannot remove consumer rights under these guarantees, but
they can improve these basic rights if they wish to do so. The Australian Consumer Law provides the
following guaranteed rights:
 The consumer will gain clear legal ownership to goods; that is, the seller actually owns the goods
being sold and can legally transfer ownership to the buyer.
Goods must match any sample, demonstration model or description provided to the buyer.
Goods must be of acceptable quality; that is, they must be safe, long-lasting, free from defects,
acceptable in appearance and finish, and do all the things that the goods are normally used for. For
example, if a consumer purchased a pair of jeans and found some of the stitching was coming apart,
the jeans would not be considered of acceptable quality.
Products must be fit for a particular purpose. Fitness of purpose means the product will perform as
the instructions or advertisements imply. A bottle of shampoo that failed to properly wash hair would
be a breach of this condition.
Repairs and spare parts must be available for a reasonable time after manufacture and sale.
Any necessary servicing must be carried out with reasonable care and skill and must be completed
within a reasonable time.

FIGURE 3 Goods must be of acceptable quality; if a consumer purchased a pair of shoes and one of
the heels broke after only a couple of wears, the shoes would not be considered of acceptable quality.

3.2.5 When the law is broken

Although the Australian Consumer Law is a law of the Commonwealth parliament, enforcement of the laws
protecting consumers is usually carried out by the relevant state or territory Office of Fair Trading or
Consumer Affairs Office. When a consumer has a complaint against a seller, these offices will usually
recommend that the consumer attempt to sort out the problem directly with the seller. If direct contact with
the business does not produce a result, the Fair Trading or Consumer Affairs Office may contact the
business on the consumer’s behalf and attempt to resolve the matter.
If the business fails to resolve the problem, Fair Trading or Consumer Affairs Offices can take legal action on
behalf of the consumer. If the legal action is successful, the seller may be required to compensate the
consumer or to replace or repair any faulty goods. The business can also be fined for failing to comply with
the Australian Consumer Law.

FIGURE 4 The following steps may help a consumer resolve an issue when they feel a business has
breached consumer laws.
 FIGURE 5 Fair Trading and Consumer Protection offices will usually recommend that the consumer
attempt to sort out a problem directly with the seller.

3.2.6 Responsibilities as well as rights!

While the Australian Consumer Law contains a strong emphasis on protecting the rights of consumers and
enforcing the responsibilities of sellers, consumers also have responsibilities in the marketplace. Some of
these responsibilities are:

Whenever you buy goods or services, you are entering into a legally binding contract. You might
believe that a contract is a written document that you sign, but this is not always the case. If you are
buying a house or a car, there are particular types of written documents that are required by law, but
any agreement between a buyer and a seller is a legally binding contract, even if you don’t sign
anything. As a buyer you have a responsibility to pay the required amount for the goods or services
you purchase. This is particularly relevant if you purchase goods or services on credit, with an
expectation that you will pay by instalments, such as the purchase of a mobile phone with an
accompanying plan.
Consumers who borrow money or who use a credit card to make purchases have a responsibility to
make repayments. Failure to do so can leave the consumer with a poor credit rating. This remains
active for five years, and if you need to apply for a loan during that time, you may have that loan
refused.
A consumer cannot return goods and claim a refund if the goods have been used other than for the
purposes for which they were intended. If you damage a product by using it inappropriately, or even
injure yourself while doing so, you have very little chance of being compensated. Consumers have a
responsibility to use goods in the way the manufacturer intended.
FIGURE 6 Consumers who borrow money must repay it in full. Failure to do so can leave the consumer
with a poor credit rating.

Resources

Watch this eLesson: What is an ethical consumer or producer?

Searchlight ID: eles-0255

3.2 ACTIVITIES
REMEMBER
1. What is the purpose of Australian Consumer Law?
2. Provide a brief description of each of the following:
a. misleading conduct
b. bait advertising
c. referral selling.

3. Outline one responsibility that consumers have in relation to goods or services they purchase.
EXPLAIN
4. Explain the rules that apply to phone sales and door-to-door selling.
5. In what circumstances is a seller allowed to refuse a refund?
6. Explain two guaranteed rights that consumers have in relation to goods they purchase.
7. What powers does a Consumer Protection or Fair Trading authority have to enforce Australian
Consumer Law?

THINK
8. In each of the following examples, explain why there has been a breach of the Competition and
Consumer Act.
a. An electrical goods business advertises a particular brand of television and states that it is
at a cheaper price than that offered by a competitor. This statement is false.
b. A clothing store advertises tee-shirts and claims that they are made in Australia when in
fact they are made in Hong Kong.
c. A take-away food outlet advertises that a special deal is only for one week when in fact it
plans to extend it for two months.
d. A garden maintenance business offers some of its customers a 10 per cent discount if they
provide the names and addresses of five potential customers for the business.

Resources

Complete this digital doc: Worksheet 3.1: What is an ethical consumer or producer?
3.3 Business
consumers
competition protects

3.3.1 The benefits of competition

One of the best protections consumers can have is a market with a large number of sellers, all competing
with each other to attract customers. Competition can help keep prices lower, and if one business gains a
bad reputation, there are plenty of alternatives available. As the name suggests, the Competition and
Consumer Act is concerned with encouraging fair competition between businesses in all markets. The Act
makes it illegal to engage in business practices that interfere with competition, or that give some businesses
an unfair advantage over others. The Australian Competition and Consumer Commission (ACCC) has the
power to enforce the law to encourage greater competition in the marketplace.

3.3.2 Banned anti-competitive practices

The Competition and Consumer Act lists a number of business practices that are prohibited or that are
regulated by the ACCC. These practices are outlined in the subsections below.

Price fixing
It is illegal for two businesses in competition with each
FIGURE 1 Any agreement by service stations
other to agree to set identical prices for their
to raise or lower prices at the same time and at
products. Businesses will probably have similar prices
the same rate would be an example of price
for similar products because of market forces, but
fixing.
they cannot actively work together to raise or lower
prices by an exact amount. This has been an issue
over the years with petrol pricing. Many service
stations lower their prices in the middle of the week,
and then raise them at the weekend. There have been
accusations that service stations that are close to
each other have agreed to raise or lower their prices
by the same amount at the same time. If it could be
proved that they had done so, they would be deemed
to be acting illegally, because this action would
prevent consumers from taking advantage of genuine competition.
 DISCUSSION
As opposed to being involved in price fixing, large supermarket chains have been involved in a price
war with items such as milk and roast chickens being sold at reduced prices. The squeeze on the profit
margins of these items comes back to the farmers, who are paid less for supplying the goods to the
supermarkets. Is this practice by the supermarkets ethical, or should they be paying more for these
supplies?

Misuse of market power

Not all businesses are the same size, and there is a risk that larger businesses may use their power unfairly
to drive smaller competitors out of business. The Act bans any action aimed at damaging or getting rid of a
competitor or preventing another business from entering the market. Some years ago retailer Woolworths
was fined $7 million for attempting to prevent some restaurants and bars from selling packaged liquor in
competition with its own liquor outlets. When these other businesses applied for liquor licences, Woolworths
lodged objections with the government licensing authority. They then proposed to withdraw the objections if
the other businesses agreed not to sell take-away alcohol products to their customers. A court found that
Woolworths was in breach of the law.

FIGURE 2 Woolworths was fined for attempting to misuse its market power to restrict the operations of
competing liquor outlets.
Predatory pricing
Predatory pricing occurs when a business deliberately sets its prices at such a low level that its competitors
cannot match them. In such cases, the business actually decides that it is prepared to lose money for a
while until it has forced its competitors out of the market. This leaves the business with less competition so
that it can then disregard market forces, raise prices and exploit consumers. An example would be where a
major supermarket chain decided to sell all its bread products below the prices set by a local bread shop.
The supermarket could afford to make a loss on its bread because it was making a good profit on other
products. The bread shop may not be able to lower its prices to match those charged by the supermarket,
so could lose a lot of its customers. If the bread shop was forced out of the market, the supermarket could
then raise its prices and there would be no competition to prevent it from doing so.

FIGURE 3 It would be illegal for a supermarket to use predatory pricing to try to put a neighbouring
bread shop out of business.

Exclusive dealing
Exclusive dealing involves one business trading with another while imposing restrictions on that other
business’s freedom to deal with its competitors. An example is when a hair products supplier will only sell to
a hairdresser on the condition that the hairdresser does not purchase hair products from any other supplier.
This can be legal in some circumstances if it is not seen to lessen competition in the market for the products
in question. For example, McDonald’s sells Coca-Cola products but not Pepsi, and they are permitted to do
so. This is because KFC sells Pepsi and not Coke, so the overall market for soft drinks is still competitive.
Businesses that wish to enter such an arrangement must notify the ACCC of the proposed agreement. The
ACCC will then examine the details before either approving or disallowing the arrangement.
 FIGURE 4 McDonald’s is permitted to have an exclusive deal with Coca-Cola, and KFC can have an
exclusive deal with Pepsi, because the market for soft drinks is still competitive.

Resale price maintenance

Suppliers cannot set the prices at which retailers will
FIGURE 5 Retailers must be free to compete
sell the products they supply them. Suppliers can
on price with other retailers selling the same
recommend a retail price for the sale of their goods,
products.
but it is illegal to attempt to force a retailer to sell at
that price. Retailers must be free to compete on price
with other retailers selling the same products. It is also
illegal to set a minimum price that sellers must not sell
below, or to force a retailer not to discount goods. On
the other hand, it is quite legal for a supplier to set a
maximum price for its products. This is to prevent any
retailer that has no competitors in a particular location
from unfairly overcharging customers.

Mergers and take-overs

When two or more businesses decide to join together,
this is known as a merger. When one business
decides to buy out a competitor, this is known as a
take-over or an acquisition. Sometimes a merger or
take-over in a particular market may lead to reduced competition in that market. The Act prohibits mergers
and take-overs between one or more businesses if they result in the competition being substantially
reduced. Businesses proposing a merger or acquisition can ask the ACCC for permission. The ACCC may
permit a merger or acquisition if it will not substantially limit competition. If businesses proceed without
seeking permission, the ACCC can investigate and has the power to take action against them if it finds that
the merger or acquisition has substantially limited competition.
Mergers and acquisitions have occurred regularly in the banking industry. In 2008, Bendigo Bank and
Adelaide Bank merged; the Commonwealth Bank took over Bankwest; and Westpac acquired St George
Bank. However, the big four banks, ANZ, NAB, Westpac and the Commonwealth Bank are specifically
banned from merging with each other as this would be too big a reduction in competition.

FIGURE 6 Australia’s four big banks are prohibited from merging because this would severely reduce
competition in the banking industry.

3.3.3 The role of the Australian Competition and Consumer

Commission (ACCC)
The ACCC has wide powers to investigate possible breaches of the Competition and Consumer Act, and
can take legal action against any person or organisation suspected of such a breach. It will sometimes be
granted a court order to seize confidential documents from businesses suspected of anti-competitive
behaviour.

Only a court can determine whether a breach of the Act has occurred and make orders against offenders.
The ACCC’s role is to bring matters before the courts to have criminal penalties imposed and to gain
compensation for anyone who may have been harmed by the breach. Courts can impose penalties of up to
$10 million for companies and $500 000 for individuals found guilty of anti-competitive behaviour.

The ACCC has the power to authorise behaviour which might appear to be anti-competitive if it considers
that behaviour to be in the public interest. It can also actively monitor prices and approve price rises in
markets where competition is limited. As described in subtopic 3.3.2, businesses wishing to engage in
mergers or take-overs can seek advice from the ACCC as to whether the proposed action is likely to breach
the Act, and then proceed according to that advice. The ACCC aims to encourage compliance with the Act
rather than simply to punish wrongdoers.
FIGURE 7 ACCC officials may seize documents from businesses suspected of anti-competitive
behaviour.

3.3 ACTIVITIES
REMEMBER
1. Provide a brief description of each of the following:
a. price fixing
b. predatory pricing
c. exclusive dealing
d. resale price maintenance.

EXPLAIN
2. Why is competition between businesses beneficial for consumers?
3. Explain the circumstances under which a merger or acquisition would be acceptable to the
ACCC.
4. Outline the actions that can be taken by the ACCC when dealing with a breach of the
Competition and Consumer Act.

DISCOVER
5. The media releases page of the ACCC website contains details of recent cases dealt with by the
ACCC. Use the ACCC media releases weblink in your Resources section to visit the site, select
and read one story, and then answer the following:
a. What was the issue in question?
b. How did the matter come to the attention of the ACCC?
c. What decisions, actions or recommendations did the ACC make in relation to the issue?
 PREDICT
6. How would you expect the ACCC to deal with each of the following situations?
a. The only two garden maintenance businesses in a country town decide to merge and form
one business.
b. The owners of five petrol retailers along a major stretch of road met each week to
determine how much they would all charge on each day of the week.
c. The manufacturer of a range of electrical goods provides all retail outlets selling its
products with a list of recommended retail prices for each of its products, and refuse to
supply them unless they stick to those prices.
d. A branch of a major supermarket chain, located in the same shopping centre as an
independent supermarket, consistently prices all its products five per cent below those of
the independent supermarket. When the independent business lowers its prices to try and
match its competitor, the major supermarket lowers its prices even further.

Resources

Explore more with this weblink: ACCC media releases

3.4 Keeping consumers safe

3.4.1 When purchases go wrong
Every now and again we hear stories in the news of a particular model of car being ‘recalled’ to have some
fault fixed. Other stories come to light of people suffering from food poisoning after visiting a certain
restaurant or café. We hope that every purchase we make will be safe and not cause us harm, but this is not
always the case. Just as it is important to protect consumers from dishonest behaviour, it is even more
important to ensure that the products we buy will not harm us.

3.4.2 Who keeps us safe?

A number of different bodies have the responsibility for ensuring that the goods and services we buy are not
going to cause us harm. These bodies include government regulators as well as other groups. The roles of
these different entities are discussed briefly below.
Government regulators
Governments at federal, state, territory and local level
FIGURE 1 Customs officers check containers
have established a number of bodies to ensure
of goods from overseas to prevent dangerous
product safety.
goods from entering the Australian market.
The ACCC — the Australian Competition and
Consumer Commission includes issues of
product safety among its various roles.
State and territory Consumer Affairs and Fair
Trading authorities have a major role within their
respective states.
Customs and quarantine bodies are able to
monitor goods coming in from overseas, and
can identify any products that may be
dangerous.
Specific industry regulators are organisations
that have particular powers in relation to certain types of products. For example, the Therapeutic
Goods Administration has a role in regulating medicines, as well as devices such as wheelchairs.
Local government health authorities carry out inspections on food premises such as restaurants, cafés
and school canteens to make sure cleanliness and hygiene regulations are followed.

