Launching A Coffee Shop In Australia: Political, Legal, And Economic Factors To Consider

Imagine you are about to open a coffee shop in your local vicinity. How do the broader regulatory and economic forces impact on your decision making? Make sure you identify one key piece of legislation (eg law, by-law, statute, Act, regulation, ordinance) from each tier of government (local, state and federal). Identify 3 key economic concepts and how they are relevant to your new venture.
 

Coffee Culture in Australia

In Australia it is like “No Coffee No Work”. Coffee is the global commodity and the coffee shops culture are emerging across the world. The new coffee shop consists different flavours of coffee beans as the country is the largest consumer of coffee with vast consumer. Australia is well-known for “the coffee capital” opined by Perfect Daily Grind. Australia is elevated to maintain their own coffee flavour in coffee shop their own history, literature, culture which has been affected by the globalisation of goods and the people across the world.

Launching a new coffee shop in the local territory of Australia seeks the macro business environmental analysis of the business market. The macro business analysis incorporates the political, legal and economic factors. The essay infers adequate information on Australian market to take proper strategic analysis and decision for the company. The political factors of the country help to identify the possible issues related to the rules, regulation, norms of the government to be followed by the business in order to not get penalized by the government. The business need to follow the taxation policy while launching the new coffee shop.

The Legal and Political factors, the external business factors which impacts the business when opening the coffee shop in the local area- Australia under the parliamentary democracy “the Commonwealth of Australia is federal constitutional monarchy” (Beatty et al. 2018). The trading agreement of the country’s government affects the taxation policy which must be taken into account for the new entries in the market. When considering a country like Australia, it is a democratic capitalism in which the state interferes in the economy through many responsibilities. Australia has a secure business environment with transparent tax and legal system (De Cilva 2018).

The three tiers of government federal parliament, the territory parliament and the local council also plays a vital role in influencing the business. The federal, territory and local parliament laws act as a shield to the business, the business man and the customer from practicing any unfair trading (Gruber 2017). The rules and regulations enforced by law helps to business to operate in fair, competitive way of trading that confirms that the customer are protected and are informed with adequate and proper information.

The laws which is required while launching the new coffee shop.

-Registration Business Name

-Business Permits and Licensing

-Business Regulation and Business Laws

-Federal Taxes

Political Factors to Consider

-State and Local Taxes

The Federal Parliament- The federal government has the rightful authority to enforce law on postal service, defence, taxation system, immigration, foreign trading, immigration, and communication. The federal parliament concerns for lifting money by assembling tax on goods and services, company profits and incomes (Hamilton and Webster 2018).

Registration business name is the first step while launching a new business. According to the “Business Names Registration Act 2011” a company and business needs to register their name, following the registration the business will attain “Australian Business Number” and “Tax File Number”. These enables the business to get license and permits to make further proceeds of the business. The new system enabled the business name registration cheaper, easier and efficient. There are many restrictions while registration of the business names-

The name is similar or even merely identical, a hitherto registered business name cannot be registered again, if the word is offensive like (Anzac) and if the ministers declare the business name as an unacceptable name. Therefore, the coffee shop needs to avoid the above mentioned points in order to register its business name. 

When launching the coffee shop, the trading system and the taxation policy must be considered. The government of Australia are framed with open and consultative business manner policies which results in transparent and foreseeable policy making process, these policies make convenient approach towards initiating the new business and proceeding further in the local vicinity. It is required for the business to consider the company tax, goods and service tax, payroll tax and capital gain tax. It is also observed that the business groups are good funded and possess proactive lobbying groups which is influenced by the government to give the new initiators a good opportunity to give emphasis on the environmental and social activism.

Understanding the intellectual property of Australia, the laws are designed to protect the business from frauds and unfair practices by giving the business their legal rights the intellectual property includes trademarks, designs, patents, copyrights and secret process.  The Consumer Law in Australia puts a great impact on the Australian business, and their business strategy. The Australian Consumer Law{ACL) aims to protect the customers from the unfair practices practised by the business and it relates with the Australian Competition and Consumer Commission to enforce and control the laws and regulation related to consumer laws (Gray et al. 2016).

