Chapter 6 Flashcards
What are the 3 business environments?
Micro environment
Market environment
Macro environment
Macro environment
These factors have an impact on the business:
Political factors
Economical factors
Social factors
Technological factors
Legal factors
Environmental factors
Market environment
We have to be aware of the impact of the following elements of the business:
Competitors
New competitors
Substitute goods
Suppliers
Consumers
Micro environment
The business functions:
Purchasing function
Production function
Financial function
Human Capital function
Marketing function
Public Relations function
Administration function
General Management function
The Purchasing function
The purchasing department buys goods and services that are required by all the functions within the business
The 3 types of purchases taking place
Products purchased for business’s own use
Products that are purchased so that they can be re-sold
Products that are purchased with the aim of processing them to manufacture other products
What do people look for in a supplier?
They look for people who can offer:
- required product/service
- correct quantity
- correct quality
- required price
- correct time
- best possible price
Risk management in purchasing function
Businesses can make the best possible profit by negotiating the lowest possible price without compromising the quality of products.
Place orders and follow up to ensure that what they have ordered and delivered.
Must have a contingency plan in place when a supplier is unable to deliver goods on time due to unforeseen circumstances like a strike
It is essential that this function develops a system to control stock
-shouldn’t be too much stock because it could end up being stolen or damaged
- should not be too little stock
The Production function
Its aim is to create value by changing raw materials into a form that will satisfy customers’ needs or wants
Risk management in production function
Manufacturing costs must be kept as low as possible without compromising the quality of the product
Must ensure that it can produce the right quantities of the correct products at the time and place at a a price the customer is prepared to pay
There must be a contingency plan in place
The Financial function
The financial function is important because apart from developing all budgets within the business, it aims to ensure maximum profits, increase profitability, safeguard liquidity and maintain solvency
The Human capital function
Is important because it is responsible for putting programmes in place to ensure that workers
are happy and motivated, otherwise the business’s productivity and profitability could suffer, it determines the number of workers and types of skills required by the business, conducts recruitment, interviews, determines salary structures and
ensures suitable candidates are appointed.
The Marketing function
It promotes the business by identifying the target market and determining which products are in demand, what price the consumer is willing to pay, where (place) product should be sold and how this information should be made known to the consumer. In addition, the marketing function creates a winning trade
What is the difference between a logo and a slogan?
A logo is a name, emblem, or trademark of a business or organisation. It may comprise a
picture or symbol.
A slogan is a short, catchy, easy to remember, arresting phrase that is immediately identifiable
as synonymous with a particular brand or product.
Marketing instruments
1) Product policy
2) Price policy
3) Place
4) Promotion policy
(advertising, sales promotion, personal selling, publicity)
