In this assessment, I want to set up a business in Australia related to food, technology, or any business and need to consider all economic factors, legal, and impact and include a diagram too.
Read the instructions carefully and one sample is attached.
A2Sample_1999012105.pdf
Instructions.pdf
Table of Contents
INTRODUCTION…………………………………………………………………………………………………….. 1
BUSINESS ENVIRONMENT ANALYSIS …………………………………………………………………. 1
LEGAL CONSIDERATIONS ………………………………………………………………………………………….. 1
Federal Legislation ………………………………………………………………………………………. 1
State Legislation…………………………………………………………………………………………… 1
Local Legislation …………………………………………………………………………………………. 2
ECONOMIC CONSIDERATIONS …………………………………………………………………………………….. 2
Elasticity …………………………………………………………………………………………………….. 2
Profit Maximization ……………………………………………………………………………………… 3
ETHICAL CONSIDERATIONS ……………………………………………………………………………………….. 4
Seafood Labelling ………………………………………………………………………………………… 4
Ethical sourcing …………………………………………………………………………………………… 5
CONCLUSION ………………………………………………………………………………………………………… 5
RECOMMENDATIONS …………………………………………………………………………………………… 5
Legal Recommendation …………………………………………………………………………………. 6
Economic Recommendation …………………………………………………………………………… 6
Ethical Recommendation ………………………………………………………………………………. 6
REFERENCES …………………………………………………………………………………………………………. 7
1
INTRODUCTION
Australian seafood industry is valued over $3 billion and envisaged to expand by 8% during
2022-2023 (ABARES, 2022). Similarly, Australia’s seafood consumption stood at 356 kt
(kilotons) in 2021 (ABARES, 2021). With a coastline of approximately 34,000 kilometres
(Geoscience Australia, 2023), Australia hosts multifarious seafood species. The strategic
objective of this analytical report is to provide detailed and rigorous scrutiny of legal, economic
and ethical considerations for establishing and operating a successful and sustainable domestic
seafood retail business in Strathfield, NSW. While there are substantial sustainability and safety
regulations, this report will emphasize on the analysis of critical industry environments and
provide recommendations for retail seafood business.
BUSINESS ENVIRONMENT ANALYSIS
Business macroenvironment subsumes social, economic, political, legal and technological
environment (Yüksel, 2012), however, this report analyses legal, economical and ethical
environment only.
Legal Considerations
• Federal Legislation
– Food Standards Australia New Zealand Act 1991 ensures safety and high-quality
of seafood by mandating food standards, labelling regulations and statutory
measures, for seafood business along with integration of HACCP system for
minimizing risk of food-borne illnesses. Thus, the client must abide by the Act to
ensure business standing, profitability and safety of supply chain and prevent legal
consequences and punishments.
– The Australian Fish Names Standard (AFNS) standardizes fish and seafood product
names to mitigate confusion in identifying seafood and facilitate informed decision
making. Failure to adhere to AFNS will imply transgression of Australian
Consumer Law, Trade Descriptions Act and other fisheries regulations and further
lead to grave legal fines and sanctions.
• State Legislation
2
– Work Health and Safety Act 2011 (NSW) mandates risk assessment, safe work
practices and reporting measures to minimize risks associated with handling,
processing and transportation of seafood. Non-compliance can exacerbate
workplace hazards and occupational injuries, ultimately attracting significant legal
ramifications such as fines, prosecution, imprisonment, etc. for business.
– Protection of the Environment Operations Act 1997 (NSW) enforces environmental
standards to regulate waste management practices of business. The act entails
employment of measures for eco-friendly packaging, minimizing energy
consumption and reducing wastewater discharge. While adherence to the these
increases administrative burdens, it also enhances business reputation and
profitability. Adversely, non-compliance might invite legal consequences from
hefty fines to imprisonment.
• Local Legislation
– Strathfield Council monitors food safety through enforcement of Food Act and
Food Safety Standards. The legislation regulates proper and hygienic handling of
seafood to minimize the risk of food poisoning. Similarly, it requires business to
routinely sterilize and sanitize premises, equipment and appliances used during
business.
– Waste Management Regulations ensure businesses operate in a responsible manner
and manage their waste effectively. The key aspects include waste minimization,
segregation of waste into organic, recyclable and hazardous, proper disposal of
waste and record keeping of waste such as waste audits. Client must acquaint
oneself with these to prevent legal ramifications and sanctions.
Economic Considerations
The seafood industry in Australia is characterized by existence of many small sellers, product
differentiation and low entry and exit barrier, known as monopolistic competition (Krugman,
1979). Hence, this report assesses Elasticity and Profit Maximization as the crucial economic
frameworks for seafood retail business.
• Elasticity
3
Price elasticity, also referred as price sensitivity (Tellis, 1988), is the magnitude of
change in quantity demanded ergo change in price (Andreyeva et al., 2010). In context
of seafood, while demand for premium products such as tuna, lobster, swordfish, etc.
are highly elastic, demand for common species like prawns, fish fillets are relatively
elastic (Pascoe et al., 2021). Thus, elasticity can be better illustrated through the
following diagram.
