Business Management 1 - Chapter 3 Flashcards
1
Q
INTRODUCTION
List the two main activities that businesses use to create value according to the value chain
A
- Primary Activities
- Support Activities
2
Q
INTRODUCTION
How does organisations remain competitive?
A
continuously monitor events in its environment
3
Q
INTRODUCTION
True or False - Business and its environment are not closed, independent or mutually exclusive entities.
A
True
4
Q
INTRODUCTION
True or False - Business and its environment must
influence and depend on each other for their continued existence.
A
True
5
Q
INTRODUCTION
List 3 needs that society depends on businesses to satisfy
A
- products
- services
- employment
6
Q
INTRODUCTION
List 3 resources that business depends on its environment to obtain.
A
- labour
- capital
- raw material
7
Q
INTRODUCTION
Complete the statement “the business can be regarded
as a creation of its environment in that its:”
A
- Assets
- Income
- Problems
- Opportunities and
- Continued survival depends on the environment
8
Q
INTRODUCTION
what does continued changes in the environment force management to do?
A
management is continually forced to make adjustments to its competitive strategy.
9
Q
INTRODUCTION
to a large extent what determines how the organisation is structured and how it functions?
A
a continual interaction between the organisation and its environment
10
Q
INTRODUCTION
in a dynamic environment what should management strive to do?
A
strive to adapt timorously and effectively to current and anticipated changes in its environment
11
Q
INTRODUCTION
What does a thorough investigation or scanning of the environment enable management to do?
A
enables management to avert threats in the environment timeously and to exploit opportunities
12
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
When did the democratisation of South Africa occur?
A
1994
13
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
What did the democratisation of South Africa enatil?
A
normalised international relations, but at the same time exposed South African businesses to a borderless world in which they suddenly had to compete.
14
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
How did globalisation and the trend towards a world without barriers affect businesses
A
affected businesses in new ways, and some businesses have responded by taking their investments out of the country.
15
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
List 5 factors that increasingly affect the environment in which South Africans must do business and make decisions regarding their investments
A
- Accelerating urbanisation
- increased poverty in Southern Africa
- the influx of immigrants
- the high crime rate
- the breakdown of law and order
16
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
when planning strategically what is of great importance for management to take into consideration?
A
it is of great importance that management takes into account the interaction between the organisation and its environment.
17
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
if management takes into account the interaction between the organisation and its environment what happens to long term planning?
A
long-term planning becomes geared towards the future.
18
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
What does management and business need to do to stay abreast of new challenges?
A
Appropriate methods of research frequently need to be developed and organisational structures and management aids must be revised.
19
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
Name one factor that prevents management task from being carried out effectively and efficiently if not considered.
A
External factors
20
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
what is the internal environment also known as?
A
decision-making or micro environment
21
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
what does the micro environment entail?
A
- strategy
- business functions
- management tasks
- setting of goals
- resource abilities
- expectation of interest groups
22
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
Define a “Strength”
A
a unique capability of a particular organisation that gives it an advantage over competitors
23
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
Define a “Weakness”
A
can be described as a deficiency, which, if not addressed, could negatively affect the organisation’s position in the market
24
Q
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
True or false - Management cannot control the elements of the micro environment
A
False - Management can control the elements of the micro environment
25
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| What does management use its strengths for?
use its strengths to improve the position of the organisation in the market
26
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| how does management improve its competitive capacity?
rectify weaknesses
27
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| what is the Market environment also known as?
Task environment
28
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| Briefly explain the market environment
is the environment immediately outside the organisation. The market environment lies between the micro and macro business environments and, while influenced by both, serves as a buffer between the two.
29
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| what does the macro environment entail?
The macro environment encompasses all
uncontrollable variables and the implications they
have for management.
30
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| what types of decisions must management make with regards to the macro environment?
Management must make strategic decisions with
regard to economic, social, technological, physical,
political and institutional and international
environments.
31
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| what types of decisions must management make with regards to the micro environment?
Management must make decisions that relate to
| the strengths and weaknesses of the business.
32
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| What affect does changes in the market and macro environment have?
it gives rise either to opportunities or threats.
33
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| Define an "opportunity"
is defined as a favourable condition in
the external environment that could be exploited to
the benefit of the organization.
34
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| Define a "Threat"
an unfavourable condition in the
external environment, which, if not responded to
by management, could seriously harm the
organization's position in the market
35
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
The organization's management must be well
informed of international events, especially with
regard to which developments?
- economic developments
- social developments
- political developments
36
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| List the characteristics of the business environment
- Interrelatedness of environmental factors.
- Increasing instability.
- Environmental uncertainty.
- Complexity of the environment.
37
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| Briefly explain "Interrelatedness of environmental factors".
Change in one of the external factors may cause a change in the micro- environment or internal factors, and, similarly, a change in one external factor may cause change in other external environmental variables.
38
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| Briefly explain "Increasing instability".
One of the consequences of interdependence in the environment is increasing instability and change. Although the general rate of change in the environment accelerates, environmental fluctuation is greater in some industries than others.
39
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| Briefly explain "Environmental uncertainty".