Other groups
Responsibility for product safety is spread quite
FIGURE 2 Consumers can be assured that any
broadly across the community, with a number of
product carrying ISO certification will be safe
organisations involved.
and will conform to the highest standards of
Businesses — manufacturers and sellers take quality.
responsibility for ensuring their products are
safe. A business selling a product that causes
harm to one or more consumers can be sued
by those affected. It makes sense to avoid legal
action by closely controlling the production
process to keep products safe.
Technical bodies — worldwide organisations
such as the International Organisation for
Standardisation (ISO) set acceptable standards
for all types of products. Any product that
conforms to those standards is entitled to
display an ISO number, so consumers know it
conforms to the highest quality.
 Consumers — buyers and their representatives also have a responsibility for safety. Choice, the
Australian consumers’ association, publishes a magazine and a website called Choice, which
examines and tests all types of products. Individual consumers also have a responsibility to maintain
items such as electrical cords and safety features on motor vehicles.

3.4.3 What do the government regulators do?

Federal, state and territory bodies have wide-ranging powers and responsibilities to ensure product safety.
They carry out a variety of different activities in exercising these responsibilities.

General market monitoring

Government regulatory bodies examine all areas of all markets to detect possibly unsafe products. They
monitor the media for any death or injury reports that may suggest a particular product could be dangerous.
They examine and arrange testing of new types of products coming onto the market. They also respond to
consumer complaints and monitor information on new products from around the world.

Encouraging safe practices

Regulatory bodies encourage safe practices through various measures:

1. Negotiating product removal. This involves gaining agreement from suppliers to remove dangerous
goods from sale in their stores or outlets, including online outlets.
2. Removing unsafe goods. This can often involve a product recall. Anyone who may have bought a
product that is found to be dangerous is expected to return it to the place of purchase. If the fault can
be repaired, it will be returned to the manufacturer to be fixed. If the product cannot be made safe, the
purchaser will be entitled to a refund. Product recalls must be widely publicised through the media. In
newspapers, recall notices appear with a special striped border. When suppliers have records of who
their purchasers are, they also will contact them directly to arrange a recall. This often happens when
identified faults need to be repaired in motor vehicles.
3. Promotion of safety management. Government regulators encourage manufacturers and other
suppliers to comply with sets of standards. These can include mandatory standards or voluntary
standards. Mandatory standards are compulsory and must be observed by suppliers. For example,
there are very strict standards for electrical goods, and consumers must be supplied with instructions
and warnings about appropriate use and possible hazards. All packaged food must have details of
ingredients on the packaging, and clothing items must have washing and care instructions provided.
Voluntary standards are those that have been agreed to by groups of suppliers or other organisations.
They are not compulsory, but any supplier that complies with them can use this fact when promoting
its products. Voluntary standards do not usually relate to issues of safety, but are more likely to deal
with issues of quality.

4. Publicity and education. Government regulators FIGURE 3 Manufacturers that discover a

aim to make sure that all necessary information fault in any of their products are expected to
relating to product safety in general, and particular recall these products for repair, replacement
hazards when they occur, is circulated as widely as or refund.
possible throughout the community. They often
issue statements to the media about particular
safety issues. These are sometimes reported in the
television news and in newspapers. The ACCC
administers a product safety website, which
provides regular updates on safety hazards. State
and territory Consumer Affairs and Fair Trading
authorities regularly conduct education and
publicity programs to inform the public on broad
product safety issues.
 FIGURE 4 All packaged food must have details of ingredients on the packaging.

Solving safety problems and enforcing standards

Government regulators usually attempt to support businesses to do the right thing, rather than simply
punishing them for doing the wrong thing. Where possible, they will work with industry, support technical
investigation and concentrate on educating suppliers and consumers about product safety. New regulations
can be created where necessary, and warning notices will be issued when dangerous products are identified.

Sometimes a product is clearly so risky that it has to be banned. This has happened on numerous occasions
with toys sold for use by young children. If a toy contains small parts that could come loose and be
swallowed by a small child, the toy may be banned from sale. Many other toys carry clear indications of the
age group for which they are designed, and possible risks to younger children.

FIGURE 5 This toy wooden alphabet train was removed from sale because it contained dangerous
small parts.
If a manufacturer or other supplier fails to comply with safety standards or bans, government regulators can
take legal action. Fines of more than $1 million can be applied to any business failing to meet mandatory
standards, or continuing to sell a product after it has been banned. Businesses may also be ordered by a
court to provide compensation to any customers harmed by products they have sold. A business that
becomes aware of any harm caused by a product or service that it has sold must inform the appropriate
government regulator within two days. Failure to do so can also result in a fine.

DISCUSSION
1. Do you think the potential fines and bans for failing to meet safety standards are appropriate?
2. Should government regulators be doing more or less to enforce these standards?

3.4 ACTIVITIES
REMEMBER
1. Describe the role of each of the following in ensuring product safety:
a. industry regulators
b. customs and quarantine
c. local government authorities.

2. What action can government regulators take if a person is injured after a supplier fails to remove
a banned product from sale?

EXPLAIN
3. What responsibilities do consumers have in relation to product safety?
4. Explain the difference between mandatory standards and voluntary standards.
5. Give details of two of the methods used by government regulators to encourage safe practices.

DISCOVER
6. Use the ISO standards weblink in your Resources section to visit the ‘About Us’ section of the
International Organisation for Standardisation (ISO) website. Watch the video provided on this
page and then answer the following:
a. What are ISO standards?
b. Outline two benefits of these standards.
 7. Use the ACCC Product Safety Recalls weblink in your Resources section to visit this section of
the ACCC website and select three ‘Recall categories’ from the links in the left hand side panel.
From each of these three categories, select one product that has been recalled and answer the
following:
a. What was the name of the product?
b. What was the defect in the product?
c. Why was that defect dangerous?
d. What advice is given to consumers?

Resources

Explore more with this weblink: ISO standards

Explore more with this weblink: ACCC Product Safety Recalls

3.5 SkillBuilder:
research
Questioning and

3.5.1 Tell me
The following steps provide a useful guide to the process of carrying out research:

Identify and understand the general task you are attempting to complete.
Develop a series of specific questions that will help guide your research in the appropriate direction,
and help you determine the information you need.
Locate appropriate sources of that information.
Record relevant information from a range of sources.
Present the information in an appropriate form.

3.5.2 Show me
Imagine you have been asked to investigate the role of your state Consumer Protection or Fair Trading
authority’s website in providing advice for consumers and businesses.
Your first step is to clearly identify the key task. This could be expressed as follows:

‘Prepare a report on the type of advice the state Consumer Protection or Fair Trading authority website
provides for consumers and businesses, with examples.’

It is now necessary to break this down into a series of more specific questions. These could include:

1. How is the website organised to provide advice?

2. What types of headings or categories of information are used?
3. How is the material broken down (types of industries, types of products etc.)?
4. If a consumer has a specific problem with a particular product or supplier, what does the website
advise them to do?
5. What sort of advice is provided to businesses?
6. What are some relevant examples?

The next step is to locate your sources. Each state authority has a website, so you simply need to use a
search engine to find the name and website of your home state’s Consumer Protection or Fair Trading
authority.

Keep your questions beside you as you navigate through the site, and note the location of material that
provides answers. You can select and print some text, and then highlight those sentences or paragraphs that
provide answers to your questions. Sometimes a complete answer to a question may be found in several
places in a piece of text. Be sure to highlight all relevant text, and indicate with a number which question the
information answers.

When you are satisfied you have found the answers to all the questions, you need to write the answers in
order, making sure you use your own words as much as possible. You can then use the answers to present
your information in the required form. For example, this may be an oral report to the rest of the class, an
essay to be marked by your teacher, a PowerPoint presentation, or any other format that is appropriate.

3.5.3 Let me do it

3.5 ACTIVITIES

Practise the skill

Using the above process as a model, carry out the following research task:

Prepare a report on the type of advice the ACCC gives to consumers in relation to internet and phone
usage, including examples.
3.6 Review
3.6.1 Summary
The market system works best as a means of providing goods and services if markets are fair to all
participants. This means that we require laws to regulate markets and maintain that fairness. In Australia this
is provided by the Competition and Consumer Act, which incorporates the Australian Consumer Law.

The Australian Consumer Law prohibits a range of practices that could mislead consumers.
It is compulsory for sellers to provide all available information to consumers, and to ensure that buyers
and sellers have equal rights in any purchase.
Consumer Law also provides a number of basic guarantees in relation to the quality of goods
purchased.
Practices that would lessen fair and open competition between businesses are banned under the Act.
The ACCC has the power to take legal action through the courts to deal with businesses that fail to
comply with the provisions of the Act.
A number of different government regulators monitor product safety throughout Australia.
These regulators encourage the development of safety standards, and seek to educate suppliers and
the public on product safety.
The regulators can ban dangerous products, or order the recall of products to ensure they are made
safe.

3.6.2 Your turn

3.6 ACTIVITIES
Any business displaying a sign that says ‘No refunds’ or ‘No returns’ is breaking the law, because
returns and refunds are permitted in some circumstances.

1. Use internet resources (ACCC, Fair Trading or Consumer Protection websites) to find out the
actual legal circumstances in which refunds are permitted, and when they do not have to be
granted.
2. Design and create a poster for display in a shop that clearly informs customers of those
circumstances in which returns and refunds are allowed, and those circumstances in which the
business is not required to allow a return or provide a refund.
 Resources

Try out this interactivity: Multiple choice

Searchlight ID: int-5472
Try out this interactivity: True/false
Searchlight ID: int-5477
Try out this interactivity: Rights and responsibilities in the marketplace crossword
Searchlight ID: int-6524
Chapter 4: Business decisions
Contents
4.1 Overview

4.2 What are the three main ways in which a business can be owned?

4.3 Are there other ways to own or operate a business?

4.4 Opportunities for businesses

4.5 How can businesses respond to opportunities in the market?

4.6 SkillBuilder: Cost–benefit analysis

4.7 Review

Note to students and teachers: This PDF has been provided as an offline solution for times when you
do not have internet access or are experiencing connectivity issues. It is not intended to replace your
eBook and its suite of resources. While we have tried our best to replicate the online experience offline,
this document may not meet Jacaranda’s high standards for printed material. Please always refer to
your eBook for the full and latest version of this title.
4 Business decisions

4.1 Overview
4.1.1 Cosmetics entrepreneur

Resources

Watch this eLesson: Different forms of business ownership

Searchlight ID: eles-1813
Jellaine Ross started her business Cherry Blooms at the age of 24. The Brisbane-based company sells
cosmetic products, particularly brush-on eyelash extensions. Ms Ross started selling the brush-on eyelash
extensions after seeing them being used when she was on a holiday in Korea. She thought the idea would
work in Australia so she repackaged and remarketed the product and created her own brand. Her business
earned $100 000 in its first year and now sells close to $10 million worth of product a year both online and in
retail stores across the world.

FIGURE 1 Founder and Chief Executive Officer of Cherry Blooms, Jellaine Ross

Learning objectives
Students will investigate:

types of businesses and the ways that businesses respond to opportunities in Australia.

STARTER QUESTIONS
1. List some of the decisions that Jellaine Ross might have needed to make before starting her
business.
2. Cherry Blooms is a company. What does this mean?
3. Why did Jellaine Ross start a business selling brush-on eyelash extensions?
4. Why do think that business owners need to respond to business opportunities?
4.2 What are the three main ways in
which a business can be owned?
4.2.1 Structures of business ownership
There are a number of structures, or forms of ownership, that a business owner can choose from when
starting a business. The three most common forms of ownership are sole proprietorship, whereby an
individual runs a business on their own, a partnership, whereby a group of people will run a business
together, and a corporation, which is owned by shareholders. These are discussed below.

4.2.2 Sole proprietorship

A sole proprietorship, or sole trader, is a business that is owned and operated by one person. A sole
proprietor business can operate in almost any field. Usually, however, they are small businesses such as
cafés, newsagents and hairdressers and trades such as plumbers and electricians. A sole proprietor may
employ other people to work for the business, or to operate and manage the business.

The sole proprietor receives all the profit that the business makes, but is also responsible for any losses. He
or she has unlimited liability. This means he or she can be forced to sell personal assets such as a house or
car to pay off business debts. A sole proprietor business usually has only one person's name in the business
name; for example, Maria's Café.

Individuals who establish a sole proprietor business are often referred to as entrepreneurs. Entrepreneurs are
those people who assume the financial and personal risk of establishing a business with the hope of making
a profit. These people normally exhibit enterprising behaviours.

You may know somebody or you yourself may be the kind of person who demonstrates enterprising
behaviours. Some of these enterprising behaviours and characteristics include:

demonstrating initiative
having good problem-solving abilities
being creative and innovative
being able to plan and complete complex tasks
being a reflective thinker
being willing to take measured risks
predicting the consequences of a decision
communicating clearly and effectively with different types of people
analysing alternatives and selecting appropriate courses of action.
 FIGURE 1 A sole trader is a business that is owned by one person, even though it may employ other
people to operate and manage the business.

Advantages and disadvantages of sole proprietorship

A sole proprietorship is a good form of ownership for a person who is just starting a business because it is
very simple and low cost. It allows the owner to maintain full control of the business and to keep all the
profits. There will be no disputes with any partners and there are minimal government regulations. However,
the owner does have unlimited liability. It can be difficult for the sole trader to find finance to commence the
business or expand and there is a large burden on the owner to perform a wider variety of tasks.

4.2.3 Partnership
A partnership is a business usually owned and operated by two or more people, called partners. The
partners share their profits and losses, usually equally. Together they decide how best to operate the
business. It is common for people with similar skills, such as doctors, accountants, solicitors and dentists, to
form a partnership. Partnerships tend to have the names of the partners in the business name; for example,
Kennedy & Lee Lawyers. As with sole proprietors, partnerships also have unlimited liability.

A partnership can be formed with a verbal agreement, but using a formal written partnership agreement is
worthwhile. This usually outlines who is in the partnership, how profits will be shared, how decisions will be
made, how disputes will be settled and what will happen when the partnership ends.
 FIGURE 2 A partnership is a business usually owned and operated by two or more people, called
partners.

