Executive Summary
The article “Jobs boom wipes out Covid losses” examines the positive dynamics in the labor market recovery. The key takeaway is the reduction in the unemployment rate from 6.3% to 5.8%, with an expectation to lower it to the level below 5%. The other positive tendency discussed is the decrease in the number of people who receive JobSeeker and Youth Allowance payments by 0.3 million. In addition, the article states that 10 jobs were created on February, 8 of which accounted for women that is also beneficial for the current state of affairs. Although the situation is worse than the pre-pandemic one, the labor market’s future perspectives’ expectations are positive.
Introduction
Small and large businesses have been influenced by the lockdown’s consequences. Despite being a negative situation, it resulted in various changes, many of which are potentially beneficial for the contemporary world in general. The instance of a business positively affected by the pandemic is the “picnic boat” one, owned by Alistair Sutherland. He claims that since the second lockdown at Melbourne, followed by summer, his company earned two or three times more than in the previous season. The owner had to hire additional staff to fulfill extra demand, lowing the unemployment rate. This one of many instances shows that new challenges result in opportunities, which eventually may make economics stronger.
Identification and Analysis of Micro Environmental Factors
Every business’ functioning can be examined within the macro and micro environmental levels. There are various factors that influence the mentioned business, and it is possible to evaluate their monetary and non-monetary impact and characterize it as positive or negative ones. It is necessary to outline all of them to provide a comprehensive understanding. Customers, intermediaries, suppliers, the public, and competitors, and parts of the external business environment should be considered during a business examination. The most significant factor in terms of its impact on enterprises is customers. For the mentioned business, customers and individual users, which take boats for personal needs and create 100% of direct income, the enterprise obtains. In current satiation, the number of customers has grown, which shows the positive dynamics of this factor.
Suppliers are the second factor of great importance, and to the business, they are boat providers, which create the cost of initial expenses. Providers of boats influence the safety and experience users will have, so this part of the external business environment should be taken into consideration. Suppliers cause an indirect impact on an enterprise’s income, as the quality of boats provided will influence future financial impact from service providing. Intermediaries, which are the next factor, are marketing services in the described case, and they have non-monetary influence. There is no necessity for the distributors, as the company does not provide products but the service. In addition, the enterprise is a local one, and the flow of consumers is ensured through online advertisement and banners, which make mass media unnecessary.
The next factor is competitors that can only be local ones because of the business’s specificity. Therefore, there are a limited number of companies, which can provide similar services. It is possible to represent successfully an enterprise, showing consumers the difference between offers that create a competitive advantage. In the discussed case, it is likely that some companies did not survive the first lockdown, which increased the demand for boats. Public factor has a moderate impact on the business’s financial flow, mostly due to local ones, such as neighborhood residents. Because of the business’s size, there is only one individual interested in the increase of the company’s income.
Challenges and solutions
There are risks for the discussed business functioning, which can be tracked within the external business environment. There are five forces of competition, two of which influence the enterprise more than others. Rivalry among competitors is considerable in this case, as there is a number of similar businesses, which provide the same service, while technology does not significantly affect the customers’ choice. The second major threat is new entrants, which potentially can offer better opportunities for users. It is possible to choose one of three strategies, which are proactive, reactive, and uncontrollable, to respond to the business environment. Due to the business’s specificity, the more suitable strategy is to watch and react to forces, as this market does not require aggressive actions to stimulate demand. In addition, the current state of affairs shows that business has an opportunity to grow, and there is a necessity to react accordingly.
Conclusion
The picnic boat business owned by Alistair Sutherland is an instance of successful reaction to opportunities provided by the initially challenging situation, which is the lockdown. It is possible to notice that the demand for this enterprise’s services has increased, enabling the owner to hire additional staff, lowering the unemployment rate. The most important microenvironmental factors for this business are customers and suppliers, which have monetary and non-monetary impacts accordingly. The most significant risks are rivalry among competitors and a threat of new entrants. The appropriate strategy in the current situation and taking into consideration the risks is a reactive one. Most businesses, regardless of their size, can be benefited from the pandemic crisis.
Appendix A
The full text of the article “Jobs boom wipes out Covid losses.”
A surging labour market has driven the number of jobs in the nation above pre-pandemic levels and slashed the unemployment rate to 5.8 per cent, a result that reveals a workforce recovery running 10 months ahead of the Reserve Bank’s forecast. As economists hailed the “stunning” post-COVID-19 turnaround from January’s 6.3 per cent unemployment rate, Scott Morrison seized on the figures as justification for the government’s withdrawal of emergency income support at the end of the month.