Uncertainty about the environment is, of course, a function of the amount of information about environmental variables and of the confidence that management has in such information
40
THE ENVIRONMENT OF THE ORGANISATION IN PERSPECTIVE
| Briefly explain "Complexity of the environment".
This indicates the number of external variables to which a business organisation has to react, as well as variations in the variables themselves.
41
THE INTERNATIONAL ENVIRONMENT
| What does international business activities refer to?
profit-oriented activities across national borders.
42
THE INTERNATIONAL ENVIRONMENT
What levels affect organisation that operate within a country while drawing resources from or selling products to another country?
- National Level
| - International Level
43
THE INTERNATIONAL ENVIRONMENT
| Local organisations must keep up to date with which international data?
- Inflation,
- Exchange rates,
- Interest rates,
- Recession,
- Shortages of natural resources,
- The gold price and
- Especially international political events
44
THE INTERNATIONAL ENVIRONMENT
What does success or failure greatly
depend on for Organizations involved in international trade?
- Knowledge of legislation,
- Customs,
- Ethics,
- Economic systems and
- On the management practices that are followed
45
THE MACRO BUSINESS ENVIRONMENT
| What does the macro-environment include?
all external influences that have a bearing on the business but do not fall within its direct sphere of influence.
46
THE MACRO BUSINESS ENVIRONMENT
| In the study of the macro-environment where does the emphasis fall on?
the emphasis falls on the changes that uncontrollable macro-variables bring about, and their implications for the business.
47
THE MACRO BUSINESS ENVIRONMENT
True or False - Remaining abreast of environmental changes in order to be able to predict environmental changes is a difficult task.
True
48
THE MACRO BUSINESS ENVIRONMENT
| Why are certain changes in the macro environment unpredictable?
due to the speed with which the changes take place
49
THE MACRO BUSINESS ENVIRONMENT
| Why are certain changes in the macro environment difficult to predict?
due to a lack of information or knowledge.
50
THE MACRO BUSINESS ENVIRONMENT
| What are the main characteristics of external factors?
Their origin is outside the business, they are unpredictable and change constantly, but they are a determining factor in the survival of the business.
51
THE MACRO BUSINESS ENVIRONMENT
| List 20 external factors
- Economic environment,
- Inflation
- the business cycle,
- Interest rates,
- Provisions of employment,
- Productivity and profitability,
- The influence of trade unions,
- The technological environment,
- Social environment,
- Distribution of income,
- Consumerism and employees interests
- Participation of employees and the community (social
involvement) ,
- Different languages,
- Level of education,
- The threat of HIV/aids,
- Population growth,
- Urbanization,
- The physical environment,
- The political environment, and
- The institutional environment.
52
THE ECONOMIC ENVIRONMENT
Which economic factors influence the demand for goods and services by compelling consumers to reassess their priorities in terms of consumer products.
- The business cycle
- inflation
- recession
53
THE ECONOMIC ENVIRONMENT
| What is required by the business with every significant economic change?
appropriate reaction by the business
54
THE ECONOMIC ENVIRONMENT
| What is required by management with regards to the business cycle?
management should not only try to determine the intensity of the business cycle, but should also try to forecast the possible cycle of the economy for the following year.
55
INFLATION
| Briefly explain inflation
Inflation is described as a continual rise in the general
| price level.
56
INFLATION
| Why did the South African government decide to introduce or set the South African Reserve Bank inflation target?
Because inflation introduces uncertainty
| into decision-making
57
INFLATION
| When did the South African government decide to introduce or set the South African Reserve Bank inflation target?
February 2000
58
INFLATION
| What was the South African Reserve Bank inflation target set in February 2000?
between 3 and 6%
59
INFLATION
| What is the South African Reserve bank?
The South African Reserve Bank is the central bank of
| the Republic of South Africa.
60
INFLATION
| What is the primary purpose of the South African Reserve bank?
The primary purpose of the Bank is to achieve and maintain price stability in the interest of balanced and sustainable economic growth in South Africa
61
INFLATION
| Apart from the primary purpose of the South African Reserve bank, how else does the bank aid Southern Africa?
Together with other institutions, it also plays a pivotal role in ensuring financial stability.
62
INFLATION
| List the two types of inflation
- Demand inflation
| - Cost push inflation
63
INFLATION
| When does "Demand inflation" occur?
Demand inflation occurs when the demand for goods
and services is higher than the supply, resulting in
higher prices.
64
INFLATION
| When does "Cost push inflation" occur?
Cost push inflation occurs when production costs of
goods and services continually increase, resulting in
higher selling prices.
65
INFLATION
| True of False - The organization must not counteract the influence of inflation as far as possible.
False - The organization must counteract the influence of inflation as far as possible
66
INFLATION
| Under condition of high inflation where is the emphasis placed?
the emphasis is, to a large extent, placed on the management of working capital, such as debtors, stock and creditors.
67
THE BUSINESS CYCLE
| Briefly explain "the business cycle"
This involves the pattern of expansion and
contraction of economic activities around a
long-term growth tendency.