Diagram A exhibits highly elastic demand, whereby a minor increase in price (P to P1)
significantly reduces demand (Q to Q1) and a slight decrease in price (P to P2) causes
substantial increase in demand (Q to Q2). Contrastingly, Diagram B illustrates slightly
elastic demand where significant increase in price from P to P1 and considerable
decrease in price from P to P2 shows no eminent change in demand.
While revenue is a direct function of price and quantity demanded, price and demand
exhibit an inverse relationship. Consequently, increasing price for maximizing profit
will likely reduce the subsequent demand and thus, adversely impact the overall
revenue.
Therefore, price elasticity provides crucial insights into pricing strategies and gain
competitive edge. If price elasticity is low, client may increase the price when demand
is high to enhance revenues. Similarly, if price elasticity is high, business may lower
the price when demand is low to multiply demand and boost revenue.
• Profit Maximization
In monopolistic competition, profit can be maximized by producing the level of output
where Marginal Cost (MC) equals Marginal Revenue (MR) as indicated by level Q and
Diagram A Diagram B
4
charging a price at corresponding level P as price exceeds Average Total Cost (ATC).
Producing beyond level Q will cause ATC to exceed market price and business will
incur loss ending up with only two options; either to return the production quantity at
level Q or exit the industry.
Although client can earn economic profit in short run, business can only earn normal
profit in the long run as more firms will enter the industry seeing the potential to earn
supernormal profits. Similarly, business can never achieve allocative efficiency (B –
Price equals MC) or productive efficiency (C – minimum ATC) as expanding
production beyond Q by utilizing excess capacity would mean selling produced
quantity at a lower price than production cost.
Ethical Considerations
• Seafood Labelling
Client should ensure seafood is properly labelled and provides complete as well as
accurate information about country of origin, production methods and other
fundamental information about product (Alfnes et al., 2018). Seafood fraud such as
mislabelling of seafood has been of rising concern (Reilly, 2018) as it infringes
consumer right to information. Client should embed transparent practices and refrain
from misleading consumers through deceptive practices such as labelling cheaper
species of fish expensively, providing wrongful information about allergens, origin, or
constituents, making false claims about product such as ‘sustainably caught’ or ‘wild-
Short Run Equilibrium Long Run Equilibrium
5
caught’ or omitting crucial information about presence of harmful substances in the
seafood (Luque & Donlan, 2019).
• Ethical sourcing
Client should assess the ethicality of suppliers and only take products from traceable
sources. Traceability ensures that the seafood has been ethically harvested, processed
and safely transported under optimal conditions with compliance to regulatory
requirements. Moreover, business should ensure that the seafood is sourced from
certified sustainable fisheries (Christenson et al., 2017) such as those certified by
Marine Stewardship Council or Aquaculture Stewardship Council. Similarly, client
should regularly assess suppliers for their adherence to regulatory requirements such as
disengagement of suppliers in overfishing or other unsustainable practices,
prioritization of biodiversity conservation and minimization of environmental impacts
(Fleming et al., 2014). This helps to build consumer trust, maintain loyalty and promote
long-term viability of the business (Castaldo et al., 2009). Further to this, client should
evaluate if suppliers meet ethical standards in terms of labour safety, workplace safety
and so on.
CONCLUSION
In conclusion, this report assesses legal, economic and ethical landscapes establishing and
operating a retail business for domestically produced seafood in Strathfield, NSW, Australia.
The legal environment entails a wide spectrum of federal, state and local legislations which
rigorously administers food standards and safety, workplace safety, environmental impact and
waste management. Although, these regulations are arduous to comprehend, client should
comply with these to prevent litigation and other legal consequences. Likewise, economic
frameworks such as elasticity and profit maximization aids decision making about pricing
strategies and maximizing business profit. Furthermore, ethical concerns uphold sustainable
practices through transparency in business operations to prevent violations of consumer rights.
RECOMMENDATIONS
While easy access to fresh seafood is the major strength of business, fierce competition in the
industry is a significant weakness to a new business. Similarly, industry bears huge potential
for growth such as developing an online marketplace, but the threats from imported seafood
6
sold at a cheaper rate (Schrobback et al., 2022) is significant. Thus, leveraging strengths to
mitigate threats and capitalizing opportunities by strategizing weakness requires compliance
with rigorous standards, relevant legislations, prominent economic frameworks and
fundamental ethical considerations.
• Legal Recommendation
Apart from basic requirements such as getting a license, business registration, etc.,
client should also abide by the federal, state and local legislations and other regulatory
watchdogs such as Fisheries Research Development Corporation, Department of
Agriculture, Fisheries and Forestry, Seafood Industry Australia, etc.
• Economic Recommendation
Although elasticity and price maximization uphold the best practices for profitability,
client should also consider income elasticity and cross elasticity while making pricing
strategies and production decisions.
