Chapter 6

Question 1

What are the 3 business environments?

Answer 1

Micro environment
Market environment
Macro environment

Question 2

Macro environment

Answer 2

These factors have an impact on the business:
Political factors
Economical factors
Social factors
Technological factors
Legal factors
Environmental factors

Question 3

Market environment

Answer 3

We have to be aware of the impact of the following elements of the business:
Competitors
New competitors
Substitute goods
Suppliers
Consumers

Question 4

Micro environment

Answer 4

The business functions:
Purchasing function
Production function
Financial function
Human Capital function
Marketing function
Public Relations function
Administration function
General Management function

Question 5

The Purchasing function

Answer 5

The purchasing department buys goods and services that are required by all the functions within the business

Question 6

The 3 types of purchases taking place

Answer 6

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

Question 7

What do people look for in a supplier?

Answer 7

They look for people who can offer:
- required product/service
- correct quantity
- correct quality
- required price
- correct time
- best possible price

Question 8

Risk management in purchasing function

Answer 8

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