68
THE BUSINESS CYCLE
| Western economies-South Africa included are harassed by what?
By the phenomenon of inflation, and also by periods of recession that follow each other in quick succession and are interrupted by short periods of economic growth.
69
THE BUSINESS CYCLE
What should businesses and consumers do during different phases of the business cycle to adapt to emerging economic realities?
They must make certain value adjustments during the various phases of the business cycle
70
INTEREST RATES
| Define "interest"
Interest is the price paid for money.
71
INTEREST RATES
| What largely determines the level interest rates?
The demand for and the supply of funds.
72
INTEREST RATES
| Who else uses interest rates to influence the supply of money?
The Reserve Bank also uses interest rates to
| influence the money supply.
73
INTEREST RATES
| Define "Repo rate"
The "repo" rate is the cost at which banks can borrow money from the Reserve Bank.
74
INTEREST RATES
| Define "Prime rate"
The prime rate is the floor price at
which banks make loans or overdraft
facilities available to their clients
75
PROVISION OF EMPLOYMENT
| What is one of the biggest problems we face in the South African economy?
Unemployment is one of the biggest problems in the
| South African economy
76
PROVISION OF EMPLOYMENT
| When did unemployment in South-Africa spread beyond the unskilled labour force
In the early 1990’s unemployment spread beyond the unskilled labour force
77
PROVISION OF EMPLOYMENT
| what implication does an unemployment figure of 40% have?
An unemployment figure of 40 per cent of the
economically active population has enormous social
implications
78
PROVISION OF EMPLOYMENT
| With crime increasing, who does it affect?
Crime affects not only home-owners, who have to spend more of their disposable income on home security, but also affects the business community.
79
PRODUCTIVITY AND PROFITABILITY
| What is the relationship between productivity and profitability?
There is a strong relationship between these two phenomena. If productivity increases, profitability should also increase. Increased productivity enables the organisation to compete better in the market.
80
PRODUCTIVITY AND PROFITABILITY
| True or False - The labour unit cost in South Africa is among the highest in the world.
True
81
PRODUCTIVITY AND PROFITABILITY
| What is the reason for the high labour unit cost is South- Africa
The conduct of labour unions, and
| because of a low work ethic
82
PRODUCTIVITY AND PROFITABILITY
| What is the affect of the high labour unit cost on businesses?
Businesses find it difficult to compete on the basis
of price with businesses in other parts of the
world.
83
PRODUCTIVITY AND PROFITABILITY
| what is the result of a high disparity between labour productivity and wages?
There is no positive correlation between wage
| increases and productivity,resulting in increases in labour-unit cost and inflation.
84
THE INFLUENCE OF TRADE UNIONS
| Why is it important for management to know how to deal with labour disputes?
Due to the activities of trade unions, many
organizations have been forced to close their doors,
with a resultant loss in employment opportunities.
85
THE INFLUENCE OF TRADE UNIONS
| What are trade union activities in South Africa often characterized by?
Trade union activities in South Africa are often
| characterized by acts of intimidation and violence.
86
THE INFLUENCE OF TRADE UNIONS
| When will South African and local businesses not pay a heavy price for the activities of unions?
Until such time that government realizes the
seriousness of the situation and is willing to restore
order in labour relations.
87
THE TECHNOLOGICAL ENVIRONMENT
| What contributes to the many recent changes in the business environment?
Technological advances and innovation.
88
THE TECHNOLOGICAL ENVIRONMENT
| What provides the source of technological innovation?
Research and development.
89
THE TECHNOLOGICAL ENVIRONMENT
| What benefits/results comes from technological innovation?
new products, processes, methods and approaches to management result from this.
90
THE TECHNOLOGICAL ENVIRONMENT
| What drives the tendency towards innovation in all spheres of the business community?
Interaction between technology and
| other environmental factors.
91
THE TECHNOLOGICAL ENVIRONMENT
| What does scientific research produce and systemize?
Scientific research produces and systematizes new
| knowledge
92
THE TECHNOLOGICAL ENVIRONMENT
| What happens when Knowledge is applied in practice?
When knowledge is applied in practice, new goods and services are developed.
93
THE TECHNOLOGICAL ENVIRONMENT
| True or False - The economic environment does not affect the direction of technological innovation.
False - The economic environment largely determines the direction of technological innovation.
94
THE TECHNOLOGICAL ENVIRONMENT (TRADING)
| What new business opportunities or capabilities was created due to developments in electronic communication?
e-commerce, e-trading, e-marketing, e- supply and others.
95
THE TECHNOLOGICAL ENVIRONMENT (TRADING)
| List 4 new types of businesses created due to developments in electronic communication?
- cellular communication services
- vehicle tracking services
- sophisticated information supply services
- on-board vehicle navigational systems
96
THE TECHNOLOGICAL ENVIRONMENT (TRADING)
| What are labour-saving machinery,equipment and products?
New and improved products, which satisfy specific needs, that have been made available to the consumer, thanks to technological innovation.
97
THE TECHNOLOGICAL ENVIRONMENT (TRADING)
| List 3 labour-saving machinery,equipment or products?