Advantages and disadvantages of partnership

A partnership is an inexpensive and simple form of ownership. It allows responsibility for decision-making
and risk, as well as workload, to be shared. The partners can pool their finances and their expertise together
and there is minimal government regulation. On the other hand, a partnership has unlimited liability. It can be
difficult to find suitable partners and disputes between the partners can arise. If one partner decides to leave
the business, the future of the business can become complicated.

4.2.4 Corporation
A corporation, or company, is owned by shareholders. In Australia, all corporations undergo a process
known as incorporation. This involves creating a business as a legal entity in its own right and treating it as a
separate entity from its shareholders. In other words, the corporation (rather than individual shareholders) is
liable for the debts created through its operation.

Corporations have limited liability. This means that if the business cannot pay its debts, a shareholder loses
only the money she or he has invested in the business. A shareholder cannot be forced to sell personal
assets to pay the corporation’s debts.
However, there are some exceptions to this situation. In some instances, the directors of the corporation will
be asked to give a personal guarantee when seeking a loan from a financial institution. In such cases, the
person who offered the personal guarantee might lose their own assets to pay the debts of the business.

If directors of the corporation engage in misleading behaviour or recklessly borrow money, they can be held
personally responsible. Criminal charges may follow, and lawsuits may also be brought under the code of
civil law.

Corporations can be organised as either public or private. The general public may buy and sell shares in
public corporations and these corporations may be listed on the Australian Securities Exchange (ASX).
Private corporations can not be listed on the stock exchange and tend to be family-owned businesses. They
have restrictions on who can buy their shares. A public corporation must have the word ‘Limited’, or the
abbreviation ‘Ltd’, after its name. A private corporation must have the words ‘Proprietary Limited’, or the
abbreviation ‘Pty Ltd’, after its name.

DISCUSSION
In the aftermath of the Global Financial Crisis (GFC) of 2008, many large corporations in the banking
industry were ‘bailed out’ by their governments, with large amounts of taxpayers’ money helping them
to stay afloat. Some people have argued that these companies should not be ‘too big to fail’, and that
by bailing them out it could encourage more reckless behaviour in the future. What do you think?

FIGURE 3 A corporation is owned by shareholders and can be structured as either a public or private
company.
Advantages and disadvantages of a corporation
A corporation is a very good form of ownership for attracting more finance. Capital (finance) can be obtained
by selling shares. Corporations have limited liability, which means that the owners can only lose the value of
their investment if the corporation goes into debt. The life of a corporation can continue if an owner of the
business sells their shares. However, corporations are very complex and expensive to set up. There are very
strict laws regulating corporations including how they are registered, how they need to report their financial
results and how they will be closed down. Corporations can grow very large, resulting in inefficiencies.

4.2.5 Your turn

4.2 ACTIVITIES
REMEMBER
1. Define the following terms in your own words:
a. unlimited liability
b. limited liability
c. shareholder.

2. Identify the correct form of business ownership for the following businesses:
a. National Australia Bank Ltd
b. Dinah’s Mobile Dog-washing
c. McCartney and Daughters
d. Visy Industries Australia Pty Ltd.

EXPLAIN
3. Outline the difference between a sole proprietorship and a partnership.
4. In what ways does a private corporation differ from a public corporation?
 5. Summarise the advantages and disadvantages of each form of business ownership using a table
such as the one below.

Form of ownership Advantages Disadvantages

Sole proprietor

Partnership

Corporation

DISCOVER
6. Work in groups for this activity. Choose a business that interests you — it may be a local, national
or international business. Use research techniques to find out as much as you can about it on the
internet and through other means. Share your findings with your group.
What type of business is it, and how is it structured?
What are some of the business’s key products/ services?
What else about this business is of particular interest?

7. Working with a partner or by yourself, visit a shopping centre. Record information about the
businesses you find there in a chart like the one below.

Name of business Nature of business activity Form of business ownership

Carol’s café Meals, tea, coffee, snacks Sole proprietorship

Collect data for at least 10 different businesses. Analyse your results to find out what is the most
common form of business ownership. Use a bar graph or a pie chart to present your results.
Suggest reasons why this form of ownership is the most popular.

PREDICT
8. List the possible consequences of the partners of a business having a dispute.
9. If someone wants to buy out a corporation, what will they need to do?
 THINK
10. Suggest an appropriate form of business ownership for the following people. Explain why you
made your suggestion.
a. Brynn is very interested in setting up a manufacturing business which will sell coffee to
supermarkets around Australia, and possibly internationally.
b. Gemma wants to start a new pet shop business where she is responsible for making all of
the decisions on her own.
c. Muhaned is considering whether he should open a fish and chip shop. He is worried that
he has very little finance, and would like to invite other people to help him start the
business.

4.3 Are there other ways to own or

operate a business?
4.3.1 Alternative ways to own a business
Sole proprietorship, partnership, and corporation are not the only forms of business ownership available
when starting a business. A business can also be structured as a cooperative — a business owned and
controlled by the group of people it serves, and a trust, where another person or company holds property or
carries out business on behalf of the members of the trust. After choosing a form of ownership, a business
owner may decide to run their business as a franchise.

4.3.2 Cooperative
In a cooperative, a number of people combine resources for a particular purpose. Typical cooperatives
involve farmers, community education centres and credit unions.

The benefit of a cooperative is that people who work in one industry can join together to manage their own
affairs, drawing on their combined expert knowledge of the specialist aspects of their work. They also reduce
costs by streamlining their operations to ensure maximum efficiency in the delivery of goods and services.

An example of a cooperative is the Best Western international hotel chain whose members are hotel
operators. The members own and operate their own businesses but work together and pool funds and
resources through Best Western, which operates as a non-profit organisation. Pooled funds are used to
advertise their businesses and the Best Western brand, and to generate greater buying power.
 FIGURE 1 The Best Western hotel chain is an example of a cooperative.

There are many different types of cooperatives used for a wide range of purposes, including cooperatives for
housing, building, consumers, workers and credit unions. Retailers’ cooperatives buy in bulk on behalf of
their members to obtain discounts from manufacturers and to pool marketing. This type of cooperative is
common for locally owned grocery stores, hardware stores and pharmacies. However, their members are
businesses rather than individuals.

4.3.3 Trust
A trust is a form of business ownership where a trustee holds property or assets for the benefit of another
person or a group of people. These other people are known as beneficiaries. They are often members of a
family. Setting up a trust can be expensive and complex because a formal deed needs to be created and
there are administrative tasks that the trustee is required to complete annually. Trusts are often used to
preserve family assets and to reduce tax. Family businesses can be set up as trusts so that every family
member can be made a beneficiary without having direct involvement in the running of the business.

FIGURE 2 A family business can be set up as a trust so that family members can be made beneficiaries.
4.3.4 Franchise
While it is not actually a form of business ownership, operating a business as a franchise is becoming
increasingly popular. A franchisor is the individual or organisation that grants, under certain conditions, the
right to use a business name and the right to produce or distribute the franchisor's product. The franchisee
is the person who purchases the franchise, usually by paying a fee to the franchisor. Franchisees can
operate their business as a sole proprietorship, partnership, corporation or trust.

The benefit to the franchisee is that he/she is granted an instantly recognisable business name; for example,
Subway and Hungry Jack’s. The business owner can immediately start to benefit from the reputation of the
franchise. The franchisee also receives training in the technical aspects of operating the business from the
franchisor, as well as assistance with business management principles. In return, the franchisee provides the
start-up fees and labour, and agrees to uphold the terms and conditions of the franchise agreement. This
can mean, for example, that a franchisee is obliged to market and sell the products specified under the
franchise agreement. The franchisee may also need to conform with any required production and distribution
processes and requirements.

Just as there are many advantages for businesses operating as franchises, there are also disadvantages for
both the franchisee and franchisor.

Operating a business as a franchise limits the freedom of the franchisee. The franchisor controls the
operations, the product and the marketing. For example, when you enter a McDonald’s restaurant, the décor
looks the same, the staff act the same and wear the same uniform, and the food tastes the same as in any
other McDonald’s anywhere in Australia. Operating a franchise limits the owner’s ability to innovate and
individualise their stores.

All advertising and promotional campaigns are determined by a centralised office and must be run in all
franchise stores in exactly the same way. An owner of a franchise may not agree with a particular TV
commercial or a ‘Scratch and Win’ promotion, but they must do what the franchisor tells them.

The responsibility is on the operator/franchisee to follow all of the strict guidelines set by the franchisor or
they may be reprimanded, receive a fine or even lose the rights to their business.

FIGURE 3 Some franchise operations in Australia include Pie Face, a café and bakery business
specialising in pies, and Harvey Norman, which sells products for the home and office.
 DISCUSSION
When Pizza Hut and Domino’s started to offer $5 pizzas in 2014, many of their franchisees claimed the
strategy would make their business unprofitable, with 80 Pizza Hut franchisees applying for a court
injunction to stop the promotion. The Federal Court ultimately rejected the injunction, leaving many
franchisees having to sell their goods at a lower price than they wanted to. Do you think this decision
was correct?

4.3.5 Choosing the best form of ownership

As we have seen, there are several structures, or forms of ownership, that a business owner can choose
from when starting a business. When choosing the most suitable structure, the business owner needs to
consider their personal preferences, as well as the advantages and disadvantages of each type of business.
For example, someone who prefers to work alone and is wishing to start a business that is easy to set up
might choose a sole proprietorship. A person who wants to raise the finance to grow a business selling
products around Australia, and perhaps overseas, might consider a company structure. A person wishing to
preserve the assets of their family and reduce tax might choose a trust. The form of ownership used by the
business can change over time. It is quite possible that after a business is started, it will grow. As the
business grows, its goals might change, which means the owner might need to review the most appropriate
structure as well.

FIGURE 4 Business owners must consider a range of factors when deciding on which form of
ownership best suits their business.
4.3 ACTIVITIES
REMEMBER
1. In what ways is a cooperative different to other forms of business ownership?
2. Why do people create trusts?
3. List five different franchises that operate in your area.

EXPLAIN
4. a. What do the franchisor and the franchisee receive under a franchise agreement?
b. What is each party required to provide?
5. Outline the main advantages and disadvantages in establishing a business through a franchise
agreement.
6. What are the benefits to farmers of joining a cooperative?

DISCOVER
7. Use the Business structures weblink in your Resources section to visit the Australian
Government Business website and find out more about different types of business ownership.
Choose two business structures and write down two new things that you did not already know
about these structures. (Within the site, you may need to click on links to the Australian Taxation
Office (ATO) or other advice for your state.)

THINK
8. Consider the following businesses that are just starting up. What form of business ownership
would be the most appropriate? For each case, explain why a person or group of people would
choose to establish that form of ownership rather than another.
a. An accounting practice providing financial and taxation services
b. A café offering freshly baked breads and cakes and specialty coffee
c. A milk processing plant owned and operated by a group of one hundred dairy farmers
d. A fashion retailer with the aim of expanding nationally within twelve months
e. A family that has property held in trust by another person
f. A business selling phone and internet connections hoping to raise $250 million in capital to
commence trading
 Resources

Explore more with this weblink: Business structures

4.4 Opportunities for businesses

4.4.1 Factors influencing opportunities
A business will always be searching for opportunities, including ideas for new products, new customers and
new ways of running the business. There are many factors that influence opportunities for businesses,
including demographics, competition, location and target market. Successful businesses will be very quick
to seize opportunities.

4.4.2 Demographics
Being aware of demographics can create opportunities for businesses. Demographics are characteristics or
statistics relating to population, including age, gender, ethnicity, employment, income and education. This
information can be used by businesses to work out what products consumers prefer or to determine their
buying behaviours. Let’s have a closer look at some of these characteristics.

Age
The age of a country’s population can influence business opportunities. The products that a business sells
will usually appeal to a certain age group. The Australian population is ageing which means that there is
more demand for, for example, health services, further education and training, and travel. Some businesses
may choose to focus on these opportunities or to target their products at younger consumers. Younger
people aged under 35 are more likely to be the first consumers to purchase new technologies like mobile
phones and computer games.

Gender
Males and females demand different products. Businesses will sell different hygiene and clothing products
based on the gender of consumers. Women make the majority of the buying decisions in Australian
households. This presents an opportunity for businesses. For example, businesses might target women with
new home improvement products.
Income
Income can affect business opportunities. The products that a business sells will usually appeal to a certain
income group. A premium product, such as designer clothing, will normally appeal to higher income groups.
Lower income groups tend to purchase discount products. A business owner may decide to focus on higher
income groups by starting a fashion boutique, or focus on lower income groups by opening a discount
fashion store.

FIGURE 1 Demographics are the characteristics or statistics relating to population, including age and
gender.

4.4.3 Target market

By focusing its efforts on the most appropriate demographic, the business can begin to determine its target
market. This is a specific group of customers with similar characteristics, for which a business will produce
goods and services. A business working out its target market will do so by ‘segmenting the market’. People
can be grouped according to demographic characteristics, geographical characteristics (where people live;
for example, in urban, rural or suburban areas, or the country they are located in), behavioural characteristics
(the way that customers purchase products; for example, are they a regular user or a first-time user of a
product, do they have loyalty to a brand?) and psychographic characteristics (people’s personalities, values,
attitudes, interests, and lifestyles).
 FIGURE 2 By identifying a target market, a business may be better able to satisfy the demands of its
customers.

A business selling car products may determine that its target market is males, aged 30−50 and living in
urban areas, who like cars and who have time and money to spend working on them. A business selling
make-up may have a target market of customers who are female, aged 25–50, living in the city and who like
to buy ‘brand name’ products. Defining a target market allows a business to decide who will demand their
products, what products they want, and if there are actually enough potential customers to make the
business profitable.

4.4.4 Competition
Competition can make life very difficult for a business. Depending on the market that the business is
operating in, there may be several competitors or very few competitors. Competition can drive prices down
and can restrict the opportunity to make profit.