The Prime Minister said the $90bn JobKeeper wage subsidy scheme had “done its job”. Economists and business groups are urging the Morrison government for a more ambitious growth agenda in the wake of the strong result, arguing it should try to force unemployment below 5 per cent to drive wage rises in line with the goal set by Reserve Bank governor Philip Lowe. Australian Bureau of Statistics figures showed that employment lifted by 88,700 last month —triple the expected result —pushing the number of Australians in work past 13 million. Full-time jobs accounted for all of the lift in net employment.
Women accounted for more than eight in 10 of the jobs created in February, helping to cut the jobless measure by half a percentage point in one month and triggering calls for the government to prioritise a lower unemployment target before embracing budget repair. Mr Morrison said on Thursday the job numbers were “a real shot in the arm” that would “only boost us as we go into the next phase” of the recovery.
“At each stage of our gear change on JobKeeper, we have seen the economy continue to move forward,” Mr Morrison said. “Now we are going into that final phase when it comes to JobKeeper, and that is why I am pleased we are going into it with a strong run-up. In less than 12 months from when the recession began …there are now more jobs in the Australian economy than there were before the pandemic. That is something that is truly remarkable.” Despite the sharp drop in the jobless measure, economists said the RBA was unlikely to change its commitment to keep rates at historic lows until 2024. Citi chief economist Josh Williamson said Thursday’s data didn’t “imply that rate hikes are any closer” and there was “still a long way to go” before the labour market was tight enough to trigger widespread wage pressures.
The result exceeded the Reserve Bank’s jobs outlook and the labour market recovery is now running more than 10 months ahead of the central bank’s forecast of 6 per cent unemployment by the end of 2021. Deloitte Access Economics partner Chris Richardson said the labour market recovery was likely to slow in the coming months, but Thursday’s “stunning” jobs figures meant the government should reassess its plan to address budget repair when unemployment was “comfortably” below 6 per cent. On Thursday, Josh Frydenberg said an unemployment rate of 5.8 per cent did not meet that threshold.
Mr Richardson said aiming at an unemployment rate in the low fives “was the right target at the time, and it was ambitious, but now it’s not ambitious enough”. His expectation was for unemployment to reach 5.3 per cent by the end of the year and argued that the Treasurer should, like the RBA, aim for full employment, or unemployment of 4.5 per cent or below, before he began taking a razor to spending and the deficit. Mr Richardson conceded this could take years to achieve. PDF GENERATED BY PROQUEST.COM Page 1 of 3 Big business is also pressing the government to adopt a more aggressive pro-growth agenda, arguing that the economy needs to expand by closer to 4 per cent over the coming three years to pay down the $1.2 trillion debt pile accumulated during the pandemic. On Thursday, Business Council of Australia chief executive Jennifer Westacott called on corporate Australia to “take the baton from government and do the heavy lifting on job creation”.
On a Boat owner Alistair Sutherland said the end of Melbourne’s second lockdown had been followed by a booming summer for his “picnic boat” business. He had taken on additional staff to cater for the extra demand. “Since November we (have been) well and truly booked out …business has picked up two or three times more than our last summer,” Mr Sutherland said. “We now have got a pool of more than 10 casuals and we are still bringing new guys on as of this week and last week.” Despite the encouraging jobs figures, there were 1.3 million Australians still receiving JobSeeker and Youth Allowance payments as of last Friday, according to unpublished data from the Department of Social Services.
This was down from the peak of more than 1.6 million on unemployment benefits in May, but still a significant hike on the 810,000 before the pandemic struck. Returning to pre-COVID levels of employment has not been enough to compensate for the natural growth in the workforce, leaving the jobless measure in February still 0.7 percentage points above pre-crisis levels. With large numbers of Australians still relying on welfare and wage-subsidy payments, the Morrison government is preparing a flurry of COVID-19 economic support packages ahead of JobKeeper and coronavirus supplement payments ending by March 31. The May 11 budget will feature targeted funding packages, aimed at supporting the worst-affected regions and sectors, including tourism, hospitality and accommodation. After parliament on Thursday passed the government’s Strengthening Income Support package, 1.9 million social security recipients will begin receiving permanent $50-a-fortnight increases from April 1
References
Jobs boom wipes out Covid losses. (2021). Nation Wide News Pty Ltd, 1-3.
Torrens University Australia (n.d.). Micro environmental factors [PowerPoint slides].