- Forklifts
- Production plant machinery
- Pallet wrapping machine
98
THE TECHNOLOGICAL ENVIRONMENT (TRADING)
| What are Administrative systems and equipment?
New technology in the form of electronic and automated apparatus and systems. These services are primarily focused on the convenience of and service to the consumer.
99
THE TECHNOLOGICAL ENVIRONMENT (TRADING)
| List 3 Administrative systems and equipment?
- Color multi function devices (printers, scanners)
- Electronic filing systems and archives
- Document converters (PDF to Word)
100
THE TECHNOLOGICAL ENVIRONMENT (TRADING)
| List what increased productivity entail?
- The most outstanding result of advanced technology. - Demands or increases turnover of the organisation's
products and services.
- It creates more intense competition
- May reduce employment opportunities.
101
THE SOCIAL ENVIRONMENT
| What can be considered to be a creation of the social environment?
The organization
102
THE SOCIAL ENVIRONMENT
| What is the role of an organization in a dynamic environment?
The role of an organization in a dynamic environment
is to adapt continually to changing circumstances and
to meet the expectations of the society.
103
THE SOCIAL ENVIRONMENT
| True or False - There is an overlapping of some of the elements in the social and the economic environments.
True
104
THE SOCIAL ENVIRONMENT
| Who is at the centre of changes taking place in the social environment?
• The organization is at the centre of changes taking
| place in the social environment
105
THE SOCIAL ENVIRONMENT
| True or False - The organization does not contribute to social change, and is also not influenced by it.
False - The organization contributes to social change, and is also influenced by it.
106
THE SOCIAL ENVIRONMENT
Due to the organizations contributions to the social environment and the influence the social environment has on the organization, what does the organization have to be aware of?
- culture
- needs
- preferences
- purchasing patterns
- nationality
- religion and
- geographical location of consumers.
107
THE SOCIAL ENVIRONMENT
| Draw a diagram of the social environment and its influences.
Business management studies folder on laptop
108
THE SOCIAL ENVIRONMENT
DISTRIBUTION OF INCOME
True or False - South Africa, with its heterogeneous population and geographical vastness, consists of many subcultures, each of which reacts differently to change.
True
109
THE SOCIAL ENVIRONMENT
DISTRIBUTION OF INCOME
What had a great influence on the market in recent years with regards to blacks in South Africa?
Increasing income levels and improved literacy among
| blacks in recent years has had a great influence on the market.
110
THE SOCIAL ENVIRONMENT
DISTRIBUTION OF INCOME
What is considered to already be of vital importance in many branches of industry?
The growth of the black consumer market and buying
power is already of vital importance in many branches
of industry.
111
THE SOCIAL ENVIRONMENT
DISTRIBUTION OF INCOME
How would management exploit a market and ensure that high quality products and service are served?
Management must establish where its biggest buying
| power is located.
112
THE SOCIAL ENVIRONMENT
CONSUMERISM AND EMPLOYEES INTERESTS
What is the primary responsibility that the organization has towards the consumer?
The primary responsibility that the organization has towards the consumer lies in protecting him or her (the consumer).
113
THE SOCIAL ENVIRONMENT
CONSUMERISM AND EMPLOYEES INTERESTS
Where does the demands of society for greater social responsibility on the part of the organization culminate?
The demands of society for greater social responsibility on the part of the organization culminate in consumerism.
114
THE SOCIAL ENVIRONMENT
CONSUMERISM AND EMPLOYEES INTERESTS
What does consumerism and employees interest link together?
The organization and the social environment.
115
THE SOCIAL ENVIRONMENT
CONSUMERISM AND EMPLOYEES INTERESTS
What was social responsibility previously largely limited to?
• Previously, social responsibility was limited
| largely to social and welfare services.
116
THE SOCIAL ENVIRONMENT
CONSUMERISM AND EMPLOYEES INTERESTS
What is meant by "Previously, social responsibility was limited largely to social and welfare services"?
The employer concerned himself only with the
social well-being of his workers, without paying
attention to the socio-economic and cultural fate
of individuals.
117
THE SOCIAL ENVIRONMENT
CONSUMERISM AND EMPLOYEES INTERESTS
What is being done or considered nowadays with regards to socio-economic and cultural fate of individuals?
Nowadays, the totality of the employee's existence
and experience is studied, and the expectations
not only of his family but of the entire community
demand attention.
118
THE SOCIAL ENVIRONMENT
CONSUMERISM AND EMPLOYEES INTERESTS
What will happen if the socio-economic and cultural fate of individuals are neglected?
The organization will definitely elicit the criticism of the community, consumer groups and even of government.
119
THE SOCIAL ENVIRONMENT
PARTICIPATION OF EMPLOYEES AND THE COMMUNITY (SOCIAL INVOLVEMENT)
What is the new labour community characterized by?
• The new labour community is characterized by the
| principles of labour democracy.
120
THE SOCIAL ENVIRONMENT
PARTICIPATION OF EMPLOYEES AND THE COMMUNITY (SOCIAL INVOLVEMENT)
What is implied by "the new labour community is characterized by the principles of labour democracy"?