However, competition can also create opportunities for businesses. It can force a business to improve the
way they do things or to innovate, either through using technology, altering the product or by improving
customer service. Competition can force a business to examine their target market closely to make sure that
they are selling to the right consumers and perhaps to change the group of customers to whom they are
attempting to sell.
4.4.5 Location
The location that a business chooses can create opportunities or restrict them, according to the nature of the
business. A business needs to consider how important passing trade will be, whether visibility is important,
how important access to resources will be, or whether cost will be the most important factor. For example, a
business that is hoping to sell to young people or young families would find limited opportunities if it located
in an area whose population has an average age of over 60; a boutique fashion store would struggle to find
customers if it located in an industrial area; and a business that manufactures goods might encounter
difficulties if it located in an area that was not easily accessed by its suppliers.

CASE STUDY

GameZone
Two friends, Jake and Ashley, established their small business, GameZone, in 2010. They didn’t have
much money of their own, but they managed to convince their parents to lend them enough to get
started.

Their first problem was the location. Rents were very high in the local shopping centre. They opted for a
disused shop in a local street. Next door was an abandoned warehouse, and on the other side was the
Pensioner World shop. They thought they might do all right in the area though, because another
computer games store, eGames, was located just around the corner.

Ashley thought it would be best to sell to anyone and everyone who would buy their games. He put a
couple of advertisements in the local newspapers, and left some leaflets in the Pensioner World shop.

On the opening day, the stock had arrived and games were piled high on the shelves. One elderly
customer walked up to the counter.

‘Do you have any touch-typing programs please?’ asked the customer.

‘Dunno about that,’ said Mez, the shop assistant. Jake emerged from the back office and stubbed out a
cigarette on the counter. He told the customer that the store sold games, not computer programs.

‘Well then, could you please order a copy for me?’ asked the customer.

‘Maybe, but until our internet is fixed, nothing's happening. Sorry,’ replied Jake.
FIGURE 3 GameZone in action — how not to play the business game!

A Bad location for business

B Wrong demographic for products

C Uninterested staff

D Inappropriate store layout

E Disorganised paperwork

F Workplace hazard
4.4 ACTIVITIES
REMEMBER
1. List some business opportunities.

EXPLAIN
2. Briefly outline the four characteristics of a target market.
3. Explain how the following factors influence business opportunities:
a. target market
b. competition
c. location.

4. For each of the target market groups below, think of an opportunity (a product or a business idea)
that would cater for their needs.
a. High income earners
b. New parents
c. Diet-conscious consumers
d. Well-educated people
e. Young and active students

DISCOVER
5. In a magazine, newspaper or online, find images that show an example of each target market
characteristic. Paste the pictures onto a page under appropriate headings (demographic,
geographic, behavioural and psychographic) and add labels explaining why each picture
represents that characteristic.
6. Select a business in your local area. Describe whether the business has an advantage or
disadvantage in its location in regard to:
a. how visible it is to potential customers
b. cost (including the likely rent or costs of transportation)
c. how close it is to suppliers and customers
d. how close it is to competitors.

PREDICT
7. What would happen to a business that fails to seize opportunities?
 THINK
8. Read the GameZone case study.
a. What evidence is there that Jake and Ashley did not spend enough time carefully locating
their business for its target market?
b. How will competition affect GameZone? Did Jake and Ashley make the right decision in
locating close to a competitor? Why or why not?
c. Give three examples of poor customer service at GameZone.
d. The business has not enjoyed the start the owners wanted. If they called you in as a
manager, what steps would you take to improve operations? Explain.

4.5 How can businesses respond to

opportunities in the market?
4.5.1 Developing a new product
After identifying opportunities in the market, a business owner will need to respond to those opportunities in
some way. This may involve developing new products to satisfy demand or changing the way the business
delivers its products or services to consumers.

A business might respond to opportunities in the market by developing a new product to satisfy demand.
Product development can involve modifying an existing product or the way in which it is presented, or
creating an entirely new product that meets the demands of a newly defined customer or market. Starting
with an idea for a new product, or an idea to modify a product, a business will go through a series of steps to
bring the product to market.

The product will need to undergo a design process and then a prototype or mock-up will need to be created.
The product will then go through beta and market testing. The testing will confirm if the product is on the
right track or if improvements need to be made. After the technical needs of the product are planned for,
including materials needs, suppliers, and final production requirements, the product will be launched onto
the market.
FIGURE 1 The process for new product development

FIGURE 2 Gelato Messina, a Sydney-based gelato maker, introduced a ‘whitebait’ flavour — a

combination of salmon and white chocolate with lemon cream cheese, dill and caper jelly. Co-owner
Donato Toce said that the business would not have introduced the flavour if they did not think it would
work.
4.5.2 Changing the way products are delivered to consumers
A business might respond to opportunities in the market by changing the way they deliver their products to
customers. Products can be delivered in many ways, including by road, rail, ship, pipelines, power lines and
computer networks. Most goods are produced at a point of production, for example a farm or factory. They
are then distributed to warehouses and moved to points of sale, for example retail stores, where customers
will then purchase them. A business can change the way it delivers products to customers by modifying this
process.

Online shops have drastically altered the way that products are delivered to customers. Instead of going to a
physical store, millions of customers around the world visit businesses such as Amazon.com, and eBay
online. After purchasing a product, customers can specify or negotiate delivery details, including delivery
direct to the customer’s home. Some of the ways in which a business can change the way in which it
delivers its products can be seen in below.

FIGURE 3 Some of the ways in which a business can change the way it delivers its products
Crowdsourced delivery
Online networks and marketplaces, including Zipments and Deliv in the USA and PluckNGo in Australia,
connect couriers with customers who want to have goods delivered. A business owner wanting deliveries
can make the request on the crowdshipping service’s site or app. Those wanting to deliver products can
browse available delivery orders, then pick up and make the delivery. Couriers range from professionals to
students to people looking for some extra income.

Improving customer service

A business can improve its customer service by seeking feedback from customers and reacting to the
suggestions. One way to collect feedback is through a customer survey. Many businesses use customer
loyalty programs. Discounts and giveaways can be used to reward customers. Loyalty programs allow
businesses to build a database of their customers and to stay in contact with them. Another way that
businesses can provide quality service is by training staff in how to provide good service.

FIGURE 4 Blake Davies, a barista employed by Casualties Espresso in Port Macquarie, delivers coffee
and food to customers on his skateboard.
CASE STUDY

Apple responds to an opportunity

Apple pioneered a hands-on, immersive in-store technology experience when it originally opened a
retail store in 2001. When the first store opened, people were very sceptical. There was a recession and
Apple had been reporting losses. But Apple saw an opportunity to improve its relationship with its
customers and better present its brand. Led by then Chief Executive Officer (CEO) Steve Jobs, Apple
took a risk in opening Apple Stores. It now has more than 400 retail stores located around the world,
and rivals including Microsoft and Samsung have since emulated the retail stores.

Apple’s retail stores allow the company to connect with customers in ways that other technology
companies cannot. Customers, both new and existing, can experiment with Mac and iOS products.
Apple learns lessons from what customers do in the retail stores and applies these lessons to its
product development, including its iTunes and Mac OS applications stores, as well as its hardware.
Having retail stores allows Apple to take further risks with its products. It knows that if its products
break down, customers can simply pop into an Apple Store and have the fault repaired or replaced by a
technician at the Genius Bar. This excellent customer service builds a positive relationship between the
consumer and Apple so that customers keep coming back and tell other people about their products.
Apple also uses its retail stores to support the launch of its new products, so that they become events.
The launch of a new iPhone or iPad becomes a media frenzy because of the lines of people waiting
outside Apple Stores.

FIGURE 5 Apple saw a business opportunity to improve its relationship with customers and build
its brand by launching Apple Stores.
4.5 ACTIVITIES
REMEMBER
1. Define the term ‘product development’.
2. List the steps in the product development process.
3. Suggest five ways that a business can change the way in which it delivers its products.

EXPLAIN
4. Read the case study ‘Apple responds to an opportunity’ and answer the following:
a. What business opportunities was Apple responding to?
b. In what ways did Apple respond to these opportunities in the market?
c. How did the introduction of Apple Stores improve Apple’s products and customer service?

DISCOVER
5. Use the Business innovation weblink in your Resources section to visit the Australian
Government Business website to find out more about businesses that have responded to market
opportunities.
Choose one business case study and read it. Write down one innovation that the business has
introduced in response to a business opportunity.
6. Product of the Year is a consumer-voted award for product innovation. Use the Product of the
Year weblink in your Resources section to visit the award’s website and find the results of the
current year’s awards. Write down the names of ten new products that received awards.

PREDICT
7. List the possible consequences of the decisions that are being made by the following small
business owners:
a. Charlie runs a plant nursery and has decided to sell his products online to expand locally
and overseas. He is intending to use crowdsourced delivery to make sure that the products
get to customers.
b. Customer surveys at Bulete Ltd, a transport and logistics corporation, have revealed that
customer satisfaction is very poor. The CEO, Murgon Conray, has decided that all staff will
be trained in customer service.
c. Karley is planning to introduce a new product line to her swimwear importing business.
She has sent her designs to the manufacturer in Asia which produces her products and
has promoted the new fashions on her website.
THINK
8. Imagine that one of the shop spaces in your local shopping centre has become vacant.
Recommend a new business idea that could be located in that space and explain the new
product or products that it might sell. Draw the new shop front and label the ways that the store
has provided a new product to satisfy demand or changed the way that its products are delivered
to consumers.
9. Use the product development process to launch an imaginary new product. Complete a report by
responding to the following questions:
a. Outline your idea. What is your product and who do you think would be interested in
buying it?
b. Design your product. Draw or sketch rough plans for your new product.
c. Create a prototype or mock-up. You could draw a final sketch, make a model or produce a
video or animation showing what the product will look like.
d. If you were to test the product on the market, what would be the results? Write a
paragraph suggesting what beta and market testing might reveal about your product.
e. What technical needs will your product have? Write a paragraph outlining what will be
needed to produce your product, including materials, employees, factory, plant or
warehouse, transport, packaging and any other needs.
f. Launch your product by presenting your report to the class. You could do this in the form
of a PowerPoint, Keynote, video or a combination of presentation technologies.

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4.6 SkillBuilder: Cost–benefit analysis
4.6.1 Tell me

Using a cost–benefit analysis

A cost–benefit analysis is a detailed examination of the strengths and weaknesses of different alternatives
in order to see whether the benefits outweigh the costs. The principle behind a cost–benefit analysis is that
you should only decide to act on an alternative if the benefit from taking it is greater than the cost.

Why is a cost–benefit analysis useful in economics and business?

A cost–benefit analysis is important for determining if an option will be a good decision or investment. It is
also useful for comparing alternatives or projects, as well as estimating the resources needed to complete
the alternative or project.

A good cost–benefit analysis:

identifies opportunities
proposes alternative ways to take advantage of these opportunities
calculates the costs and benefits
compares the costs and benefits to determine if the benefits outweigh the costs
makes a decision about the best alternative to recommend.

4.6.2 Show me
We can apply the five elements of a good cost–benefit analysis to a case study, to see how this works in
practice.

CASE STUDY

Olando’s opportunity
Step 1: Identify opportunities in the market.
Olando is the general manager of a large soft drink manufacturer. He and his team are looking at the
market to identify opportunities.

The manufacturer has spent a great deal of time looking closely at its business and the local market
that it sells to. By asking a wide range of questions they have determined that there are two business
strategies that could meet the changing needs of the soft drink market.

Olando’s team believes that there is an unmet need in the Australian market for low-sugar alternatives
to cola flavours. There are currently some products available, but customer feedback suggests some
frustration with the lack of widespread access to these options. These options also suffer from poor
quality.

Step 2: Propose alternative ways to take advantage of these opportunities.

The company thinks that there are two possible alternatives. Firstly, they can introduce a new range of
low-sugar soft drinks based on the unmet need. The other alternative is to select suitable products that
other companies are selling overseas and offer these, or copies of these, to local customers. This
would involve buying the rights to distribute these soft drinks.

Step 3: Calculate the costs and benefits of each alternative.

Olando’s team conducts a cost–benefit analysis of the alternatives proposed. This means that they add
up all the costs and all the benefits of each alternative, and then they compare the costs and benefits to
decide if the benefits outweigh the costs. A summary of the costs and benefits of each alternative can
be seen in table 1 and table 2.
 TABLE 1 A summary of costs and benefits for a new range of low-sugar soft drinks

Costs Benefits

Monetary Total (including raw materials, factory overheads, Total (including sales):
transportation, packaging, research and $30 million
development, salaries): $20 million

Non- Extra workload for staff New research and development

monetary which could benefit the
business in the future
A positive image built up among
customers and potential
customers

TABLE 2 A summary of costs and benefits for selling or imitating overseas products

Costs Benefits

Total (including raw materials, factory overheads, Total (including sales):

Monetary
transportation, packaging, salaries): $15 million $20 million

Non- Staff dissatisfaction with using ideas from Research and development team
monetary overseas will be free to look at other
Customer dissatisfaction with using products products
designed for overseas markets

Step 4: Compare the costs and benefits to determine if the benefits outweigh the costs.

The team calculates that the benefits outweigh the costs when analysing the first alternative,
introducing a new range of low-sugar soft drinks. The monetary costs are $20 million, while the
monetary benefits are $30 million. This means that the monetary benefits outweigh the monetary costs
by $10 million. They also consider that the non-monetary benefits considerably outweigh the non-
monetary costs.
 When analysing the second alternative, selecting or imitating overseas products and selling these to
local customers, the team calculates that the monetary benefits outweigh the monetary costs by $5
million. The team feels that, even though the non-monetary costs of this alternative are high, the non-
monetary benefits still outweigh the non-monetary costs.

Step 5: Choose the best alternative.

The team determines that the best alternative is the first one, introducing a new range of low-sugar soft
drinks. This is because they believe that the benefits of this alternative far outweigh the costs when
compared to the second alternative.

4.6.3 Let me do it

4.6 ACTIVITIES
You can now carry out this five step process to complete a cost–benefit analysis using the case study
below.
CASE STUDY

Uncle Bill’s
Uncle Bill’s is a global manufacturer of cereal products and snacks. Its marketing department has
recommended that the business should respond to opportunities in the Australian market to produce
products that meet different dietary needs, including low-salt, yeast-free and gluten-free products. It
has proposed two alternatives. The first alternative is to introduce a new range of gluten-free cereals.
The second alternative is to modify existing products already being used in other markets and sell
these in the Australian market.

Bridie is the Australian regional manager for Uncle Bill’s. She has asked you to be part of the team that
will undertake a cost–benefit analysis of the alternatives proposed. Bridie has provided the team with a
breakdown of the costs and benefits of each alternative (see table 3 and table 4).