• Ethical Recommendation
Client should not engage in misleading or unfair trade practices and maintain a check
on suppliers to ensure ethical supply chain. Business should demonstrate commitment
to sustainable and environment friendly practices to develop a positive and trustworthy
brand image.
REFERENCES
ABARES. (2021). Fisheries and Aquaculture Statistics 2021. Department of Agriculture,
Fisheries and Forestry. Retrieved 29 Apr from
https://www.agriculture.gov.au/abares/research-topics/fisheries/fisheries-and-
aquaculture-statistics
ABARES. (2022). Australian Fisheries and Aquaculture Outlook 2023. Department of
Agriculture, Fisheries and Forestry. Retrieved 29 Apr from
https://www.agriculture.gov.au/abares/research-topics/fisheries/fisheries-
economics/fisheries-forecasts
Alfnes, F., Chen, X., & Rickertsen, K. (2018). Labeling farmed seafood: A review. Aquaculture
Economics & Management, 22(1), 1-26.
Andreyeva, T., Long, M. W., & Brownell, K. D. (2010). The impact of food prices on
consumption: a systematic review of research on the price elasticity of demand for food.
American journal of public health, 100(2), 216-222.
Castaldo, S., Perrini, F., Misani, N., & Tencati, A. (2009). The missing link between corporate
social responsibility and consumer trust: The case of fair trade products. Journal of
business ethics, 84, 1-15.
Fleming, A., Hobday, A. J., Farmery, A., van Putten, E. I., Pecl, G. T., Green, B. S., & Lim-
Camacho, L. (2014). Climate change risks and adaptation options across Australian
seafood supply chains–A preliminary assessment. Climate Risk Management, 1, 39-50.
Food Standards Australia New Zealand Act 1991.
https://www.legislation.gov.au/Series/C2004A04193
Geoscience Australia. (2023). Australia’s Coasts and Estuaries. Retrieved 29 Apr from
https://www.ga.gov.au/scientific-topics/marine/coasts-
estuaries#:~:text=The%20Australian%20coastline%20extends%20approximately,incl
udes%20more%20than%201000%20estuaries.
Krugman, P. R. (1979). Increasing returns, monopolistic competition, and international trade.
Journal of international Economics, 9(4), 469-479.
https://www.agriculture.gov.au/abares/research-topics/fisheries/fisheries-and-aquaculture-statistics
https://www.agriculture.gov.au/abares/research-topics/fisheries/fisheries-and-aquaculture-statistics
https://www.agriculture.gov.au/abares/research-topics/fisheries/fisheries-economics/fisheries-forecasts
https://www.agriculture.gov.au/abares/research-topics/fisheries/fisheries-economics/fisheries-forecasts
https://www.ga.gov.au/scientific-topics/marine/coasts-estuaries#:~:text=The%20Australian%20coastline%20extends%20approximately,includes%20more%20than%201000%20estuaries
https://www.ga.gov.au/scientific-topics/marine/coasts-estuaries#:~:text=The%20Australian%20coastline%20extends%20approximately,includes%20more%20than%201000%20estuaries
https://www.ga.gov.au/scientific-topics/marine/coasts-estuaries#:~:text=The%20Australian%20coastline%20extends%20approximately,includes%20more%20than%201000%20estuaries
Luque, G. M., & Donlan, C. J. (2019). The characterization of seafood mislabeling: A global
meta-analysis. Biological Conservation, 236, 556-570.
Pascoe, S., Schobback, P., & Hoshino, E. (2021). How demand analysis can help improve
fisheries and aquaculture performance. In: CSIRO. Canberra: FRDC.
Protection of the Environment Operations Act 1997 (NSW).
https://legislation.nsw.gov.au/view/html/inforce/current/act-1997-156
Reilly, A. (2018). Overview of food fraud in the fisheries sector. FAO Fisheries and
Aquaculture Circular(C1165), I-21.
Schrobback, P., Hoshino, E., Pascoe, S., & Curtotti, R. (2022). Market integration of domestic
and imported seafood: Insights from the Sydney Fish Market. Australian Journal of
Agricultural and Resource Economics, 66(1), 216-236.
Tellis, G. J. (1988). The price elasticity of selective demand: A meta-analysis of econometric
models of sales. Journal of marketing research, 25(4), 331-341.
The Australian Fish Names Standard. https://www.frdc.com.au/sites/default/files/2023-
02/as_5300-2019-final_approved_pdf_download_version.pdf
Work Health and Safety Act 2011 (NSW).
https://legislation.nsw.gov.au/view/html/inforce/current/act-2011-010
Yüksel, I. (2012). Developing a multi-criteria decision making model for PESTEL analysis.
International Journal of Business and Management, 7(24), 52.
INTRODUCTION
BUSINESS ENVIRONMENT ANALYSIS
Legal Considerations
• Federal Legislation
• State Legislation
• Local Legislation
Economic Considerations
• Elasticity
• Profit Maximization
Ethical Considerations
• Seafood Labelling
• Ethical sourcing
CONCLUSION
RECOMMENDATIONS
• Legal Recommendation
• Economic Recommendation
• Ethical Recommendation
REFERENCES
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