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The Advantages and Disadvantages of Starting a New Business

The External Factors that have an Influence on BusinessThe Advantages and Disadvantages of Starting a New Business

The Advantages and Disadvantages of Starting a New Business explains that When evaluating the major impact of external factors on any organization or business which can affect the ability of the business to achieve its important goals and objectives, using the PEST acronym will be helpful to group these external influences. These include the Political factors, Economic factors, Social factors, and Technological factors.

The PEST analysis of Wal-Mart:

Political Factor: Wal-Mart presently operates globally. Wal-Mart has to follow some rules and regulation stated in any of the country they are operating. For example, Wal-Mart is facing big challenges from the Chinese government and they are forced to acquire their operation with local firm. Some of the political conditions include the economic condition, political instability, currency regulation, tax system, and intellectual property rights. Therefore, Wal-Mart international operations have a larger impact on the law and regulation of their host countries just like India.

Economic Factor: The economic condition of host countries has a higher impact on business organization. Lately, Wal-Mart is facing high currency devaluation and inflation rate. For example, in the United States, Wal-Mart faces challenge if higher fuel and energy cost and high interest rate, higher level of unemployment, higher tax rates, and unavailability of consumer credit.

Social Factor: The local culture of host countries is a responsibility of Wal-Mart’s international operation. This should include age distribution, population growth, emphasis on safety, career attitude. Therefore, the trend of every Wal-Mart’s host country affects their products and services’ demand.

Technological factor: In recent times, technology has impacted businesses. This includes environment and ecological aspects. The investment in research and development activities, technology incentives, automation and response to the rate of technological change to remain in the competitive market is important. Wal-Mart spend huge amount of money for the advanced technology upgrade program.

The PEST analysis of Ford:

Political Factor: The political issues facing Ford should be addressed as an external influence. This is because the government has a large impact on the organization’s remote or the macro – environment. Basically, these factors include, the support provided by the government for technology innovation, the increasing international trade agreements, and the increasing effort by the government for infrastructure in developing countries. Based on these incentives given by the governments, there are demands for vehicles in the majority of this high-growth developing countries, thus giving Ford Motor Company the privileged to grow internationally. This is a positive impact from the political external factors.

Economic Factors: Ford monitors the changing and unstable economic situations. And thus, some of these factors include the growth of the United States economy, the increasing growth rate of the developing markets, and the threat of the strengthening U. S. Dollar. This threat reduced the profit margins and level of attractiveness of Ford’s products, based on the fact that many of the organization’s raw materials and automotive parts are sourced from the United States. Ford is left with no options that to improve business efficiencies to increase the opportunities in the foreign markets.

Social Factors: Factors that contribute to this aspect of this analysis include the increasing demand for electric and hybrid automobile, which is an opportunity, moderate attitude about the customer service delivery, and the increasing wealth gap which is both an opportunity and a threat to the organization. This is a threat to Ford based on emphasis on product innovation to satisfy customer preferences and also address the sociocultural factors in this business.

Technological Factor: Ford has been opportune to enjoy the trend and the emergence of the increasing rise in the use of mobile computing for its innovation, the increasing use of online fulfillment service in the improvement of its performance, and a threat of limited network of alternative fuel stations. This is because of the company’s potential growth in the provision of alternative-fuel vehicles leading to a limitation because of limited alternative fuel stations. Thus, Ford has to improve on its enhancement to ensure it remains in the competition despite the pending challenges.

Factors of Production for Surfboard Manufacture

To achieve the manufacture of surfboards, there is the need to know about surfboard products, where to produce the surfboards, how they will be produced, and who will produce them, then coordinate the resources and process required. This is known as the factors of production. This includes land, labor, capital, and entrepreneur.


This is where the production process has to be taken place, all resources needed, and energy to use the tools for the production of the surfboards have to be used here. An ideal location for surfing must be included in the planning of the land choice.


These are the employees to carry out the whole processes of the surfboard manufacture. Hiring the locals in the closest community where the land is situated will help carry out the production processes on good budget and in a timely manner.


This is the funds or resources needed to start the processes of the surfboard organization. Since the end result of the business plan is to make profit, it is necessary to have money. Therefore, sourcing for funds from other funding organization is necessary.


This is the one who had gathered the skill required to bring all other factors of production to achieve the success of the surfboard company. Without me as the entrepreneur, the company cannot exist.

Types of Competition

These include perfect, oligopoly, monopolistic, and monopoly competitions.

Perfect Competition is when there exist many consumers purchasing standardized product from very many small businesses. For example, a commercial butcher brings his meat to the local market, he doesn’t have so much control over the price given, and has no choice than to accept the going rate. Also, small bars and restaurants are another example.