TABLE 3 A breakdown of costs and benefits for Uncle Bill’s: Alternative 1 — new gluten-free
products

Costs Benefits

Monetary Raw materials (ingredients): Improve market share by 5%

$12 million Sales of $50 million
Factory overheads — salaries,
insurance, power, repairs and
maintenance: $8 million
Transportation: $1 million
Packaging/labelling: $2 million
Selling/distribution: $3 million
Research and development —
salaries, other overheads: $4 million

Non-monetary Extra workload for staff New research and development which
could benefit the business in the
future
Building a positive image among
customers and potential customers
Empower staff (as they are involved in
the development of the new product)
and improve corporate culture
 TABLE 4 A breakdown of costs and benefits for Uncle Bill’s: Alternative 2 — modification of
existing products

Costs Benefits

Monetary Raw materials (ingredients): $12 Improve market share by 4%

million Sales of $40 million
Factory overheads — salaries,
insurance, power, repairs and
maintenance: $8 million
Transportation: $1 million
Packaging/labelling: $2 million
Selling/distribution: $3 million

Non-monetary Some staff may be dissatisfied with Research and development team will
using ideas from other countries when be free to look at other products
local ideas could have been used.
Loss of customers who may be
dissatisfied with products that are
designed for overseas markets

Construct your cost–benefit analysis by completing the following steps:

Steps 1: Identify the opportunities for Uncle Bill’s.

Steps 2: Identify the alternatives that have been proposed to take advantage of these opportunities.

Steps 3: Add up the costs and benefits of each alternative. Write down the total costs and benefits for
alternative 1 and the total costs and benefits for alternative 2.

Steps 4: Compare the costs and benefits for each alternative. Do the benefits outweigh the costs for
one alternative or both? In your opinion, which alternative has more benefits than costs?

Steps 5: Make a decision about which alternative to recommend.

Complete the following questions.

1. How did you decide which alternative to recommend?

 2. Compare your decisions to the decisions made by other people in your class. How do the
decisions differ? Can you explain the variation in decisions?
3. What aspect of completing a cost–benefit analysis did you find relatively easy and what did you
find more challenging?
4. Reading the Olando’s opportunity case study, identify the opportunities in the market for
Olando’s soft-drink manufacturer.
5. How did Olando’s company respond to opportunities in the Australian market?

4.7 Review
4.7.1 Summary
When starting a business, the business owner has several forms of ownership from which to choose. These
include sole proprietorship, partnership, corporation, cooperative and trust. Some business owners choose
to operate their business as a franchise. When selecting the most suitable form of ownership, the business
owner will consider their personal preferences, as well as the advantages and disadvantages of each type of
business. There are many factors that influence business opportunities in the market and a number of ways
that businesses can respond to those opportunities.

Entrepreneurs assume the financial and personal risk of establishing a business with the hope of
making a profit. These people demonstrate abilities such as risk-taking, initiative, problem-solving,
creativity, innovation, communication and planning.
A sole proprietorship is a business that is owned and operated by one person.
A partnership is a business owned and operated by two or more people.
A corporation is a business owned by shareholders.
A cooperative is a business that is owned and operated by the group of people that it serves.
A trust is a business created to hold property or assets for the benefit of another person or a group of
people.
A franchise is the situation in which a business sells the right to distribute its products under its name
to other individuals or businesses.
Business opportunities are influenced by factors including demographics, target market, competition
and location.
A business can respond to opportunities by following a process to develop new products to satisfy
demand or by changing the way products are delivered to consumers.
4.7.2 Your turn

4.7 ACTIVITIES
1. What is a cost–benefit analysis?
2. Why is preparing a cost–benefit analysis useful?
3. Read the case study below and then answer the following questions:
a. What form of business ownership does Food Orbit have? Explain your answer.
b. Outline the advantages and disadvantages of this form of ownership.
c. Explain why you think the founders of Food Orbit might have chosen to use this form of
ownership rather than another.
d. Identify the opportunities in the market for Food Orbit.
e. Explain how James Nathan and Melissa Foster responded to opportunities in the
Australian market.
f. What has happened to Food Orbit since the launch of the website?

CASE STUDY

Food Orbit
In 2013 Food Orbit Pty Ltd. started a website
FIGURE 1 James Nathan, founder and CEO
designed to connect local farmers and growers
of Food Orbit
with wholesale buyers of food, including restaurant
chefs. When the website launched, Food Orbit’s
founder and CEO James Nathan said, ‘We’re trying
to change the food system. We’re shortening the
supply chain. We’re cutting out the middleman.
We’re effectively doing this to be able to give
farmers a fair price.’ Food Orbit has a vision: ‘To
see every café, restaurant, school, canteen, caterer,
hospital and hotel all using locally sourced,
sustainable food.’
Mr Nathan and his co-founder, Melissa Foster, spoke to growers at farmers’ markets and toured
properties, signing farmers up for their website. They also spoke to chefs. To raise awareness of local
producers they staged a series of local produce dinners with Tom Walton, head chef of The Bucket List,
a seafood restaurant in Bondi. They did this to showcase the farmers and to prove that their model of
connecting farmers with restaurateurs worked.

Since launching the online ordering platform Mr Nathan has been seeking funding for the technical and
sales resources needed to grow the business. In early 2014, Food Orbit partnered with Marketboomer,
a business owned by Australian stock exchange listed Qanda Technology. Marketboomer supplies
large hotel chains and Qantas lounges and has relationships with thousands of wholesalers. Food Orbit
has now changed its focus from creating a ‘one-stop shop’ to connecting chefs with all of their
suppliers.

‘We started up quite small and tried to expand the amount of local produce restaurants were buying
through us. But unless you are supplying a substantial portion of chefs' needs and making their life
easier, you won't get much traction.’, says Mr Nathan.

The objective for Food Orbit now is to grow nationally and perhaps expand into New Zealand and the
United Kingdom.

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Chapter 5: The changing work environment
Contents
5.1 Overview

5.2 Influences on work today

5.3 The significance of technology

5.4 Changes to the workforce

5.5 Work in the future

5.6 SkillBuilder: Analysis and interpretation of data

5.7 Review

Note to students and teachers: This PDF has been provided as an offline solution for times when you
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5 The changing work
environment
5.1 Overview
5.1.1 The rapidly changing world of work

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In the past, when a person started a job, they would generally remain in that same job for several decades —
a job was considered ‘for life’. It gave the worker a sense of security knowing that they would always have
an income (money coming in) as long as they performed the tasks their employer asked of them.

FIGURE 1 The nature of work has significantly evolved, largely as a result of technology.

Today the concept of work is shifting from ‘Where do you work?’ to ‘For whom do you work?’ and ‘What do
you do?’.
In many industries, the routine of a working day starting at 9 am and finishing at 5 pm is long gone. This
routine has been replaced with almost 24/7 access to everything and everyone. Computers, the internet and
smart phones have made it possible for people to stay connected with their social and work networks no
matter what the time. With increased connectedness comes benefits such as greater flexibility to work the
hours that suit individuals’ lifestyles and the possibility of working remotely (i.e. from home or another
location away from the office). However, it is also not uncommon for employers to expect workers to be
available to deal with work matters outside of their normal working hours. In some fields there appears to be
an employer expectation that employees will work harder and longer than they have done in the past. For
the Australian labour force, like many places throughout the world, employment for life is a thing of the
past. Employment is becoming less secure, and work that involves low-level skills is less common. It is being
replaced by work that requires a greater level of skill and knowledge, especially in light of the rapid
technological advances that have taken place over the past 20 years and which continue to shape the
modern work environment. Technology is just one of the key factors that influence the world of work. Other
influences include the health of the economy, employer and employee expectations, consumer demands,
and globalisation. In this topic, we will explore these various influences on the way people work today and
how they may work in the future.

Learning objectives
Students will investigate:

the influences on the ways people work and factors that might affect work in the future.

STARTER QUESTIONS
1. Explain how you think work has changed in the last 100 years.
2. Technology has affected how people work. Think of three examples of jobs that have been
affected by technological advances and explain how these roles have changed.
3. ‘Technology has made many significant changes to our lives.’ Discuss.

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5.2 Influences on work today
5.2.1 Modern technology
The Australian labour market has undergone significant change in the past two decades. These changes
may in part be attributed to the changing expectations of workers and employers: employers expect that
employees will work harder and longer hours, while employees want a greater balance between their work
and their non-working lives (work–life balance). Arguably, though, the greatest influence on today’s world of
work has been the rapid development of technology — a development that has changed the way in which
not only Australians, but the people of the entire world, work. We will explore the impact of modern
technological advances in subtopic 5.3, but it is important to note that long before the age of computers, the
silicon chip and the internet, another significant technological advance began the process of change in the
way people work.

5.2.2 Past influences

Prior to the late eighteenth century, the type of available work was mainly in primary production, in areas
such as crop farming, fishing or livestock raising. Life was very different to that of today’s developed
societies. People produced the bulk of their own food, clothes and other needs. Manufacturing was fairly
small-scale and done in people’s homes using hand tools or basic machines. From the late 1700s to the mid
1800s, technological advances associated with the Industrial Revolution — in particular the development of
steam power and the steam engine, the mechanised cotton mill and loom and the use of processed fuel to
fire and heat the furnaces in iron ore production in England — changed the way that people lived and
worked. People who previously worked in the primary industries outlined above moved to towns and cities
to work in factories (secondary industries). The working conditions in these early factories were harsh. Men,
women and children had few rights. They were forced to work long hours in noisy, dirty and dangerous
workplaces. Accidents often happened around machinery, but there was no compensation or sick leave. If a
person was injured, someone else took their job and there were no unemployment benefits provided to those
who could not find work.

Substantial workplace reforms in the many decades since this time have greatly improved on-the-job
conditions for the great majority of workers in industrialised, developed countries such as Australia. But in
some countries, harsh and unsafe work environments still exist, with workers paid poorly for long hours of
labour in these difficult conditions. This is one of the ethical challenges of globalisation, which is discussed
further in the sections that follow.
 FIGURE 1 Children provided cheap labour in factories and mills. As this 1853 illustration shows, they
were often badly treated.

5.2.3 Present influences

In looking at the historical perspective of work, it is evident that the advancement of new ideas, the need for
improvements in daily living conditions, new manufacturing processes, and the development of new ways of
using resources such as coal, gas and oil, have all had major effects on how people live and work. In modern
times, in addition to technological advances, there are numerous other factors that may influence the ways in
which people work. These include:

the health of the local economy and the level of unemployment

government regulations and workers’ unions
the impact of globalisation, the decreasing cost of distance, and the outsourcing and offshoring of
jobs
the decline of employment opportunities in some industries and the growth of others.

The health of the economy

When an economy is healthy, business tends to thrive, which means work is generally more readily available
and unemployment levels are low. Consumers feel more able to afford the products and services they
require, and their spending, in turn, feeds business growth. However, during times of economic hardship this
is not the case. Businesses that are struggling to keep afloat are less likely to hire staff and, in fact, may
attempt to cut business costs through making particular positions redundant and retrenching some of their
workers. Thus, when the economy is in a period of decline, workers may experience difficulty finding
employment.
 FIGURE 2 The health of the economy is an important influence on the world of work — a healthy
economy generally means more available jobs and lower unemployment rates.

Sometimes employers will attempt to weather a period of economic downturn by reducing employees’ work
hours rather than retrenching their workers. This can be an effective way of maintaining jobs while allowing a
business to continue to operate at a lower cost, but any such changes can only be made in consultation with
employees, if they are on permanent work contracts.

Government and workers’ union influences

Industrial relations laws govern the relationship
FIGURE 3 Conditions of employment are set
between employers and employees and have a
out in a formal agreement. In Australia, there are
significant impact on the ways people work in
three different types of agreement: awards,
Australia. These laws have undergone many changes
registered collective (group) agreements and
since the inception of the industrial relations system in
individual employment contracts.
the early 1900s. Many of these changes have
occurred as a result of different government policies
over time, and also as a result of the work of unions —
formal organisations that negotiate with employers
and government on behalf of the workers in a
particular industry to ensure that their conditions of
employment are fair and reasonable. Conditions of
employment are the arrangements made between an
employer and employee; that is, what the employer
agrees to give an employee in return for their work.
These conditions are usually outlined in a formal
agreement, which covers issues such as the number
of hours an employee is expected to work, annual
leave and other entitlements such as sick leave and long service or maternity leave.
Government also affects the world of work through decisions regarding taxation and import tariffs, which can
impact on the ability of certain industries to remain competitive (see subtopic 1.5), and through changes to
laws in relation to issues such as retail trading hours and liquor licensing. For example, where once it was
illegal for retail shops to trade on Sundays, this has now become the norm. In Victoria from the time of World
War I until 1966, hotels had to close at 6 pm; in 1966 this was changed to 10 pm, and since changes to
liquor licensing laws in the late 1980s, many hotels and other venues are now able to stay open until the
early hours of the morning. Clearly, such changes have had a significant impact on the working hours of
people employed in hospitality (hotels, clubs and restaurants) and in retail trade. Changes to work hours are
discussed further in subtopic 5.4.

The impact of globalisation

Advances in technology, in particular communications
FIGURE 4 Rapid technological advances have
technology, more effective, lower cost methods of
facilitated the process of globalisation —
transportation, and largely unrestricted trade between
allowing the interaction of economies
countries have allowed the whole world to become a
throughout the world.
single, integrated marketplace. The term globalisation
refers to this ever-increasing international cultural and
economic interaction.

In Australia, globalisation has had, and continues to

have, a significant effect on work opportunities and
the way people work. One of the key ways in which
this effect has been felt is through the increasing
practice of outsourcing.

Outsourcing involves engaging individuals or

businesses outside of an organisation to fulfil
functions previously carried out within the
organisation itself. In an attempt to improve productivity, cut costs and increase their ability to compete on a
global scale, many Australian businesses now outsource some of their non-core functions. Some functions
that are commonly outsourced include recruiting new staff, marketing and advertising, management of
finances, and production of goods. Some businesses have taken this a step further, and outsource various
functions to workers and organisations overseas — some have even moved their entire production process
overseas. This practice is known as offshoring.

