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 includ

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.

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.