Oligopoly competition occurs when a few sellers a large portion of all the goods sold in the market. For example, the airline industry, where American Airline declares a fare decrease and other Airlines do likewise. Another example is the banking industry or telecommunication companies.

Monopolistic competition is when there are many sellers selling unidentical products. Their products differ a little, but are felt to differ, even with similar purpose. For example, if someone prefers Fanta over Mirinda, despite the similarity in the products, if there’s a promotional price difference for Mirinda, the person may likely choose Mirinda over Fanta for the time being.

Is Honesty Academic?

Honesty is said to be academic when there is sincerity, truthfulness, and unpretentious behaviors in carrying out academic works based on academic integrity. The principles of academic integrity policy are based on ethical behavior principles and the honor for knowledge as the basis of the academic environment at school.

The behaviors that violate academic integrity include cheating, falsification of data, and plagiarism (either in assignments or in examination misconduct).

Moreover, plagiarism covers copying contents from the assignment of other students, permitting another person to carry out part of, or all an assignment, copying paragraphs, sentences or portions of sentences directly from the Internet or texts without enclosing them in quotation marks or giving a remark that it was copied somewhere. Also, the use developed ideas or concepts, even when they are paraphrased or summarized from texts, Internet, or person without a full acknowledgement of the source is considered as plagiarism. Even when graphic contents, architectural plans, any multimedia works or other forms of intellectual property without giving proper acknowledgment are regarded as plagiarism. However, some acts of plagiarism may arise when there exist the lack of skills in the use of academic conventions for referencing or genuine ignorance of plagiarism. This is regarded as unintentional plagiarism.

Anyone accused of any academic dishonesty is liable to face the procedures and consequences attached to the Student Academic Integrity Policy.

In a case where an incident of academic dishonesty is witnessed, it is wise to advise the victim of such act to desist from such act, else would be reported to those in charge of misconducts.

Ethical Dilemma and Ethical Decision

Ethical dilemma is also called moral dilemmas. This is a situation whereby there is a choice to make between two alternatives, in which none of them resolves the situation at hand in an ethically acceptable fashion. In such circumstance, personal and societal ethical guidelines cannot provide a satisfactory outcome for the person who makes the choice. It is assumed in ethical dilemma that the person making the choice will abide by societal norms, including the religious teachings or the codes of law, so that the choice is ethically impossible. (“YourDictionary, n.d) For example, Fred is a friend to Jeffery and Paul. Jeffery just met and started dating a lady named Lucy. Unknown to Jeffery, Fred saw them at an eatery few days ago and realized Lucy is married to Paul. Fred feels he should tell Paul about this issue, but he was sure to hurt either his friend Paul by not telling him what is going on with his wife, or his friend Lucy. Therefore, he’s left with the confusion of whom to hurt. The question is does he have to remain silent and hope it is not discovered that he knows about it.

Ethical decision is the process of assessing and making a choice among alternatives in such a way that is consistent with ethical principles. When making ethical decisions, perceiving and eliminating any unethical options, and then selecting the most important ethical alternative is reasonable. (“UC San Diego, 2016) For example, a week ago, one of the employees at where Kate works, was placed on suspension because he was suspected to have stolen some goods from the warehouse. Kate’s friend, Adrian told Kate that this employee didn’t steal the goods, but he borrowed some of these items due to some difficulties in his family. Does Kate have to report Adrian or keep it secret?

Ethical lapse

This is referred to the error or mistake in judgment that results in a harmful outcome. Majority of the lapse in ethics doesn’t demonstrate a total lack of integrity, but an oversight or ethical blind spot. Other examples of ethical lapse include, lapse from subjectivity, lapse from attempted tolerance, the authority fallacy, status quo fallacy, and lapse of conscience. (Frenz, 2012)

University of Canberra Stakeholders

UC, as a nonprofit organization offers its stakeholders some benefits, such as participation in local charity events, financial supports to the University students, staff, research, and endowment. And also sponsors many organizations and activities including small community events based on national sports.

Ways firms expand their operations into overseas

Importing: This is referred to as bringing in goods and services into a country from another country for the purpose of selling them. This can help to enhance a firm in the global market. As much as every country is endowed with their own benefits in skills and resources, there are other countries that have more specialization in some resources, in other words, these countries could be rich in natural resources or other resources needed to expand a firm in another country. (“Study.com”)

Exporting: This refers to the direct sale and marketing of goods that domestically produced in a country to another country. This is important because it is a traditional and fully established approach or strategy of reaching foreign markets. In most cases, exporting does not require the goods should be produced in the country the goods are going to, therefore, no investment is necessary for foreign production facilities. Also, most of the related costs with exporting is in the form of marketing expenses. (“QuickMBA, 2010”)

Licensing: This basically allows an organization in a target country use the property of the licensor. This kind of property is intangible, such as production techniques, trademarks, and patents. The license pays a particular amount in exchange for the rights to utilize the intangible good and maybe for technical assistance.

