business environments Flashcards
Define/Explain the meaning of “MICRO ENVIRONMENT”
internal environment.
business itself.
management has complete control.
COMPONENTS of the micro environment
- Vision, mission, goals and objectives
- Organisational culture
- Organisational resources
- Organisational structure
- Management and leadership
- Eight business functions
vision
The dream that the business wants to achieve
mission statement
Clear directives to achieve
vision
goals
Long-term plans
objectives
Short-term aims to achieve
long-term goals
ORGANISATIONAL CULTURE
personality of the business.
different beliefs / values / expectations of workers
* Influence interactions w workers and stakeholders
influences people’s actions and attitudes.
* A positive culture helps staff to be motivated and productive.
* A negative culture discourages workers, causing conflict
types of organisational resources
human
financial
physical
technological
entrepeneurs
PURPOSE / IMPORTANCE of a business ORGANISATIONAL STRUCTURE
workers tasks and level of authority and responsibility must be indicated.
structure should indicate flow of assignments and feedback.
The flow of communication in the business.
organizational structure also called an organogram.
Explain the difference between management and leadership
MANAGEMENT/LEADERSHIP
-Direct behaviour.
>Influence behaviour.
-Communicate through functions
>Communicate through interaction
-Manage plans / programs / tasks to
reach targets.
>Encourage new ideas to increase
productivity.
-Control systems and procedures to get
the job done.
>Inspire staff to know each other trust and
support.
-appointed the job
>born with leadership skills.
-Task orientated
>Humanly orientated
-Management by planning/control
>Lead by example
-Instructional approach.
>Motivational approach
BUSINESS FUNCTIONS
- General Management
- Purchasing
- Production
- Marketing
- Human resources
- Public Relations
- Administration
- Financial
Human Resources
ensure best candidate appointed
talents and skills used to best benefit the organisation
production
good quality products produced
* Sufficient quantity produced
Administration
- reliable Information collected
- Info regularly shared with the relevant
parties
Financial
- Accurate records of transactions
- Reports compiled for submission to
management
Management
- The correct decisions made
- set realistic goals
Public Relations
- Regular communication with the media
- All communications aim to promote positive image
Purchasing
- Identify and select reliable suppliers
- Sound relationships with suppliers
- high quality raw materials
Marketing
- product development
- packaging
- customers are loyal to the brand
Define/Explain the Meaning of the term “MARKET ENVIRONMENT”
- environment immediately outside business.
- surrounds the micro-environment.
- All powers have a direct impact on the business
- Management has no control, but can influence
The COMPONENTS of the market environment
- Consumers
- Suppliers
- Intermediaries
- Competitors
- Other organisations / Civil Societies
o [NGOs]
o Regulators
o Strategic allies
o Unions
Consumers
final users of the product
buys products or services from a business
sub-divided
o Durable products
o Semi-durable products
o Non-durable product
o Services
Suppliers
suppliers of goods / services businesses require e.g factories
provide resources e.g raw mat.
supplier provides the right quantity at
the right time, right price and credit terms.
Intermediaries
help promote, sell and distribute products
Bridge gap
bring the products and services within reach
wholesalers, retailers, spazas, agents, brokers and representatives.
* Financial intermediaries = banks
Competitors
sell the same / similar products / services
help understand SWOT
Regulator
person / organization with power to
control / make rules that businesses must adhere to.
strategic allies
2+ businesses working together to combine skills and acquire those which they lack.
Trade unions
aim to improve the working conditions of the workforce / protect workers
examples of CIVIL SOCIETY.
Unions
NGOs
Regulators
CBOs
why NGO’s and CBO’S form part of the market.
they trade with the public who donate money used to benefit the country.
can also sell products/ organise fundraisings to use the profit for the community.
Business environment, possible challenges and extent of control
micro and market
Micro
- Difficult employees
- Lack of vision and mission
- Lack of adequate management
skills - Unions, strikes and go-slows
extent of control
Full control
Market
- Competition
- Shortages of supply
- Demographics and psychographics
- Socio-cultural factors
extent of control
Little / Partial /
Limited control
micro env, extent of control, why that extent of control
full control
e.g A business determines its own
mission, organisational structure and resources.
market env, extent of control, why that extent of control
little control over all components of the market
environment.
E.g. A business cannot force its
suppliers to reduce the prices of their goods but it
can buy goods in bulks and claim discounts.
macro env, extent of control, why that extent of control
Businesses have no control over all components of the macro environment.
E.g. A business cannot control the increase in the
price of petrol, but can outsource the transport function to
reduce delivery of costs.
Define/Explain the meaning of the “MACRO-ENVIRONMENT”
interaction of the business with everything outside of
the business.
aka the external environment.
no control
macro, possible challenges and the extent of control
- Change in income levels
- Labor restrictions
- Political changes
- Interest rates
- Socio-economic issues
- HIV and AIDS
- Globalisation and International
challenges
No control
why the MACRO environment can be a CHALLENGE to
businesses.