Offshoring provides a business with the ability to cut labour costs, which can be as much as ten times higher
in a developed country such as Australia than in a developing country such as China, India or Sri Lanka. For
example, a number of the telecommunication companies you may deal with have outsourced their call
centres to places like India, Sri Lanka and China; similarly, an increasing number of companies are taking
their legal or accounting needs offshore, having work completed in countries where labour costs are cheaper
but skill levels remain high. Offshoring can also enhance the ability of a business to stay competitive and to
develop an overseas presence by entering new markets.
The impact of globalisation on the Australian working environment can be examined in relation to the
consumer, the worker and the business owner.

TABLE 1 Examining the impact of globalisation on Australian consumers, employers and employees

Impact on consumers Impact on employers Impact on employees

Ability to choose from a wide Ability to reduce the costs of Loss of jobs as some roles are
range of goods, some of which manufacturing or providing a moved to overseas providers
are imported into the country, service by employing cheaper
e.g. tinned tomatoes, electrical overseas-based labour
goods, clothing, wine

Access to goods at lower prices Access to new markets Potential for individuals to travel,
overseas work and/or study overseas;
taking skills, knowledge and
capabilities with them

Ability to browse and buy online Increased ability to access new Potential to work for
and have purchases delivered to technologies from overseas international companies that
the door, eliminating the need to bring their business to Australia
travel to stores

Ability to generate greater New jobs created as a result of

income through selling more business growth through
products to a global market, exporting products such as
allowing the potential to further wine, cars, gas and minerals to
build and develop the business other countries
through investment in
improvements in technology,
productivity and quality

Pressure to become more

competitive and produce goods
and services more cheaply than
overseas competitors
Decline and growth of industries
With many companies moving part or all of their operations overseas, the employment opportunities in some
industries have decreased. For example, the announcement of the closure of production plants of the three
major car manufacturers in Australia (Ford, Holden and Toyota) means that workers in this industry will need
to seek employment in other fields. While ongoing technological advances can lead to job losses in some
cases, where tasks that were once carried out by people are now able to be done by machines, they can
also present opportunities for new businesses to develop; for example, in areas such as telecommunications
and digital technologies. In the 1980s, jobs such as website designers, social media managers, e-commerce
consultants and app developers didn’t exist. Thirty years later, they are a common part of the business
world. Many of the jobs that will exist in the future may be roles that we cannot even imagine today.

FIGURE 5 Just as ‘app development’ was unheard of in the 1980s, many of the jobs of the future may
be in fields that are yet to be developed.

5.2 ACTIVITIES
REMEMBER
1. Describe what work was like before the Industrial Revolution.
2. Explain the difference between primary and secondary industries.
3. What is outsourcing?
4. What is offshoring?
 EXPLAIN
5. Examine figure 1. What do you think working conditions were like for young people then?

THINK
6. What impact do you think globalisation, outsourcing and offshoring will have on the Australian
economy?
7. What might be some of the ethical challenges of globalisation, and in particular, the practice of
offshoring?

DISCOVER
8. Use the Industrial Revolution weblink in your Resources section to watch a video examining
how the Industrial Revolution changed the nature of work. Take some notes while watching the
video, then write 1 or 2 paragraphs explaining how working conditions were different prior to the
Industrial Revolution compared with today.

Resources

Explore more with this weblink: Industrial Revolution

5.3 The significance of technology

5.3.1 Significant technological change
The Australian work environment has changed significantly in the past two decades. Much of this change
can be attributed to the development of technology and rapid communications advances that have altered
the way the world does business.
The world of work changed dramatically in the 1980s with the development of the desktop computer, but it
was the widespread adoption of the internet in the 1990s that has brought arguably the greatest change to
the world of work since the Industrial Revolution. The internet, computers and devices such as smart phones
and tablets are now part of our everyday life and, for most workers, have been integrated significantly into
the way that they undertake and complete their work. The ability to communicate virtually instantaneously
with anyone almost anywhere in the world has changed the way people do business and has been a major
factor in the process of globalisation.

Types of new technology

Technological advances have changed many aspects of business operation, from administration tasks to
internal and external communications and service provision and manufacturing processes. The list of
technological advances that have changed the way we work is enormous. It includes:

video conferencing and webinars: using technology to meet or conduct information and training
sessions, rather than needing to have face-to-face interactions
smart technology (smart phones): enabling 24/7 communication through phone, email, SMS, MMS
e-commerce: internet banking, online shopping, microchip credit cards, EFTPOS, PayPal, BPay, Post
Billpay, PayPass
software developments: word processing, spreadsheets, database, accounting and other software
programs that streamline administrative tasks
robotics: their use in manufacturing, especially in assembly lines
computer-aided design (CAD): using computers to design new products, buildings etc.
computer-aided manufacturing (CAM): using computers to assist with the manufacturing process of
goods and services
cloud computing: external data storage away from the organisation, allowing access to information
from anywhere
communication: discussion forums, blogs, social networking — creating new ways to reach potential
customers.

FIGURE 1 Video conferencing allows workers to meet even though they may be in different countries.
How technology has changed working lives
The impact of technological advances has been felt significantly in the workplace. For example, where once
it was necessary to send written materials via the post (which may take several days or even weeks to be
delivered, depending on the distances involved), email now makes it possible for correspondence to be sent
and delivered within the same minute! Computer software enables once tedious administrative, accounting
and other processes to be completed in a fraction of the time that they once required. And computer-
operated machines now perform many manufacturing line tasks that once required meticulous human
completion. Similarly, in many cases where once manual labour was the norm, computers and robots now
control the lifting and movement of heavy objects. Interestingly, the law has followed this process and
various requirements have been introduced that seek to protect workers and ensure that employers provide
a safe environment for them. Work (Occupational) Health and Safety laws cover issues such as manual
handling, machine operation, safety guards and shut-off mechanisms, acceptable noise levels, and other
hazard management in relation to the use of technology in the workplace.

Manufacturing
The use of computers in production has meant that the manufacturing process has sped up significantly
and, in turn, productivity levels have increased. Assembly lines, computer-aided designs, and computer-
driven manufacturing processes (in which computers control and direct the machinery and equipment), have
meant that less workers are needed to undertake the manual aspects of production. However the increase in
production output, combined with access to new markets through globalised trade opportunities has
allowed the growth of some businesses, and a need for increased numbers of workers to meet the demands
of expansion. Further, the nature of many roles in computer-assisted manufacturing operations has changed,
with workers gaining higher level skills as they are trained to be able to monitor equipment and carry out any
adjustments or even repairs that may be required.

FIGURE 2 The types of machinery used in manufacturing processes are constantly changing the way
workers work and the work that they do.
Rapid communication changes
Technology has changed the concept of communication. For example, the growth of the internet has meant
that news events, when they occur, can be instantly disseminated and shared through instant messaging,
blogs, emails and websites. This change has had a huge impact on print media such as newspapers. Many
people no longer buy the printed newspaper but will instead read the news online — and it is not just local
newspapers that they can access, but also newspapers from around the world.

In the workplace, these rapid changes have led to enormous shifts in the way people communicate and
work. No longer is there a need to have ‘face time’, where people need to be in the same room to meet and
discuss business. As figure 1 depicts, face time has been replaced by ‘virtual meeting time’. Smart devices
allow for instant communication and access to workers, employers, suppliers and producers.

Where once distance may have been a prohibitive factor in applying for and obtaining a job, this is no longer
the case. In many fields of work, employees increasingly have the opportunity to work remotely, based from
their own homes. The use of technology such as teleconferencing or video-conferencing, email, cloud
computing and so on effectively eliminates the distance between people, and creates opportunities for more
flexible work arrangements that are beneficial for both the employee and the employer.

Staying connected or switching off?

The developments that have occurred in
FIGURE 3 You can have access to your
communications technology make it difficult to ‘switch
working life no matter where you are.
off’. For example how many people in your class have
a smart phone? Do you check your phone or device
as soon as an instant message, email or Facebook
post hits your inbox? If you do, you are not alone.
Many of us are obsessed with our smart phones,
tablets, laptops and other devices, along with the
social media so easily accessed on them. And while
such technologies allow us unprecedented
opportunities for social connection and access to
information, they also play a role in the gradual
blurring of the boundaries between work and home
life. It is now easy to stay connected with the office or
work while at home, on holidays, or even while sleeping! Many people now work beyond the traditional office
hours of 9 to 5, using laptops and other devices to access work networks remotely, checking work emails
while they have breakfast or during their commute to work on the train, or perhaps to teleconference during
their home time with other people working in a different time zone.
DISCUSSION
Having 24/7 access to work emails and being able to work in any location has led to many people
feeling that they need to work more than the 38 hours each week (for a full-time job) that the federal
government recommends. Should more be done to ensure that this 38-hour limit is adhered to?

5.3 ACTIVITIES
REMEMBER
1. List three technological advances that have altered the way people work and outline how they
have changed the workplace.

EXPLAIN
2. The use of technology in work has a range of consequences. Discuss one positive and one
negative consequence.
3. Discuss how technology can stop people from ‘switching off’ and the impact this may have on a
person’s wellbeing.

THINK
4. What forms of technology do you use on a daily basis? What effect does this have on your life?

INVESTIGATE
5. Conduct more research on the development of the internet. There are many interesting videos
online that will provide you with this information. Examine them and then write a short story or
cartoon about how the internet was developed.
5.4 Changes to the workforce
5.4.1 The changing roles of women and men
Fifty years ago, the majority of the Australian workforce was male. Most of these men were the family
breadwinners — supporting their wives and families until retiring in their sixties. Women often ‘retired’ from
the workforce when they married, and it was relatively uncommon for a woman to work if she had young
children. Today, the two-income family is more common, with women continuing to work throughout the
period of having dependent children. Employment is more likely to be part-time or casual and there have
been significant changes in the types of jobs in which people are employed. People are less likely to do the
one job for their entire working lives, instead moving not just from one role to another in the same field, but
also undertaking complete career changes, possibly several times, in a bid to find work that continues to
provide a sense of purpose and satisfaction in this major area of people’s lives. With this shift in the way
people approach their careers, human resources management has become increasingly important within the
business world — emphasising the value placed on finding the right person for a particular role. In this
section, we will explore these and other changes to the Australian workforce.

5.4.2 Participation rates

One of the most significant changes seen in the Australian workforce in the past 50 years has been the
increased participation of women. As mentioned above, in the past it was common for women to leave the
workforce when they had children, and often they never returned to paid work. This is no longer the case.
Figure 1 shows the change in female workforce participation rates from 1966 to 2011.

FIGURE 1 Age-specific labour force participation rates for females, 1966 and 2011

Source: Adapted from Australian Bureau of Statistics, Labour Force Historical Timeseries, Australia (cat.
no. 6204.0.55.001).
The graph clearly depicts the overall increase in participation, and, in particular, the virtual absence in 2011
of the ‘dip’ in participation seen in the 1966 data during the traditional child-rearing ages of 20 to 35. This
indicates that a much higher proportion of women today are continuing to work throughout this period.

As women have entered the workforce in greater

FIGURE 2 The increased participation of
numbers and continued to work after having children,
women in the workforce has created the need
the need for formal childcare has increased. This has
for formal childcare.
led to the growth of the childcare industry and has
created significant new job opportunities in early
childhood development and childcare. Another
significant change has been an increase in flexible
work options, offering benefits such as parental leave
(for both females and males) and part-time work, that
allows greater flexibility to juggle the demands of work
and parenthood.

Figure 3 shows the proportion of males and females in

the employed Australian labour force in May 2014,
and their average weekly earnings.

FIGURE 3 Proportion of males and females in the paid workforce in 2014, and their average weekly
earnings

Source: Adapted from Australian Bureau of Statistics, Employee Earnings and Hours, Australia, May
2014 (cat. no. 6306.0).

Female employees actually slightly outnumber males, but as can clearly be seen, the average weekly
earnings of females is significantly lower than that of men. This can be explained to some extent by looking
at the differences in full-time and part-time participation rates.
Full-time and part-time participation rates
An employee is considered to work full-time if their hours of work equate to 35 hours or more per week, or
they work the agreed upon or award hours for a person in their occupation or industry, and the work is
ongoing. An employee is considered to work part-time if they work less than 35 hours a week in ongoing
employment, where the number of hours they work is either fixed or variable.

FIGURE 4 The proportion of full-time and part-time employees in May 2014, and their average weekly
earnings

Source: Adapted from Australian Bureau of Statistics, Employee Earnings and Hours, Australia, May
2014 (cat. no. 6306.0).

Figure 4 shows that in May 2014 there were more full-time employees (60.0%) than part-time employees
(40.0%), and that, as would be expected, average full-time earnings ($1568.80/week) were significantly
higher than average part-time earnings ($602.80/week). However, 56.3% of females were employed on a
part-time basis, compared with only 23.4% of males; that is, the vast majority of male workers (76.6%) were
employed full-time, which accounts for much of the disparity in average weekly earnings between men and
women.

5.4.3 Hours of work

In today’s work environment, there is a perception that people are expected to be available outside of
traditional work hours due to technology-enabled connectivity, and that they are generally working longer
hours than ever before. While in some industries this may indeed be the case, Australian Bureau of Statistics
figures show that since the 1980s there has actually been a decline in the average hours worked by
Australians — from 35 hours average in the 1980s, to 32.9 hours average in 2011. Figure 5 depicts this
change.
 FIGURE 5 The average number of hours worked by employed Australians shows an overall decrease
from 1980 through to 2011.

Source: Adapted from Australian Bureau of Statistics, As a Matter of Fact, 2012 (cat. no. 1393.0).

The change in average work hours can at least in part be attributed to the significant increase in part-time
employment during this period. Part-time roles now exist in almost all industries, and are particularly
prevalent in areas such as retail trade and hospitality.

Apart from the change in the number of hours worked, there has also been a significant shift in the times that
people work. Where once the world of work was largely framed around the 9 to 5 workday, this is no longer
the case. For example, changes to regulations in retail trade have created a demand for employees to work
vastly different hours to those of the past, with weekend and late-night trading now allowing businesses to
operate well outside the traditional 9 to 5 trading hours. Similarly, venues such as bars, restaurants and
nightclubs are now able to stay open much later, creating a need for staff who are willing and able to work
shifts into the early hours of the morning. Consumer demand has also created a need to provide call centre
sales and helpline staff in certain industries from early in the morning until late in the evening. Thus,
employees working in such fields may work a range of hours that are significantly different to what was once
the case.
 FIGURE 6 Changes to trading hours have had a significant impact on the hours of work for many
Australians.