Franchising: This is the pattern of the right to use an organization’s business model and brand for a particular period of time. Many countries, such as Australia and United States have laws that regulate and monitor franchising, with other countries having laws that impact franchising directly or indirectly.

I will prefer to use the importing approach as the CEO of a large company, especially when the company is in a developing country. I would have to import goods from developed countries to enhance the economy of the home country.

Outsourcing to China

With this large number of employees, outsourcing to China for production may not be needed. But, if there’s a need to, then I should outsource my production to China based on the fact that they have more skills, specialization, and readily available technology for my concept of production. This would definitely not hurt the Australian economy because there is still a level of work to be done in my organization, and there will still be increased revenue that will positively affect the Australian economy. Those that would be hurt are some of the employees that are not needed for basic operations that had been outsourced. However, some technical operatives will be needed in case there are technical, maintenance, or emergency issues. The skilled employees will be helped. Basically, I can ensure to enhance the skills of my employees to the level of production occurring in China, so that the business can continue in South Australia. And to also increase the integrity of Australia in the global market, it would be necessary to carry out the production there.


I’m actually at a disadvantage because those other companies have a higher edge of getting the project. But the Section 70.2 cannot be repealed because the law can work in my favor in other favorable conditions and it also helps to maintain a better way to strategize to get a job than bribery.

Multinational Corporation and AIDS

Some multinationals decided to help control AIDS in their workplace because they have realized that if they don’t take it upon themselves, their employees in Asia and Africa will cause them to lose profits and economic progress, which could severely hamper the organization. (“Bloomberg, 2004”)

However, others who had failed to help could assume that many of these countries in Asia and Africa are filled with the unemployed who are voraciously in search for jobs, it’s easier for them to pay some infected workers off for their treatment and get newer ones. Others may not have the full capability to assist. Additionally, some organization may be in a country where they do not have the power to carry out such control on their employees or citizens at large.

The right thing to do is to assist people affected with AIDS, they are human and their extraordinary individual skills that means so much to any organization. Although, some organizations may assume that what if such infected persons were dead, will their organization not still live on? But it is very important to put all necessary ideas together to help militate against AIDS in the workplace and the business. And there are many organizations, such as NGOs and local clinics willing to help companies develop programs on AIDS since it is becoming the major and leading cause of death in their target countries.

For a nation whose government was not willing or can’t control the spread of AIDS, I think it’s better to sensitize them on the need for it. If they are still adamant and not willing, it’s better not to invest heavily in that country and only have a little business operation in that country so that it would be easy to control the few employees available and then move to other countries.

Small Businesses and the Service Producing Sector

Most small businesses are found in the service-producing sector due to the cheap cost of running the business, they also require lowest amount of investment in materials, equipment, resources, and advertisement. Also, the start-up costs of manufacturing business are too high and running such large firm will incur more production costs.

Some small service-producing businesses I patronize include transportation, food service, education, recreation, and accommodation.

The goods-producing sector include industries such as agriculture, construction have includes small businesses such as fishing, forestry, hunting, etc.

Agriculture is what humans can’t do without. Most often, I do business with the fishing industry.

Business Interest


Advantages of Business Ownership Interests

  1. The business owner receives all the profits
  2. The business is easy to start up because there are no filing fees of any sort
  3. Only a few documents are required for the start up
  4. The business owner is free to make his own decisions concerning how the business is to be run


Disadvantages of Business Ownership

  1. The business owner carries the responsibility for all liabilities.
  2. The business owner might not be able to raise the capital at once.
  3. When the owner dies, the business comes to an end in most cases.

The advantages and disadvantages of starting a new business


The advantages of starting a new business

  1. Start-up cost is low
  2. There’s independence of all decisions
  3. The business can be located at the best marketing point


The disadvantages of starting a new business

  1. There is a high commitment in time and energy
  2. The risk is high and success depends on the owner
  3. Profitability many be delayed

The advantages and disadvantages of buying an existing business


  1. The stress of starting a new business has already been done, therefore, business can be run with other plans and procedures.
  2. The turnover of an existing business is immediate.
  3. There are existing customers, contacts, employees, suppliers, and goodwill


  1. The business may need to be improved with resources
  2. There might be a very large amount of money to be invested in.
  3. The business location may be very bad, with low staff morale.

The most appealing of all these is starting my new business. This is because, I would be the one to draft the business plan, procedures, and I know how to put things in place to ensure the business is properly done. Additionally, there is no baggage.

The business I would love to start is a shoe, including sneakers, running shoes, etc purchase and sales store, which would be distributed to major retailers in the state and neighboring states.

References – The Advantages and Disadvantages of Starting a New Business;
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