- New businesses enter market
- Price wars
- Customers looking for the best prices
- Suppliers give discounts and special offers
- New products threaten old products
COMPONENTS of the macro environment
PESTLE
- Physical/natural
- Economic
- Social, Cultural and demographic
- Technological
- Legal and political
- environment (international / institutional)
COMPONENTS of the macro environment
PESTLE
- Physical/natural
- Economic
- Social, Cultural and demographic
- Technological
- Legal and political
- environment (international / institutional)
Political
what is it ?
examples and challenges ?
strategy ?
- Laws / Regulations influence business operations
*Businesses must adhere to rules and regulations
Examples and challenges:
* Political factors, e.g strikes / illegal immigrants, cause
instability, affecting the operation of the business.
* Overseas investors invest in economically and politically stable countries.
Strategy:
* Investigate regulations of countries before trading.
economic
what is it ?
examples and challenges ?
strategy ?
- Affects progress of consumers, businesses and investors.
- Interest rate, Inflation rates, Exchange rate, Economic growth,
- Imports and Exports, Taxation
Examples and challenges:
* Inflation lowers value of money / assets.
* unemployment affects the economic cycle
* Can increase prices – influence on the economic environment.
* Decrease in interest – People borrow more money from the bank.
* changes in the value of the rand affect business
Strategy:
* import when the rand is stronger, the business will pay less for products or raw materials.
social / cultural / demographic
what is it ?
examples and challenges ?
strategy ?
- The social component includes people, cultural background and income levels.
- Social issues affect consumer spending, employee performance and profit
- Poverty; HIV/Aids; Unemployment; Crime.
SOCIAL Examples and challenges:
* Health issues can have a negative impact on employee productivity
CULTURAL Examples:
* 14 different racial groupings with 11 different official languages.
* Problems arising in the workplace need to be managed, taking cognisance of the culturally diverse background of the workforce
Strategy:
* Sell generic products with lower prices.
* Appoint somebody that understands the local language.
technological
what is it ?
examples and challenges ?
strategy ?
- The technological environment created a 4th industrial revolution.
- Technological developments provide opportunities and threats to businesses.
- keep up with the latest technology
Examples:
* Technology has changed the way in which businesses operate, market, produce and communicate.
* Technology has managed to reduce cost (positive)
Challenges:
* Technology has replaced workers
Strategy:
Train employees to use new technology.
legal
*the rules that a business must adhere to and all other legal aspects the business should consider.
*allows us to communicate globally
Examples and challenges:
* Paying for fines )
Strategy:
* Adhere to regulations
international / institutiona
GLOBAL / INTERNATIONAL ENVIRONMENT
* Technology enables us to be part of markets all over the world.
Example:
* Even small businesses can now sell their products internationally
sale.
INSTITUTIONAL ENVIRONMENT
* Laws and regulations have been introduced to ensure that there is
a framework of legal systems for international trade as well as for
different industries.
* Examples
testing of product
prevention of monopolies
protection of legitimate trade
combating illegal trade.
Strategy:
* Don’t illegally trade
* Make sure that the product you want to export meet certain standards.
physical / natural
the availability of natural resources
businesses depend on natural resources to produce or
provide services
* Natural resources; infrastructure; pollution.
Examples and challenge:
* Some natural resources, such as oil / coal, are scarce and expensive.
* External environmental factors, such as pollution are a threat to the sustainability of a business.
* Changes in the weather influence the availability of natural resources
Strategy:
Use packaging that can be recycled to prevent or limit pollution.
Sufficient stock
Too much: business lose money due to cost of stock
Too little: business lose money as there is no stock to sell
Affirmative action
businesses promoting equal to redress past inequalities
relationship betw businesses and consumers
- Goods and services are advertised to potential consumers.
- Market research is carried out on consumers to determine
preferences and tastes. - The public relations department ensures that customers remain loyal.
relationship betw Business and
suppliers
- best supplier ensures best quality at the best price.
- Business communicates with suppliers about the latest technology and products.
- Business ensures suppliers have sufficient stock to meet
the demand - Businesses are suppliers customers
Business and
intermediaries
- Business must maintain a good relationship with intermediaries.
- Intermediaries help the business to access consumers and influence sales.
- Business must access reliable transport and marketing for their products.
Business and
competitors
- Business must be aware of competitors’ products and prices.
- keep up w latest trends.
- keep up to date with advertising and marketing
trends. - be creative to change competition into
something positive.
RELATIONSHIP between MICRO, MARKET and MACRO environment
- constant interaction of all elements in environments
- entrepreneur uses factors of production to produce goods and services.
- entrepreneur wants to satisfy the needs of consumers to make a profit.
- entrepreneur is exposed to challenges e.g competitors, the government
- face labour crises, affirmative action handle
- many influences are present.
- business has full control over elements in the micro-environment.
- cannot control elements in macro environment.
- A business must adapt to challenges of the macro environment and formulate strategies to deal with challenges.
- 3 business environments are interrelated.