• This implies that the worker has a greater say in the
| design, execution and evaluation of work.
121
THE SOCIAL ENVIRONMENT
PARTICIPATION OF EMPLOYEES AND THE COMMUNITY (SOCIAL INVOLVEMENT)
True or False - The employer provides additional educational services, like literacy training.
True
122
THE SOCIAL ENVIRONMENT
PARTICIPATION OF EMPLOYEES AND THE COMMUNITY (SOCIAL INVOLVEMENT)
List 8 other areas of direct social involvement.
- transport
- housing,
- financial assistance,
- clothing,
- medical services,
- recreational facilities,
- cultural facilities and
- general counseling.
123
THE SOCIAL ENVIRONMENT
DIFFERENT LANGUAGES
how does organizations inform consumers of their products and services with a language barrier?
• In an effort to inform consumers about their
products and services, organizations must
communicate with their target market(s) in
a language that they understand.
124
THE SOCIAL ENVIRONMENT
DIFFERENT LANGUAGES
why is it a challenge for organizations to communicate or inform consumers of their products and services in South Africa?
• This can be a challenging task, as South
| Africa is a multi-lingual country.
125
THE SOCIAL ENVIRONMENT
LEVEL OF EDUCATION
What is the standard of education received by matric students over the past few years according to the study of 2001?
In the year 2001, approximately 13,4 million learners
attended South African schools, though the matric
results of the past few years suggest that the education they receive is generally of a poor standard.
126
THE SOCIAL ENVIRONMENT
LEVEL OF EDUCATION
What can be attributed to the low levels of productivity and skills in the South African labour force?
The low levels of productivity and skill in the South African labour force are, to some degree, attributable to the relatively low level of education of the broader society.
127
THE SOCIAL ENVIRONMENT
LEVEL OF EDUCATION
True or false - Education is an important key to
future socio- economic development.
True
128
THE SOCIAL ENVIRONMENT
THE THREAT OF HIV/AIDS
HIV/AIDS is an extremely important factor in what process?
HIV/Aids has become an extremely important
| factor in the process of strategy formulation.
129
THE SOCIAL ENVIRONMENT
THE THREAT OF HIV/AIDS
When was the first cases of HIV/AIDS reported in South Africa?
The first cases of HIV/Aids in South Africa were reported in 1982.
130
THE SOCIAL ENVIRONMENT
THE THREAT OF HIV/AIDS
How much did Daimler-Chrysler estimate that their expenses related to HIV/AIDS equivalent to in 2002?
The South African branch of the
company Daimler-Chrysler estimated that in 2002
expenses related to HIV/AIDS were equivalent to
4% of all its salaries in South Africa.
131
THE SOCIAL ENVIRONMENT
THE THREAT OF HIV/AIDS
Who was south Africa's second largest company in 2000?
Sasol
132
THE SOCIAL ENVIRONMENT
THE THREAT OF HIV/AIDS
What was revealed with a study done in 2000 by Sasol, South Africa's second largest company?
A study done in 2000 by South Africa's second
largest company, Sasol, indicated that 15% of its
local workforce was HIV positive, of which 11% had
AIDS.
133
THE SOCIAL ENVIRONMENT
THE THREAT OF HIV/AIDS
Who is South Africas largest company?
SAB Miller
134
THE SOCIAL ENVIRONMENT
THE THREAT OF HIV/AIDS
According to the CEO of SAB Miller, South Africa's largest company, what does the cost of HIV/AIDS include?
According to the CEO of South Africa's largest
company, SAB Miller, the cost of HIV/AIDS
include costs associated with increased
absenteeism, reduced productivity, increased
turnover, and healthcare costs.
135
THE SOCIAL ENVIRONMENT
POPULATION GROWTH
List 3 factors that are closely related to population growth.
- The size of the market,
- the labour force and
- unemployment.
136
THE SOCIAL ENVIRONMENT
POPULATION GROWTH
What did the world population number to in 1850?
By 1850 the world population numbered 1000 million.
137
THE SOCIAL ENVIRONMENT
POPULATION GROWTH
What did the world population number to in 1925?
By 1925 it was already 2 000 million.
138
THE SOCIAL ENVIRONMENT
POPULATION GROWTH
What happens to third world countries population figures?
Population figures of Third World countries
| doubles every 32 years
139
THE SOCIAL ENVIRONMENT
URBANIZATION
According to estimates what will the South African population be in 2011?
According to estimates, the South African population
| will number 53 million by the year 2011.
140
THE SOCIAL ENVIRONMENT
URBANIZATION
What will the population split be based on black and white according to the estimates in 2011?
Approximately 80 per cent of the population will be
| made up of blacks, while 10 per cent will be white.
141
THE SOCIAL ENVIRONMENT
URBANIZATION
What impact does urbanization and expected population growth have?
Urbanization, along with the expected population
growth, has far-reaching social implications and
consequences.
142
THE SOCIAL ENVIRONMENT
URBANIZATION
How does Urbanization influence the economy?
