ASSESSMENT TASK 2: Business Study Report Aligned subject learning outcomes • critically evaluate the models and the likely effectiveness of different policy/management interventions in a range of different socio-political contexts • apply a range of different models to evaluate the use of different types of natural resources and how they help identify problems that are, or are not, likely to arise in their management • synthesise the models to predict whether the use of different resources is likely to be sustainable, and evaluate management/policy interventions that seek to ameliorate any potential problems Aligned professional standards/ competencies For Master of Professional Accounting (MPA) studies, the successful completion of LB5229, Economics for a Sustainable World, is essential to fulfil the academic entry requirements for the professional accounting bodies Certified Practising Accountants (CPA) Australia and the Institute of Chartered Accountants Australia (ICAA). Group or individual Individual Weighting 15%, less than 3000 words Due date 9.00am, 15 May, 2017 Assessment 2 - Business Report Produce a business study report. The report needs to contain the following four parts plus a formal introduction to your report and a conclusion. 1) Introduction to the business and general business environment Select an Australian business from the list of ASX Companies. Provide an overall description of the business and the competitive environment in which it operates. You may provide information about the business as suggested below plus any other information peculiar to the business you choose. a. Name and location of the business, the type of business (e.g. retail, manufacturing); b. What the business produces or sells; c. Who the main customers are (e.g. other businesses, government departments, young girls, older men); d. Where most of the customers are located (e.g. in Townsville, Brisbane, or on the internet); e. Who the main competitors are (i.e. those producing similar products, and selling to similar customer base); f. Where the competitors are located; and g. The (approximate) market share of key competitors including your business (e.g. ’your’ businesses has approximately 10% of the market, your main competitor has approximately 50% of the market, and many other small businesses share the remaining 40% of the market). Given the above information, comment on whether or not you think the competitive environment in which the firm operates is likely to be closer to (a) perfect competition; or (b) monopoly. Comment also on the number of ‘close substitutes’ for your business’ products, and the cost of your product relative to ‘average’ income of your customers. Does this mean that the demand curve facing the firm is likely to be relatively elastic or relatively inelastic? What does this imply about the ability of the firm to ‘mark up’ its price above marginal cost? 2) Production costs and scale Provide a description of the required factors of production, grouping them according to whether the factors of production are: a. Fixed and hence unlikely to vary much according to the quantity of goods produced or sold; or b. Variable and hence likely to increase with increased production or sales. Use the above information to comment on the likely overall cost structure of your business. For example: Are fixed costs large or small relative to variable costs? Does this mean that the firm’s ‘optimal’ size is likely to be small, medium or large? 3) Macro business environment Provide a description of the macroeconomic environment in which the business operates noting: a. The overall ‘stability’ of the political system/government of the country in which the business operates. b. The general level of inflation, unemployment and ‘average’ interest rate of the country in which the business is physically located (and also the countries in which most customers live if different from the location of the firm). Discuss any recent changes in those variables. Does the economy seem to be in a recession, boom or otherwise? c. If ‘your’ business exports its products to other countries, provide some information about the (currency) exchange rate, discussing its current level, and recent changes in it. Use the above information to comment on whether or not the overall macroeconomic conditions faced by the firm are likely to become more or less favourable over the coming years. In this part you should consider such things as: • Whether your main products are likely to be ‘normal’ or ‘inferior’ and hence whether demand is likely to rise or fall during recessions and thus whether the economic climate of the countries in which most of your customers live is likely to reflect well or poorly on your sales. • Whether you are likely to face problems getting access to key factors of production (e.g. are there skills shortages?), and whether this is likely to affect the business’ future operating costs. • If your business exports its products or imports factors of production…whether recent trends in exchange rates are likely to be good or bad for costs and/or revenues. 4) Sustainability practice of the business a. Does the production process of the business generate any positive or negative externalities? If negative, has the government (or anyone else) put in place any measures to mitigate? What is done to mitigate by the business? If positive, what is done to take advantage of it? b. Does the consumption of the good produced by the business generate any positive or negative externalities? If negative, has the government (or anyone else) put in place any measures to mitigate? What is done to mitigate by the business? If positive, what is done to take advantage of it? Use the information from above to comment on how the sustainability practice by this business and other businesses in the same industry would affect their long-term business viability. ASSESSMENT TASK 2: CRITERIA SHEET In this assessment, students are required to demonstrate their ability to apply economic principles learnt in this subject to analysing real-world business operations and evaluate how their long-run business viability may be affected by the sustainability practice they adopt in their business operations. The report will be assessed using the rubrics shown in Section 6 of the Subject Outline. Section 6. Rubric Rubric Grading Criteria for Business Report (20% of LB5229 Economics for a Sustainable World) Area of Assessment / Criteria of Marking Introduction to the report (5%) Introduces the reader to the report about what the report is about and what they can expect to get out of the report Very clear, stimulates the reader to read the report Part I. The business and its competitive environment (20%) Provides an overall description of the business and the competitive environment in which it operates SLO 1,2 and 3; K2, S2 and A2 Business description (name, location, business type, and products) (2.5%) Very clearly Identification of customers and competitors (who and where) (2.5%) Very clearly identified Estimation of market share (5%) Very convincing Identification of market structure and justification (10%) Correctly identified and very clearly justified Part II. Micro analysis (15%) Examines the required factors of production and analyses its cost structure SLO 1,2 and 3; K2, S2 and A2 Identification of required factors of production (5%) Very clearly identified Classification and analysis of fixed and variable costs (5%) Correct and very clear Cost structure analysis (5%) Very clearly Part III. Macro analysis (30%) Analyses the macroeconomic environment in which the business operates and discusses how it should make use of the environment for business success SLO 1,2 and 3; K2, S2 and A2 Description and analysis of the macroeconomic environment and its changes (political stability, exchange rate, inflation, interest rate, unemployment, booming or otherwise) (15%) Very clearly Prediction and analysis of likely changes in the macro environment and implications on the business (15%) Very sensible, clear, and adequately backed up Part IV. Sustainability practice (15%) Evaluates the impact of business operations on the environment SLO 1,2 and 3; K2, S2 and A2 Identification of externalities and mitigating measures (production) (5%) Correctly identified and very clearly justified Identification of externalities and mitigating measures (consumption) (5%) Correctly identified and very clearly justified Evaluation of the impact on long-term business viability (5%) Correctly evaluated and very clearly justified Conclusion of the report (5%) Concludes the report succinctly with business implications clearly spelled out Conclusions are clearly based on the report, clear, succinct; AND implications drawn are very clear, relevant, and implementable Quality of writing, overall (10%) Grammar, spelling, referencing, and layout Few mistakes and the layout is professional