Challenges of the business environment

Question 1

Challenges of the micro environment

Answer 1

•Difficult employees
-may have a negative attitude on new employees
-can do harm to the enterprise image if they say negative things about the business
•Lack of vision and mission statement
-the business will lack focus and single long-term objective
-businesses will not be able to allocate resources efficiently and they may struggle to succeed
•The impact of unions
-sometimes unions make demands that are impossible for businesses to meet, resulting in tension between management and employees
-once employees have a grievance against their employees relating to their worker’s rights they will declare an industrial dispute

Question 2

Challenges of the market environment

Answer 2

•Competition
-other businesses which sell similar substitute products pose a threat to the success of the business
-if a business is not able to match the quality of service/products and the price of its competitors, it will lose its customers
•Shortage of supplier
-raw materials may be unavailable when drought cause poor harvest
•without the availability of raw materials, a business cannot produce its product/service to meet the demands of its target market
•businesses depend on suppliers for their raw materials. if the supply or raw materials is disrupted, the businesses’ productivity and profitability will also decrease
•Changes in consumer behaviour
-a business is dependent on its customers to purchase its products
-economic conditions can cause in consumer taste and preference, this could lead to fewer sales
-businesses are forced to continuously study these changes to that they can provide goods/service that consumers always need

Question 3

Challenges of the macro environment

Answer 3

•Changes in income levels
-the number of goods/services that consumers can purchase is determined by their net income
-reduced in consumer spending will result in lower profit for businesses
•Political changes
-a change in government can result in political instability and scare away potential investor and tourist and in in turn threatens the survival of a business
-a business that relies on imported and exported goods may be challenged by the government’s attitude on duties and tariffs imposed
•Labour restrictions
-these restrictions make it challenge for business that have to find the right candidate for the job
-these laws create a legal framework restrictive while others see it as an important of protecting the rights of employees and ensuring democracy in the workplace