CH3: Environmental Analysis Flashcards
Why is environmental scanning important in business?
It helps managers detect external threats and opportunities early, so they can adjust strategies proactively and maintain competitiveness.’’’,
What defines the macro-environment?
It consists of broad, uncontrollable external factors like the economy, political conditions, and international trends, which influence strategy and risk.’’’,
How does international activity affect local businesses?
Global inflation, interest rates, exchange rates, and political developments can directly impact local costs, demand, and business viability.’’’,
What skills must managers have to operate internationally?
Cultural awareness, legal compliance, economic understanding, and adaptability to foreign business systems and management practices.’’’,
How does inflation affect business decisions?
It complicates pricing, reduces purchasing power, and increases the need for tight working capital management (stock, debtors, creditors).’’’,
What is the business cycle?
A pattern of economic expansion and contraction over time. It influences consumer behavior, investment, and strategic planning.’’’,
What role does GDP play in the business cycle?
GDP is a key indicator of economic activity and helps track peaks and recessions in the cycle, guiding business strategy.’’’,
What is the impact of high interest rates on business?
Increases cost of debt.’, Reduces consumer demand for financed goods., ‘Lowers business expansion due to expensive borrowing.’’’,
How are productivity and profitability related?
Higher productivity means more output with the same or fewer resources, lowering costs which increase profitability if sales and prices are maintained.
What role does employee participation play in social responsibility?
Labour democracy promotes worker involvement in decision-making, and businesses are expected to support education, health, and well-being initiatives.’’’,
Why must businesses be concerned with the ecological environment?
Because they rely on natural resources for production, and unsustainable use can lead to shortages, cost increases, and regulatory pressure.’’’,
Why is the political environment difficult to manage?
Because it’s highly unpredictable, and policy changes (e.g., taxation, regulation) can dramatically impact business operations.’’’,
What role should government play in the economy?
It should create a conducive environment for business through sound policy, infrastructure, and market support.’’’,
What is the institutional environment?
It includes government and industry institutions (e.g., SARS, DTI, labour unions) that influence or support business through policy, regulation, or advocacy.’’’,
What is the function of the market environment?
It links the business to the broader macro-environment, directly influencing competitiveness and performance.’’’,
What is the role of interest groups in the market environment?
These groups (e.g., NGOs, media) can influence public opinion and pressure businesses toward more ethical and transparent practices.’’’,
Why is understanding consumers critical for businesses?
Because consumer needs, behaviours, and perceptions directly impact product demand and marketing strategy.’’’,
How do businesses gain an edge in a competitive environment?
By developing unique value propositions, adapting strategy, and innovating faster than rivals.’’’,
Why are suppliers strategic stakeholders?
Because supply chain efficiency, cost, and quality directly affect production and customer satisfaction.’’’,
What is the purpose of strategic alliances?
To access expertise or resources not available internally and to exploit opportunities or reduce market threats collaboratively.,
Why is capital important for entrepreneurial ability?
Because it funds all operations and determines whether business goals are financially realistic and sustainable.,
How do raw materials impact entrepreneurial capacity?
They directly affect production. Proper sourcing ensures the right quality and quantity to avoid disruptions.,
What is the role of management skill in the micro-environment?
Skilled management drives success by effectively coordinating people, capital, and resources. Without it, even strong potential may fail.’’’,
How can SWOT help decision-making?
It provides a structured framework to convert threats into opportunities and weaknesses into strengths.,
