Chapter 1- Business Environments Flashcards
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What are the components of the macro environment?
Physical environment
Political environment
Economic environment
Social environment
Technological environment
Institutional environment
Why does the business have no control over the macro environment?
The macro environment refers the the major external and uncontrollable factors that influence the business’ decisions
This includes the components of the macro environment and natural forces
The above factors affect business performance and strategies
The external forces that affect businesses are beyond control and change constantly
Outline some ways business can be involved in the macro environment
Influencing suppliers to sign long term contracts
Influencing regulators through bargaining and lobbying
Having bargaining sessions between management and unions
Keeping up with new technology
Explain why business benefits from being involved in the macro environment
Business can predict future events threats and opportunities that may arise
Business can produce an healthier and productive work force
Business can promote accurately to customers
Business can protect natural resources and meet consumer needs
What are the components of the micro environment?
The business mission and objectives
It’s management and structure
Its resources and culture
What are the components of the market environment?
Customers
The final users of a product or service
Suppliers
Providers of goods and services that the business needs to operate
Agents
Who help promote the business
Competitors
Which sell similar products to the business
Regulator
Person or organisation with official power to control activities in the business
Strategic allies
Two or more businesses that work together to obtain profit
Unions
Employee organisations that aim to improve working conditions
Provide reasons why business has more control over the micro environment?
- Business owners have great control over the micro environment of the business which covers day to day decisions
- They choose the suppliers, what products to sell, where to sell the products etc.
- They use their skills and resources to create goods and services that will satisfy customers
List reasons why businesses can only influence the market environment?
- Market environment refers to businesses related influences
- Influences that have an impact on the success in forming and keeping a sustainable business
- Suppliers raw materials can also influence business products
Identify and explain challenges in the micro environment.
- Difficult employees
Difficult employees may have a negative attitude towards new employees
They need lots of supervision to complete tasks properly
They can harm the business reputation
- Strikes and go slows
They can affect the business negatively as employees don’t work
Employees don’t work at all or work slower
Business cannot meet its target
- Lack of vision and mission statement
Lack of vision and mission statement will hamper meaningful guidance to employees
When there is no mission the business will lack focus
- Impact of unions
Trade unions may create tension between management and employees
Business may not be able to meet demands of trade unions
Outline and explain challenges in the market environment
- Competition
Other businesses which sell similar products and pose a challenge to the business
It is difficult to complete with such businesses
If business cannot match the quality of goods and services of competitors it will be in trouble
- Shortage of supply
Businesses that experience shortage of supply may lose customers as they may buy from another business
Raw materials may be unavailable because of natural disasters
Imported goods may not arrive when a country has transport issues
- Changes in consumer behaviour
A business is dependent on customers to buy products
Customers are influenced by many things to change their mind about products
Customers preferences change as fashion and technology change
- Socio cultural factors
Socio cultural factors describe the common behaviour an attitudes of a society
As society changes so will cultural values and practices
Business must be aware of trends and then promote
Suggest ways in which business can overcome competition in the market
BOCT
- Business should offer more personal services by being responsive to customers needs
- Offer low cost extras such as improved credit terms
- Charging low prices than other businesses
- Try to be the best employer that in well trained