Urbanization greatly influences the economy, for
example, purchasing power is increasingly
concentrated in urban areas.
143
THE PHYSICAL ENVIRONMENT
| What does the physical environment include?
The physical environment includes the availability,
conservation, improvement and utilization of the
limited natural resources a country possesses.
144
THE PHYSICAL ENVIRONMENT
| Where does a business obtain its basic raw materials to place a product on the market?
The business obtains its basic raw materials from the
physical environment in order to place a product on
the market in combination with other factors of
production.
145
THE PHYSICAL ENVIRONMENT
| What influence does the shortage of basic factors of production have?
The shortage of basic factors of production influences the supply of goods and contributes to large price increases and resultant high inflation.
146
THE POLITICAL ENVIRONMENT
| What does the political environment encompass?
The political environment encompasses complicated
| variables that are very difficult to control or predict.
147
THE POLITICAL ENVIRONMENT
| What is managements responsibility with regards to the political environment?
Management's responsibility is to acquaint itself with
| government policy with regard, inter alia, to the acceptance of a free market system as the key to economic activity.
148
THE POLITICAL ENVIRONMENT
True or False - Management doesn't have to ensure that it is informed on the general economic policy and specific policies with regard to underlying economic issues.
False -Management must ensure that it is informed on the general economic policy and specific policies with regard to underlying economic issues.
149
THE POLITICAL ENVIRONMENT
| What are implemented by government ordinances?
Specific government policy standpoints are implemented by government ordinances.
150
THE POLITICAL ENVIRONMENT
| List 4 government policy standpoints that are implemented by government ordinances.
- Monopolistic laws,
- Environmental conservation,
- Employment policies and
- Taxation laws.
151
THE INSTITUTIONAL ENVIRONMENT
| What does the institutional environment encompass?
The institutional environment encompasses all the government, semi-government and other institutions with which the organization is directly or indirectly
involved.
152
THE INSTITUTIONAL ENVIRONMENT
| True or False - Many associations protect the interest of organizations and branches of industry
True
153
THE MARKET ENVIRONMENT
| What does the market environment link together?
The market environment surrounds the organization,
and it forms the link between the organization and the
macro-environment.
154
THE MARKET ENVIRONMENT
True or False - The importance of environmental
variables varies according to the influence that they have on the organization via the market environment.
True
155
THE MARKET ENVIRONMENT
| What is the responsibility of management within the market environment?
It is the responsibility of management not only to see to the needs of the consumer within the market environment, but also to identify possible opportunities and threats, to convert threats into opportunities and to develop specific strategies to counteract competition.
156
THE MARKET ENVIRONMENT
| List 6 components within the market environment that must be carefully analyzed by management.
```
o Interest groups
o Consumers
o Competition.
o Suppliers
o Labour force.
o Strategic alliances
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157
THE MARKET ENVIRONMENT
INTEREST GROUPS
What are interest groups?
These include institutions and groups who have an interest in the existence and future of the business.
158
THE MARKET ENVIRONMENT
INTEREST GROUPS
With interest groups lacking the power of government agencies, how do they exert influence?
These interest groups lack the power of government agencies, but they can exert considerable influence by using the media to their advantage.
159
THE MARKET ENVIRONMENT
CONSUMERS
How does consumers effect the organisations performance?
Consumers have a major effect on the organisation’s performance through purchasing products and services.
160
THE MARKET ENVIRONMENT
CONSUMERS
True or False - Ineffective managers realize the need to offer the consumer value for money.
False - Effective managers realize the need to offer the consumer value for money.
161
THE MARKET ENVIRONMENT
CONSUMERS
Who is responsible for the creation of consumer value in a organisation?
The creation of consumer value is the primary responsibility of the marketing department of the organisation.
162
THE MARKET ENVIRONMENT
CONSUMERS
How does a business stay in touch with the needs, motives and behaviour of the consumer?
Through comprehensive and continual market research the business stays in touch with the needs, motives and behaviour of the consumer.
163
THE MARKET ENVIRONMENT
CONSUMERS
True or False - The changing needs of consumers may offer opportunities as well as threats.
True
164
THE MARKET ENVIRONMENT
COMPETITION
Businesses must constantly compete for customers, what does an effective manager do in this regard?
Effective managers develop strategies that offer a unique advantage over the competition in the market.
165
THE MARKET ENVIRONMENT
COMPETITION
How does businesses strive to increase their market share?
Their market strategies are continually adjusted in order to ensure an advantage over competitors.
166
THE MARKET ENVIRONMENT
COMPETITION
What does the formulation of a strategy entail?
The formulation of strategy requires a sound competitive strategy that ensures that business can increase its competitive edge.
167
THE MARKET ENVIRONMENT
SUPPLIERS
With regards to suppliers what is the responsibility of an effective manager?
To be an effective manager you need to realize the importance of suppliers and to develop close working relationships with them.
168
THE MARKET ENVIRONMENT
SUPPLIERS
What affects can suppliers have on an organisation?
Suppliers affect the organisation’s performance and the relationship with suppliers is an important part of effective management.