5.4.4 Availability of jobs

In the late 1960s almost half of Australia’s labour force was employed in production industries like mining,
manufacturing, construction, electricity, gas and water, agriculture, forestry and fishing. In 1997, some thirty
years later, that proportion had decreased to 28%. During the same period, service industries grew
substantially. These include: property and business services, accommodation, cafés and restaurants, culture
and recreational services, personal and other services, health and community services, retail, education,
transport and communication, trade and finance, and insurance. This trend continues today, and is a major
factor in shaping the ongoing changes seen in the Australian workforce. We will look at the changes in
Australian work industries in more detail in subtopic 5.5.

5.4.5 Career lengths

Recent studies in the United States of America, based on US labour statistics, indicate that the average US
worker stays in a job for a period of 4.6 years. In Australia, the average is thought to be even less than this —
as little as 2 years — largely as a result of younger workers being prepared to change jobs on a much more
frequent basis than their older colleagues.

Anecdotal evidence suggests that members of Generation X are likely to change jobs about 11 times during
their working life. It is anticipated that this figure may double for Generation Y or Generation Z and increase
even further for Generation Alpha.

Research has found that the reason for changing jobs varies from person to person, but may include:
 social reasons: response to life events, such as having children
economic reasons: wanting to obtain better working arrangements
career-related reasons: wanting to gain further career experience
other personal reasons: a desire to gain new experiences.

FIGURE 7 Today’s workers change jobs far more often than they did in the past. This trend is expected
to continue into the future.

It is interesting to note that for many workers, there is a reluctance to change. Possible reasons why some
workers choose to stay in the same job may include:

a lack of opportunity to change jobs

security
convenience
feeling valued in a role
they like the people they work with
a fast commute (quick to get to and from work)
the need to build/consolidate retirement (superannuation) funds.

Even for people who do not change jobs, the workplace continues to change and evolve. In the Career
Experience Survey conducted in November 2002 by the Australian Bureau of Statistics, a number of
significant issues regarding the changing nature of work were noted. Approximately 77% of all employees
surveyed had been with the same employer for a year or more. Of these, almost 57% reported significant
changes to their working life over the past year. The types of change reported are summarised in table 1.
 TABLE 1 Types of workplace change experienced

Type of change Percentage of Experienced

employees who by whom
experienced the
change

Promotion: receiving an increase in wages or salary due to an 8.7% Permanent

increase in responsibility or the complexity of the work that is and full-time
undertaken workers

Transfer: where a person is moved from their current position 6.8% Permanent
into another one without a change in wage, salary, level of and full-time
responsibility or complexity of task workers

Change in hours: this can be either a reduction or an increase 31.7% Part-time

in the amount of hours to be worked in a week workers and
casual
workers

Changed location: movement involving a change in terms of 8.5% Permanent

either work building, or geographical location such as a and full-time
suburb, state or even country workers

New, different or extra duties: where there has been a change 40.2% Permanent
in the scope (the range) of activities that need to be completed and full-time
workers

More responsibility: an increase in the level of responsibility 42.7% Permanent

you have in terms of your experience and what is expected of and full-time
you workers

Source: Adapted from Australian Bureau of Statistics, Career experience, Australia, November 2002 (cat.
no. 6254.0).

Table 1 shows that in the majority of cases, the changes did not mean that employees were actually
changing their positions. More often, the change involved taking on additional tasks or more responsibility,
perhaps as experience is gained in a role.
5.4.6 Human resource management
The term human resources refers to the people who work within an organisation. In any business, the
human resources are one of the most vital elements. With the world of work undergoing such rapid and
ongoing changes, the effective management of a business’s employees — human resource management
— has become increasingly important. Human resource management involves many aspects, such as staff
recruitment, negotiation of employment conditions, training, professional development, and carrying out staff
performance reviews. The goal of successful human resource management is to ensure an organisation has
the right people with the skills and knowledge necessary to meet the needs of the business.

FIGURE 8 A business’s human resources are among its most important features.

Finding the best employees with the most appropriate skills and other attributes that will suit the
organisation and its culture is an important part of the human resource manager’s role. This recruitment
process has changed significantly over the past 20 years as a result of technological advances including
software development and, of course, the internet.

Online sites that act as repositories of potential workers’ résumés, such as SEEK.com.au, allow people in
search of work to place their details online, enabling employers to find them more quickly and easily. Job ads
are posted in these online forums and many employers require prospective employees to complete the
application process online, which can significantly streamline the whole recruitment process compared to
traditional paper-based job applications.
 FIGURE 9 Hiring is a lot easier thanks to online sites where employers can choose their employees.

Perhaps on the downside for potential employees however, is the way in which the online environment has
also made it easier for employers to ‘background check’ job applicants. It has become increasingly common
for an employer to look on social media sites to find information about the employee they are considering
hiring. Applicants need therefore to be mindful of their ‘online presence’ in order that it does not potentially
limit their employment opportunities.

The internet has provided a new way for people to advertise and search for work roles. Employers are now
able to reach a whole world of potential employees easily and in a cost-effective manner; and job hunters are
able to browse the thousands of jobs advertised around the world in their search for a role that fulfils their
needs and ambitions.

FIGURE 10 Human resource managers have become very important to the success of a business. The
tasks that they perform can be grouped into the four categories below.
 FIGURE 11 Through advances in technology employers can now easily access potential employees
from around the world.

5.4.7 The value of work

The value one places on work can be linked to one of the four reasons why people work:

1. To obtain self-satisfaction
It is never easy to separate the work you do from who you are. For many workers the tasks they
perform are done to a very high quality and reflect the attitude that they have towards their work and
their employers. They take pride in the work they do and this in turn raises their level of work
satisfaction. When workers have ownership of their work and are proud of their achievements, they are
more likely to work harder and longer to achieve the objectives of the organisation. For example, two
hundred employees of a factory were asked to write down the most important aspect of their work.
Their responses revealed that it was not money that motivated them. Sixty-seven per cent of the
employees said that knowing they had done the job well and received some praise from the supervisor
were the most rewarding aspects. Thus recognition of a job well done increases the value of the work
itself.
2. To gain status and prestige

The type of work a person does is often used to measure that person’s status and prestige within our
society. In other words, their status comes from their occupation. The value we place on a person’s
job determines his or her income. For example, a heart surgeon’s highly skilled work is valued more
than a labourer’s, so the surgeon receives a higher income. This is partly due to the education and
training needed to become a surgeon as well as their high skill level and specialisation. Historically,
society has tended to place a lower value on work in what are referred to as the ‘caring professions’,
such as childcare, nursing and aged care. For this reason, salaries for people who work in these areas
have generally been lower than in many other fields. These roles have traditionally been filled by
women, and this provides another reason for the disparity that is often seen between the relative
wages of men and women in Australia. This attitude is slowly changing, with wage rises being fought
for and won in many of these areas. Interestingly, in a 2013 survey that asked Australians to rate
professions in terms of their perceived ethics and honesty, nursing emerged as the number one ranked
profession. Doctors were ranked second in the survey.

3. To enjoy social interactions with others

The social aspects of work increase its value. On average, employees spend more time at work with
their co-workers than they do at home with their families (not including sleep time). Work provides the
opportunity to meet other people and make friends. Some workplaces have social clubs that
employees can join, to participate in organised activities aimed at increasing the sense of staff
connectedness and satisfaction.

4. To help others

For many people the need to make a difference and contribute to society is an important part of why
they work. This may be particularly so in the case of those who work in the ‘caring professions’, or
who choose to work for not-for-profit organisations. Some people place such a high value on the
desire to help others that they are prepared to offer their time and skills through volunteer work,
seeking no payment for the work they do.

FIGURE 12 Social interaction is one of the key reasons that people work.
 5.4 ACTIVITIES
REMEMBER
1. Describe one significant change that has occurred in the Australian workforce in the last 50
years.
2. List three reasons why people value work.

EXPLAIN
3. Examine figure 1. Discuss how participation rates of females have changed from 1966 to today.
4. Review figures 3 and 4. Consider the information shown in these figures with other factors
discussed in this section and explain why the average weekly earnings for women are lower than
they are for men.

THINK
5. ‘The value of work is a personal thing’. Discuss.

INVESTIGATE
6. Use the Hours of work weblink in your Resources section to visit the Australian Bureau of
Statistics website and examine the information presented on average hours worked by
Australians. Describe the changes in working hours from the 1980s to today. Have they
increased, decreased or remained the same?

5.5 Work in the future

5.5.1 Predicting future changes to work and possible outcomes
Can you imagine what work will be like in the year 2050? Will new jobs exist that are like the ones we see in
sci-fi movies, or will they continue to be much the same as they are now? Although it is very difficult to
predict how work will change, what form it will take, what activities will need to be performed and what skills,
knowledge and abilities workers will need to have, it is worth noting that one of the challenges of
government is to do just that — to attempt to predict some of these changes and to make policies and
economic plans that will support the future world of work in Australia.
 FIGURE 1 Is this the future of work?

Work as we know it will slowly change. Exactly how it will change is unknown, but it is likely to be dependent
on a range of factors, which in turn could have particular outcomes. Table 1 summarises some of these
potential factors and outcomes.
 TABLE 1 Potential changes and outcomes in the future world of work

Factor Outcome

Skills required in the future Future employees will require more education and higher skills
workplace development to participate in the workforce.

Changes in the gender More equal representation of men and women in all types of work
segregation of the workforce across all industries; the gender gap in average wages will continue
to decrease

More employment in certain More service-oriented roles; more focus on case work that follows
sectors of industry (service) and a customer from start to finish, multi-skilling of the workforce, to
decreased employment enable the same employee to assist a customer throughout their
opportunities in other sectors of entire customer experience
industry (manufacturing)

Further advances and increased Employees will need to continue to learn how to operate new
use of technology in the workplace equipment and software in order to perform their jobs.
Some roles may become obsolete as new technology provides
more efficient ways of completing particular tasks.

Changing worker attitudes and the The provision of more flexible work arrangements to accommodate
desire for work–life balance employees’ needs, increase satisfaction and productivity, and
retain staff

Changing workplace environments Creation of more creative, ideas-driven environments that

encourage workers to think independently and be creative in their
problem solving
Greater focus on having healthy and happy employees who will
work longer and stay with an organisation, rather than frequently
changing jobs; employees supported through the provision of
benefits such as an onsite gym, canteen or café, childcare facilities
etc.

Increased education and skill levels

Two interrelated service areas that are experiencing distinct growth and an increase in employment
opportunities are professional, scientific and technical services; and education and training. In the future,
these areas will continue to grow as the need for higher skilled workers increases. Lower skilled jobs are
decreasing and being replaced by roles that require a higher level of education and which are more skills-
focused. Thus the need for workers to be multi-skilled, educated and more technically oriented to enable
them to work with the newest technological advances is becoming increasingly evident.
Without appropriate, accessible training and education opportunities, it will be difficult to meet Australia’s
future workplace requirements. Thus, the need to provide such opportunities is an issue of constant focus
for government.

DISCUSSION
Many of the jobs that you may hold in your career do not currently exist. How can you prepare for a job
that doesn‘t exist? Are there transferable skills that are applicable to all jobs, regardless of how the
future develops? Should we focus more on developing these skills than traditional skills?

Changing attitudes to gender segregation

Another possible change is in the area of gender segregation. This is where one gender, male or female, is
more likely to be employed in a particular area than the other gender. Gender segregation is common in
some industries. This is particularly evident in construction and mining. For example, in the New South
Wales construction industry, women account for only 10% of workers. In mining, they account for only 11%
of workers. However, in the more traditionally female-dominated occupations such as health care, social
assistance, education and training, women continue to occupy the vast majority of roles. What might be the
outcome if more men started to work in these typically female-dominated occupations and more women
started working in typically male-dominated professions?

Certainly, it would have an impact on the gender gap that still exists in average wages of men and women. It
might also lead to an increase in the perceived value (and the higher wages that go with it) of the traditionally
lower paid female-dominated industries. Would it also change the way that we view the genders, or perhaps
the industries? Or might it simply be a natural progression that comes as part of an ever-changing work
environment?

Declining industries and growth industries

Over the past hundred years, the work people do has changed significantly. This is clearly demonstrated by
looking at the industries in which they work. The three main employment industries are the primary,
secondary and tertiary industries. In the past, much of the workforce was involved in the primary and
secondary industries. In recent years, however, there has been a shift towards greater participation in the
tertiary industry, and in what have now been termed the quaternary and quinary industries also. Figure 2
outlines the various features of each of these industry types.
 FIGURE 2 The five key industries in the Australian work environment

In Australia, there are numerous sub-industries into which people’s work can be classified. These include
agriculture, mining, manufacturing, retail, construction, accommodation and food services, transport,
education, health and others. Table 2 examines the four main employing industries and compares the
proportion of people employed in 2000−2001 with the proportion employed in those same industries for the
period 2015−2016.

TABLE 2 The proportion of people employed in 2000−2001 compared to 2015−16, by industry, in

Australia

Industry Proportion of all employed, Proportion of all employed,

2000−01 2015−16

Health care and social

10% 13%
assistance

Retail trade 11% 11%

Construction 7% 9%

Manufacturing 12% 7%

Source: Adapted from Australian Bureau of Statistics, Year Book Australia, 2012 (cat. no. 1301.0) and
Department of Employment, Australian Jobs 2016.
As table 2 details, during this 15-year period, while retail trade remained steady as the second-highest
employing industry, the health care and social assistance industry and the construction industry saw strong
increases in the percentage of people employed in those fields, while the manufacturing industry saw a
decrease of 5%. This is representative of the growth and decline of these particular fields of employment.

Figure 3 provides another view of the employment figures in certain industries from 2007 to 2013.

FIGURE 3 A series of graphs showing changes in various industry sectors

Source: Adapted from Australian Bureau of Statistics, 6291.0.55.003 - Labour Force, Australia,
Detailed, Quarterly, May 2014
These graphs clearly show the significant growth in a number of industries, such as retail trade, construction
and mining, and the distinct decline of the manufacturing industry in Australia during this period.

Further advances in technology

With ongoing technological developments comes the need for workers to continue to up-skill in order to be
able to use new equipment or software to its potential. But in some instances, we may see a decrease in the
number of jobs available in particular fields due to the automation of tasks. Many laborious tasks have been
made simpler and quicker through the use of technology. Such increased efficiencies mean less people are
required to complete the same amount of work, and hence, fewer work positions are available in that field.

