Chapter 4 - The Business Environment

Question 1

What is the most important characteristics of the buss environment?

Answer 1

The interrelatedness of the:

• environmental variables
• the increasing instability
• the environmental uncertainty
• the complexity of the environment

Question 2

Which 4 environmental variables influence INFLATION?

Answer 2

1) physical environment
2) consumer buying power
3) international environment
4) economic environment

Question 3

The micro environment of the business are viewed with 3 sets of variables. What are they?

Answer 3

1) vision, mission and objectives of the buss
2) it’s management
3) it’s resources

Question 4

What ? does the Vision Statement answer?

Answer 4

“What do we want to become?”

Question 5

What ? does the Mission Statement answer?

Answer 5

What is our business? (Long term objectives)

Question 6

A business’s resources include?

Answer 6

• tangible resources (machines ect)
• intangible resources (brand name, patents)
• organizational capabilities (ability to combine people, resources and process)

Question 7

In Buss Mng, who is the market?

Answer 7

People who have needs to satisfy and have financial means to do so.

Question 8

What is personal disposable income?

Answer 8

The portion of personal income that is left after taxes and credit payments (loans). This is available to buy with.

Question 9

The consumer market can be divided into 3 divisions. What are they?

Answer 9

• durable products ( furniture)
• semi durable products ( food)
• services

Question 10

By which 5 factors are the nature and intensity of competition determined?

Answer 10

1) possibility of new entrants (or departures)
2) bargaining power of consumers
3) bargaining power of suppliers
4) availability of substitute products / services
5) number of competitors

Question 11

Which technology trends should managers in SA watch?

Answer 11

• Water tech (acid water problem)
• Mineral tech (fracking)
• Marine tech (coastal resources)
• Agri and Vet tech (genetic modified)
• Medical tech (epidemics)
• Transport tech (urbanization)
• Power tech (solar power)

Question 12

Which physical environmental issues are a concern for buss?

Answer 12

1) population and health patterns
2) food
3) water
4) energy and climate
5) biodiversity

Question 13

What factors present treats but also opportunities to buss?

Answer 13

1) cost of energy
2) growing cost of population
3) environmentalism
4) scarce resources

Question 14

Why is Environmental Scanning important for business?

Answer 14

1) environment constantly changing - purposeful monitoring to keep abreast
2) scan for threats to present strategy
3) scan for opportunities
4) will be more successful than buss who don’t scan
5) scanning necessary to adequately adapt to change - large corp fail when not scanning

Question 15

What factors determine the extent of environmental scanning?

Answer 15

1) the basic relationship between the business and its environment
2) the more unstable the environment the more sensitive the business is to change
3) the source and extent of change

Question 16

Name 3 methods / guidelines for environmental scanning.

Answer 16

1) update relevant secondary or published info obtainable from media, financial journals, statistics ect
2) a more advanced form is the addition of primary info or special investigations on a particular aspect of the environment
3) a much more advanced method could be to establish a scanning unit within the business to continuously scan various factors

Question 17

What are the 3 sub-environments of business?

Answer 17

1) micro environment - buss itself
2) market environment - consumers, competitors, intermediaries, suppliers
3) makro environment - technological, economic, social, physical, institutional and international