169
THE MARKET ENVIRONMENT
LABOUR FORCE
What effects does employees have on the organisation?
The employees of the organisation have a direct effect on its performance.
170
THE MARKET ENVIRONMENT
LABOUR FORCE
What are major determinants of the capability levels that employees need to achieve company objectives?
The organisation’s mission, its structure and its systems processes are major determinants of the capability levels employees need in order to meet objectives.
171
THE MARKET ENVIRONMENT
LABOUR FORCE
What should organisations concern themselves with regard to the labour force?
Organisations must concern themselves with labour organised into unions.
172
THE MARKET ENVIRONMENT
STRATEGIC ALLIANCES
What is a strategic alliance?
This refers to two or more companies that work together in joint ventures.
173
THE MARKET ENVIRONMENT
STRATEGIC ALLIANCES
What does an strategic alliance aid an organisation with?
Strategic alliances help organisations to obtain from other companies whatever expertise they lack.
174
THE MARKET ENVIRONMENT
STRATEGIC ALLIANCES
With regards to strategic alliances, how does management utilize opportunities and counteract threats?
Management must look outside the organisation and be aware of trends in the market environment in order to utilize opportunities (upon which profits depends) and to counteract threats.
175
THE MARKET ENVIRONMENT
STRATEGIC ALLIANCES
List 3 factors that is important for management in order to utilize opportunity and counteract threats.
- Knowledge
- information
- market research
176
THE MICRO- ENVIRONMENT
| What is the micro-environment also know as?
decision-making environment
177
THE MICRO- ENVIRONMENT
| What does the micro-environment incorporate?
the goals of the organisation, management of the functions of the organisation, entrepreneurial ability, interest groups and all other aspects controllable by management.
178
THE MICRO- ENVIRONMENT
THE FUNCTIONAL DIVISION OF THE ORGANISATION
What does the micro-management environment encompass?
The micro-management environment encompasses all the functions of the organisation. These functions complement one another; they form a coherent unit and cannot function in isolation. Together they serve the organisation as a whole.
179
THE MICRO- ENVIRONMENT
THE FUNCTIONAL DIVISION OF THE ORGANISATION
With regards to organisation functions, what should management do when making decisions?
In the process of decision-making, management must continually consider the total interdependency of organisation functions.
180
THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY
What does resources within an organisation include?
Resources within the organisation include fixed assets, equipment, labour, capital and specific expertise.
181
THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY
What can be referred to as being of primary importance with regards to entrepreneurial ability?
Analysis of the business potential of the organisation is of primary importance.
182
THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY
What does the analysis of the business potential of the organisation entail?
This encompasses an analysis of the potential availability of the means of production, as well as of possibilities for the creative utilization of these means of production.
183
THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY
Where is the potential of the means of production (resources) reflected?
The potential of these resources is to a large extent reflected in the functional activities of the organisation.
184
THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY
What makes it difficult for individual organisations to determine its entrepreneurial ability?
Inadequate knowledge of the relevant resources, as well as of basic evaluation techniques which can be used to determine the capacity of these resources, often makes it difficult for the individual organisation to determine its entrepreneurial ability.
185
THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY
List four resources which contribute to the entrepreneurial capacity of the organisation
- Capital
- Labour and expertise
- Raw materials
- Management Skill
186
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THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY (RESOURCES)
In most cases what determines the entrepreneurial ability of the organisation?
```
Capital. In most cases capital determines the entrepreneurial ability of the organisation.
187
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THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY (RESOURCES)
What can be referred to as being vital for the continuation of the activities of the various departments?
```
The funds obtained by the financial function are vital for the continuation of the activities of the various departments: this supply the fuel for the "motor" of the organisation.
188
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THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY (RESOURCES)
What should financial management do in order to ensure that the right type of capital is available at the lowest possible cost.
```
Financial management must always be attuned to the capital needs of the organisation, as well as to the sources of finance, in order to ensure that the right type of capital is available at the lowest possible cost.
189
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THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY (RESOURCES)
How does financial management see to it that the goals of the organisation are realistic and attainable?
```
Financial management must see to it that the goals of the organisation are realistic and attainable, from a financial point of view, by undertaking sound financial planning and control.
190
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THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY (RESOURCES)
What does Labour and expertise entail as a resource that contribute to the entrepreneurial capacity of the organisation?
```
Labour and expertise. This includes the acquisition, retention and utilisation of adequate and suitable personnel to handle the activities of the organisation as efficiently as possible.
191
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THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY (RESOURCES)
How does the personnel department remain informed of the total personnel requirements of the organisation?
```
Through human resources planning and task analysis, the personnel department can remain informed of the total personnel requirements of the organisation, that is the number and type of employees required.
192
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THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY (RESOURCES)
How does the marketing and production function stay well informed about the type of goods and services that should be placed at the disposal of consumers?
```
This information can be obtained through market research into consumer needs.
193
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THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY (RESOURCES)
Which function is responsible for obtaining basic raw materials and parts for production purposes?
```
The purchasing function is responsible for obtaining basic raw materials and parts for production purposes.