The State parliament laws that is being enforced within the state for the things which include shops, railways, electricity, mining, agriculture, hospital, roads, railways, restaurant, school and water. Tax is raised by the state parliament and half of the tax is received by the state government from the federal government. It is the concern of the state government in regards to the new construction of buildings which are built within the local area hence rightful documentation is required for the coffee business.

Legal Environment for New Coffee Shops

The Local council of Australia deals for maintaining the community requirements such as town planning, public facilities and waste. The local government power is in the hands of the state parliament (Smales 2015). Therefore it is important for the coffee shop to maintain the law according to the local government.

The Economic factors which influence the new entries in the local market are-

Interest Rate

Inflation Rate

Trade

Elasticity

Supply and demand

Interest Rate- The interest rate of Australia is found to be low which supports the Australian economy. Therefore when the interest rate is low it attracts the business in the local market. The below mentioned graph shows the decreasing interest rate in Australia from 2018 to 2019.

 

Source: (Trading Economics, Australia Bureau of Statistics)

Inflation rate- It is noted according to the Australian committee that the inflation rate remains low that is 1.8% compared to previous year that is 2.1% and stable and it is highly expected that it will increase within the upcoming years. It is also estimated that the economy will rise by 3% in 2019 it is due to the support coming from the business investment spending vastly on the infrastructure and employment (Graedel et al. 2019). Hence according to the inflation rate analysis it is found that there is a good scope for the new entries that the new coffee shop to get launched in the market.

 

Source: (Trading Economics, Australia Bureau of Statistics)

Trade- In Australia the trading is observed to be quiet risky due to the low interest rate it tends to repel the foreign investments, which decreases the value and demand for the home country currency.

Elasticity- Coffee is an elastic commodity as there is a close alternative for coffee that is tea hence the probability of shifting from coffee to tea is high if the price of coffee increase. It is observed that the price of the coffee is inflating in Australia specially noted by Starbucks. It has also been observed despite of increase in the price level of coffee the demand and supply of coffee is high (Rhoades and Smart 2018). There are considerably many fans of coffee in Australia it is due to the scientific pros of coffee according to the reports.

Supply and Demand- According to survey of Australian Report it is found that twenty-third quarter of Australian population have one or more cup of coffee each day. The fan base of coffee is more as 28% of Australian population drink coffee three times a day (Phillips and Joseph 2017). Henceforth it is observed that the supply and demand of coffee is more. The coffee shop has better scope to launch its business.

Conclusion

Therefore it is inferred from the above analysis that the political, legal and economic factors provides the coffee shop has a good opportunity to launch its business in local vicinity and the business is required to follow some laws and regulation to sustain in the market as well as due to the high consumption of coffee in Australia the market supports the new café shop to underpin its business. The legal and political laws and norms will help the coffee shop to avoid illegal and unethical practices during the business. The three tier of government helps to acquire the legal support for the running business.  

Reference

Beatty, J.F., Samuelson, S.S. and Abril, P.S., 2018. Business law and the legal environment. Cengage Learning.

De Silva, A., Glover, J., Narayanan, V., Nguyen, T. and Westberg, K., 2018. Current issues with trusts and the tax system.

Graedel, T.E., Reck, B.K., Ciacci, L. and Passarini, F., 2019. On the Spatial Dimension of the Circular Economy. Resources, 8(1), p.32.

Gray, S., Harymawan, I. and Nowland, J., 2016. Political and government connections on corporate boards in Australia: Good for business?. Australian Journal of Management, 41(1), pp.3-26.

Gruber, B.B.S., 2017. LEGAL FRAMEWORKS FOR WORLD HERITAGE AND HUMAN RIGHTS IN AUSTRALIA. World Heritage and Human Rights: Lessons from the Asia-Pacific and global arena.

Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University Press.

Phillips, B. and Joseph, C., 2017. Regional housing supply and demand in Australia. Centre for Social Research & Methods. Canberra: Australian National University.

Rhoades, G. and Smart, D., 2018. The political economy of entrepreneurial culture in higher education: Policies toward foreign students in Australia and the United States. In The Social Role of Higher Education (pp. 125-160). Routledge.

Scott, C., 2018. Enforcing consumer protection laws. In Handbook of Research on International Consumer Law, Second Edition. Edward Elgar Publishing.

Smales, L.A., 2015. Better the devil you know: The influence of political incumbency on Australian financial market uncertainty. Research in International Business and Finance, 33, pp.59-74.