It is difficult to know how far the impact of technology will reach in the workplace — which jobs of today may
become obsolete in the future as a result of new technological developments. But equally, the new areas of
work that will emerge through technological development are largely unknown. It is hoped that these new
fields will open up increasing opportunities that will be more than adequate to replace the roles that are lost.

Changing attitudes, the desire for work–life balance and changing

workplace environments
As Generations Y, Z and Alpha fill the workforce, we may see a shift in the style of environments within which
people work. Employers may need to create a new style of workplace, one that encourages workers to stay,
rather than changing jobs on a regular basis, as is the tendency of these younger generations. More flexible
working arrangements and benefits that promote staff satisfaction and increase productivity may become an
increasingly common feature of the future world of work. An example of this kind of workplace is provided by
American company Google, and is described in the case study below.

CASE STUDY

Google work environment inspires creativity

Google is leading the way in terms of balancing life and work. The company offers its employees a wide
range of extra activities such as volleyball, roller hockey, bicycles, yoga classes, sharing spaces
(couches and comfy chairs where workers can discuss whatever topic they want), weights rooms,
workout rooms, washers and dryers for workers to wash their clothes, massage rooms, ping pong and
pool tables, outdoor seating for sunny days, and a wide variety of lunch and dinner places — all free or
for only a small charge to its workers.
 FIGURE 4 Google is often identified in surveys as the business that people would most like to
work for.

Google provides its employees with a work environment that has an interesting décor, which promotes
their ability to be more creative. Even sleeping pods are provided, so employees can catch up on sleep
and feel refreshed to continue working. For one day a week employees are encouraged to work on
whatever they want. This promotes creativity and encourages new ideas to be developed, which lead to
new products, better solutions and a happier workplace.

FIGURE 5 Another reason the work environment is important!

5.5 ACTIVITIES
REMEMBER
1. Which of the four main employing industries in Australia has experienced gradual decline over
the past 25 years?

EXPLAIN
2. Examine table 2 and answer the questions below.
a. What was the percentage change for the following industries?
i. Health care and social assistance
ii. Retail trade
iii. Construction
iv. Manufacturing

b. Which industry had a negative change (decline) from 2000−2001 to 2010−2011?

3. Examine figure 3 and describe the trends you notice in the industries.
4. Examine table 3 below and answer the following questions.
a. Which industry employs the most people?
b. Which industry employs the least people?
c. Which industry had the biggest positive percentage change?
d. Which industry had the biggest negative percentage change?

TABLE 3 Employment by industry, Victoria

Employment

Employ’t Nov % of 5 year change to Nov

2012 total 2012

Industries ‘000 % ‘000 %

Accommodation and Food 181.0 6.3 16.6 10.1

Services

Administrative and Support 91.7 3.2 5.8 6.8

Services
Agriculture, Forestry and Fishing 76.6 2.7 -5.3 -6.5

Arts and Recreation Services 59.7 2.1 2.3 4.0

Construction 246.3 8.5 27.3 12.5

Education and Training 231.2 8.0 23.3 11.2

Electricity, Gas, Water and Waste Services 35.0 1.2 7.3 26.6

Financial and Insurance Services 118.2 4.1 8.4 7.6

Health Care and Social Assistance 342.4 11.9 77.3 29.2

Information, Media and Telecommunications 54.6 1.9 -15.5 -22.2

Manufacturing 290.5 10.1 -36.0 -11.0

Mining 10.7 0.4 1.0 10.0

Other Services 106.5 3.7 -15.0 -12.3

Professional, Scientific and Technical Services 250.1 8.7 35.4 16.5

Public Administration and Safety 132.8 4.6 24.5 22.7

Rental, Hiring and Real Estate Services 44.0 1.5 -1.1 -2.5

Retail Trade 327.5 11.4 27.2 9.1

Transport, Postal and Warehousing 139.9 4.9 17.7 14.5

Wholesale Trade 127.3 4.4 11.4 9.9

Source: Australian Government, Department of Education, Employment and Workplace Relations,

Australian Jobs 2013, p. 7
 INVESTIGATE
5. Use the GooglePlex weblink in your Resources section to watch a clip that shows various
features of the Google work environment.
Write a paragraph describing how Google treats its workers.

Resources

Explore more with this weblink: GooglePlex

5.6 SkillBuilder: Analysis and

interpretation of data
5.6.1 Tell me
Tables and graphs can provide a wealth of information in a clear and concise way; to get the most from
them, it is important to analyse them closely.

Line graphs are very useful for showing trends (patterns of change over time) and comparing data. When
analysing a line graph, first examine the heading — what does it tell you about the data contained in the
graph? Examine the key, which identifies what each of the lines on the graph represents. Then look closely at
the vertical and horizontal axes, they show you the variables as numbers, percentages, years etc. When
reading line graphs, find points on the graph where two variables meet to obtain specific information. For
example, in figure 1 below, we can see that 28% of all people employed in 2002 worked in part-time roles.

The trend lines on a line graph show an overall picture of what is happening; that is, whether a particular
variable has increased, declined or remained steady over time. Examine these closely — what changes do
you see? If there has been change over time, has it been steady and gradual, or perhaps sudden and
erratic? When examining a line graph, note down any patterns that you identify. You will then be ready to
complete your interpretation, which involves writing a paragraph or two to summarise the information you
have found in your analysis of the data.
5.6.2 Show me
Examine figure 1.

FIGURE 1 People employed part-time, as a percentage of total employed, 1999−2012

Source: Adapted from Australian Bureau of Statistics, Australian social trends data cube, February,
2013, Work, National summary 1999−2012 (cat. no. 4102.0).

The graph’s title tells us that the data we are looking at relates to the proportion of all employed people who
were employed on a part-time basis during the period 1999−2012. Looking at the key, we can see that there
is information provided about males, females and the total employed population. The red line on the graph
shows the percentage of all employed people who were employed part-time; the purple line shows the
percentage of all employed males who were employed part-time; and the green line shows the percentage of
all employed females who were employed part-time. Looking at these lines on the graph, we can clearly see
that the percentage of women employed part-time is significantly higher than that of men.

Looking at specific points on the graph, we can see that there has been a gradual increase in the percentage
of all people employed part-time from around 26% in 1999 to 30% in 2012. The percentage of females
employed part-time was steady at around 43% from 1999−2001, then increased slightly to around 45%,
where it remained through to 2012. The percentage of males employed part-time increased from around
12.5% in 1999−2000 to around 15% by 2003. It remained at this level until 2009 and then rose again slightly
to around 16% for the 2010−2012 period.
The trend lines show an overall gradual increase (around 3.5%) in the percentage of people who were
employed part-time over the period 1999−2012. The increase for females was around 2%; and for males
around 3.5%. To summarise what we have learned from this graph, we could write a brief paragraph such
as:

‘The percentage of Australians employed on a part-time basis has gradually increased in recent years.
Overall, this figure grew from approximately 26% of the total employed workforce in 1999 to around
30% in 2012. The proportion of females employed on a part-time basis is significantly higher than that
of men, and this remained constant throughout the 1999−2012 period. The increase in female part-
time employment over this period was around 2%, while a slightly more pronounced change — an
increase of around 3.5% — was observed in male part-time participation rates’.

5.6.3 Let me do it

5.6 ACTIVITIES
Practise your skills by analysing and interpreting the line graph below. Write a paragraph describing the
trends shown.
 FIGURE 2 Number of people employed in agriculture, forestry and fishing, mining, manufacturing
and retail trade, 1986−2012

Source: Adapted from Australian Bureau of Statistics, Labour Force, Australia, Detailed, Quarterly,
May 2016 (cat. no. 6291.0.55.003).

5.7 Review
5.7.1 Summary
How exactly work will change in the future is unknown; however, a number of assumptions can be made.
 There will be further advances in technology and this will affect the type of work people do, when they
do it and where they do it.
Globalisation, offshoring and outsourcing will continue to have an impact on the Australian labour
market.
Changing work environments and the need for work–life balance will be a key feature of the future
world of work.
Employee relations and agreements will need to change even further to enable greater flexibility.
The next generation of workers will need to be more highly skilled and educated, and more focused on
technology.
Technology will significantly impact organisations’ future human resources needs, and the way in
which they find and retain employees.
The need for training and development will only increase with time.
Distance will not be a barrier to obtaining a job in the future.

5.7.2 Your turn

5.7 ACTIVITIES
1. Which industries are likely to see growth in the next 10 years?
2. Which industries are likely to see a decline in the next 10 years?
3. How do you anticipate work will change in the future?
4. Propose reasons why lower-skilled jobs are disappearing.
5. Discuss how the next generation of workers might view work.
6. With a partner, conduct your own research into the hours people work by carrying out a survey
using an online survey program. Summarise and present your findings to your class.

Resources

Try out this interactivity: Multiple choice

Searchlight ID: int-5474
Try out this interactivity: True/false
Searchlight ID: int-5479
Try out this interactivity: The changing work environment crossword
Searchlight ID: int-6526
GLOSSARY
Australian Bureau of Statistics a government-owned agency that gathers and publishes a range of
statistics to assist government, business and the community with decision making

beneficiaries the people who are entitled to the benefit of any trust arrangement

budgets estimates of all government income to be raised by taxes and other charges, and the planned
spending of that income, within any given year

capital growth an increase in the value of shares or property over time

commercialisation the act of managing or developing an activity in a way designed to make a profit

competition the outcome of two or more businesses attempting to supply their products to the same group
of customers

conditions of employment the arrangements made between an employer and the employee in terms of
work requirements and employee benefits

consumers persons or groups who are the final users of goods and services produced within an economy

cooperative a business that is owned and operated by the group of people that it serves

corporation a business owned by shareholders

cost–benefit analysis an approach for determining and evaluating the benefits and costs of a project or
decision. The evaluation includes monetary and non-monetary effects.

cost of living the level of prices paid by consumers for goods and services

crowdshipping a method of delivery where couriers are obtained from a large group of people, especially
from online communities, and connected with customers

demographics characteristics relating to population, especially age, gender, ethnicity, employment, income
and education

disposable income the amount of money that households have available for spending and saving after
income taxes have been accounted for

dividends company profits paid to shareholders, either in cash or as more shares

employer the person or business that pays workers for the work they do
employer expectation what the employer expects to receive from employees in return for the money that
they pay them

employment working in return for a wage or salary

export goods and services sold by local businesses to overseas consumers

financial intermediary any organisation that takes deposits from those with surplus funds, and makes
those funds available to borrowers

franchise the situation where a business sells the rights to distribute its products under its name to other
individuals or businesses

franchisee the individual or organisation that purchases a franchise

franchisor an individual or organisation that grants the right to use a franchise

gender segregation the division of males and females into separate groupings

Generation Alpha people born from 2010 onwards

Generation X people born between 1965 and 1979

Generation Y people born between 1980 and 1994

Generation Z people born between 1995 and 2009

globalisation the process of interacting with markets in other countries around the world, as part of an
integrated global economic system

household sector a term used by economists to refer to the total of all consumers in the economy

human resource management the process of managing the people who work within an organisation

human resources the people who work within an organisation

imported goods and services purchased by local consumers from overseas businesses

industries the way that different parts of the economy are grouped, for example, manufacturing, mining etc.

inflation a general rise in prices across all sectors of the economy

infrastructure the total of all the means of transport and communication within an economy, including the
roads, railways, ports, airports, power lines, pipes and wires that enable people, goods, services, water,
energy and information to move about efficiently

inputs those things that contribute to the production process

interest a charge made for the use of money that has been deposited or borrowed

investment the direction of money into the purchase of equipment or premises for the establishment of a
new business, or the expansion of an existing business

labour the human skills and effort required to produce goods and services

labour force people aged 15 and over who are able to work and are either employed or unemployed

labour market the availability and the ability of workers to work and for employers to hire them

lay-by an agreement by which the customer pays a deposit on goods, and the seller holds the goods for an
agreed period of time while the customer pays the balance owing

limited liability where shareholders cannot lose more than their investment in the event of the failure of the
business

mandatory standards compulsory legal minimum standards that must be observed by a supplier of goods
or services

minimum wage the legally binding minimum that must be paid to any employee over the age of 21 years

mortgage loan a loan advanced to allow a person to buy a house or other property, with the property itself
as security for the loan. This means the bank or other lender can take possession of the property if the
borrower fails to make the regular payments.

offshoring moving certain work processes to be performed overseas

outsourcing contracting a person or people outside an organisation to perform certain work tasks (that
previously might have been performed by workers within the organisation)

partnership a business owned and operated by two or more people

percentage mark-up a fixed percentage increase to the price paid by a business for goods, to determine
the selling price of those goods

primary an industry that produces raw materials, e.g. farming, mining, forestry

primary production the production of crops, livestock or other basic materials which may then be used by
other branches of industry

privatised to sell a government-owned provider of goods or services to private investors

producers individuals and businesses involved in the production of goods and services

product development the creation of products with new or different characteristics that offer new or
additional benefits to customers
profit what remains after all business expenses have been deducted from the money that has been
collected from selling goods or services

quaternary service industries involved in the processing and transfer of information and knowledge, e.g. IT
consultants, education services

quinary domestic service providers, e.g. cleaning, childcare, home maintenance

redundant a situation in which a job is no longer required to be performed by anyone; this may be as a
result of the reorganisation of a business, the introduction of new technology or a decline in business sales
or production

retrenching losing one’s job as a result of the position being made redundant

secondary industries industry involved in the processing of primary resources to manufacture other goods

secondary industry involved in the processing of primary resources to manufacture other goods

shareholders the part-owners of a corporation

sole proprietorship a business that is owned and operated by one person

target market a group of customers with similar characteristics towards which a business has decided to
aim its marketing efforts and its products

tariffs a tax on goods imported into the country from overseas

tertiary industry that involves the provision of services to others, e.g. doctors, accountants, retailers

transaction any commercial or business exchange of goods or services for money

trust a business created to hold property or assets for the benefit of another person or a group of people

trustee a person or company that holds property or assets for the benefit of another

unemployment benefits welfare payments by government to people who are unemployed and looking for
work. Such payments in Australia are generally known as the Newstart Allowance.

unlimited liability where a business owner is personally responsible for all the debts of their business

voluntary standards standards that suppliers agree to comply with that are not compulsory or legally
enforceable

work human labour which can be paid or unpaid including voluntary labour

work–life balance a feeling of having an appropriate balance between work and non-working time and
activities