194
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THE MICRO- ENVIRONMENT
ENTREPRENEURIAL ABILITY (RESOURCES)
What is ultimately the most important asset of the organisation?
```
Management skill. Ultimately, the quality of management is the organisation's most important asset.
195
THE MICRO- ENVIRONMENT
| Draw a diagram depicting the Micro-environment.
Page 45 (study guide)
196
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
| What is the environmental analysis essential for?
Environmental analysis is essential for the formulation of a corporate strategy for the organisation.
197
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
| What must a corporate study be seen as?
Corporate strategy must be seen as the deliberate decision of management to adapt to the current and anticipated change in the market and micro-environments in a timeous, economical and effective manner.
198
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
| True or False - A step-by- step approach is not necessary for the formulation of a strategy for the organisation.
False - A step-by- step approach is necessary for the formulation of a strategy for the organisation.
199
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
| Which strategies must be developed on a coordinated basis?
Functional strategies with regard to financing, production, personnel, purchases, liaison work and marketing must be developed on a coordinated basis.
200
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
How does management become aware of all external powers, opportunities, threats, strengths and weaknesses of the organisation?
Through a process of environmental exploration, management must become aware of all external powers, opportunities and threats, and also of the strengths and weaknesses of the organisation.
201
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
THE PROCESS OF SCENARIO DEVELOPMENT
How does management reduce uncertainty about the future?
In order to reduce uncertainly about the future, it is important to develop environmental scenarios for an organisation.
202
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
THE PROCESS OF SCENARIO DEVELOPMENT
List the steps in the development of a typical scenario.
Steps in the development of a typical scenario are the following:
• Determine the internal and/or external factors for which scenarios have to be developed. This implies that management has to decide which factors will have an important influence on the organisation.
• Select critical indicators for each factor.
• Determine the nature, occurrence and trend of the indicators in the past. (TIA - trend impact analysis)
• Verify potential future trends. Make suppositions.
• Forecast or extrapolate in order to form idea of what might happen in the future.
• Write the scenario on the basis of the information gleaned.
203
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
THE PROCESS OF SCENARIO DEVELOPMENT
What is the meaning of the abbreviation "TIA"?
TIA -trend impact analysis.
204
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
USE THE SCENARIOS TO FORMULATE STRATEGY FOR THE ORGANISATION
What is the meaning of the abbreviation "SWOT"?
SWOT (strengths, weaknesses, opportunities, threats) analysis.
205
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
USE THE SCENARIOS TO FORMULATE STRATEGY FOR THE ORGANISATION
How does management obtain a logical framework for the systematic analysis of the activities of the organisation?
By comparing the strengths, weaknesses, opportunities and threats of the organisation, a logical framework for the systematic analysis of the activities of the organisation can be obtained. By making use of a SWOT analysis, management can convert threats into opportunities and weaknesses into strengths.
206
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
USE THE SCENARIOS TO FORMULATE STRATEGY FOR THE ORGANISATION
Define the expression “environmental scanning”
Environmental scanning may be defined as a method of keeping abreast of external social, economic, technological and political developments which may be difficult to observe or predict, but which management dare not ignore.
207
THE RESULT OF ENVIRONMENTAL SCANNING AND SCENARIO DEVELOPMENT
What is the purpose of environmental scanning and scenario development?
The purpose of environmental scanning and scenario development is to provide a basis for the formulation of a strategy regarding the activities of the organisation.
208
THE RESULT OF ENVIRONMENTAL SCANNING AND SCENARIO DEVELOPMENT
List three possible strategic decisions that may be taken?
Some of the possible strategic decision that may be taken includes the following:
1. A maintenance strategy
2. A growth strategy
3. A Combination strategy
4. A Specific activity strategy
209
ENVIRONMENTAL ANALYSIS AND SCENARIO DEVELOPMENT
USE THE SCENARIOS TO FORMULATE STRATEGY FOR THE ORGANISATION
What does the expression “environmental scanning” entail
It entails the identification and monitoring of every opportunity or threat and may range from a simple information system to a formal environmental scanning division or unit whose sole task is to monitor external environmental factors.
210
THE RESULT OF ENVIRONMENTAL SCANNING AND SCENARIO DEVELOPMENT
Explain a "maintenance strategy"?
A maintenance strategy where the organisation continues along the route taken and attempts to maintain the current profit position.
211
THE RESULT OF ENVIRONMENTAL SCANNING AND SCENARIO DEVELOPMENT
Explain a "growth strategy"?
A growth strategy involves an extension of activities.
212
THE RESULT OF ENVIRONMENTAL SCANNING AND SCENARIO DEVELOPMENT
Explain a "combination strategy"?
A combination strategy, which may be a combination of the maintenance and growth strategies and is mainly used in cases where the organisation serves a variety of markets
213
THE RESULT OF ENVIRONMENTAL SCANNING AND SCENARIO DEVELOPMENT
Explain a "specific activity strategy"?
A specific activity strategy whereby a strategy concerning specific aspects such as finance, investment, personnel, production or purchases, is formulated.
