Chapter 1 - What is the Business Environment?

Question 1

Model a simple organisation in a Business Environment.

Answer 1

Question 2

Define the Transformation Process (2)

Answer 2

The Transformation Process is why Businesses exist: To turn inputs from their environment (material, labour and capital) into goods and services which bring value so that customers want to purchase them.

Question 3

Define a Microenvironment (3)

Answer 3

The Microenvironment is an example of a Business’ external environment and it creates events that directly impinge on a firm’s activities. Examples include the suppliers, customers, competitors, intermediaries and other stakeholders.

Question 4

Define a Macroenvironment (3)

Answer 4

The Microenvironment is an example of a Business’ wider, non-immediate external environment and it creates events that indirectly impinge on a firm’s activities. Examples include the Political/Legal forces, Social/Cultural forces, Technological forces and Economics forces.

Question 5

Define an Internal Environment (3)

Answer 5

The Internal Environment is a set of forces within a firm which directly affect the firm’s activities. Examples of departments within the firm include: Marketing, Production, Finance, Personnel, and R&D.

Question 6

Define Stakeholders (9)

Answer 6

Stakeholders are a (group of) people or companies who have a keen interest in the activities of an organisation, such that they hold a stake in it.

Question 7

Define Intermediaries (12)

Answer 7

Intermediaries are what large-scale manufacturing firms use to deal with/sell products to individual customers.

Question 8

Define Channels of Distribution (12)

Answer 8

Channels of Distribution comprise of all the people and organizations involved in the process of transferring title to a product from the producer to the consumer. Examples include distributors, wholesalers and retailers.

Question 9

Define a Credit Crunch (13)

Answer 9

The Credit Crunch refers to the 2008 Financial Crisis, and as a result, the unwillingness of investors and banks to lend money to small businesses.

Question 10

Define an Organisational Culture (14)

Answer 10

Organizational Culture concerns the social and behavioural manifestation of a whole set of values that are shared by members of the organization. Cultural values can be shared in a number of ways, including: the way work is organized and experienced; how authority is exercised and delegated; how people are rewarded, organized and controlled; and the roles and expectations of staff and managers.

Question 11

Define an Environmental Set (15)

Answer 11

The Environmental Set refers to the people and organisations within a particular company’s business environment that are of particular relevance to it.

Question 12

Define Strategic Alliances (16)

Answer 12

Strategical alliances refers to the network formed between individual set members

Question 13

Define a Value Chain (16)

Question 14

Define an Information Environment (18)

Question 15

Define a Closed System (25)

Question 16

Define an Open System (25)