Influences on factors and challenges relating to market environment

Question 1

What is the market environment sometimes referred to as?

Answer 1

Industry/task environment.

Question 2

What are the seven components the business directly interacts with?

Answer 2

• Customers
• Suppliers
• Competitors
• Regulators
• Unions
• Intermediaries
• Civil society

Question 3

Describe customers.

Answer 3

Customers are the people or businesses that are willing and able to buy the goods and services provided to satisfy their needs or wants.

Question 4

Describe suppliers.

Answer 4

Suppliers provide the resources that make it possible for the business to produce the goods and services required.

Question 5

How must the suppliers provide resources?

Answer 5

Suppliers must provide resources:
- at the right time,
- in the right place,
- at the right price, and
- of the right quality.

Question 6

Describe competitors.

Answer 6

Competitors are businesses selling the same or similar products or services in the same market.

Question 7

What are the 5 Porter’s forces that affect competition?

Answer 7

• The threat of new entrants.
• Threat of substitutes products.
• Competitive rivalry - businesses that are the same size, offering similar products at a better price.
• Bargaining power of customers - customers looking for the best quality at the best price.
• Bargaining power of suppliers - number and size of suppliers, ability to use substitute resources and suppliers.

Question 8

Describe regulators.

Answer 8

Regulators impose these rules and laws that guide and regulate businesses and protect customers or consumers.

Question 9

What is the main example of a regulator?

Answer 9

South African Bureau of Standards (SABS)

Question 10

Describe unions.

Answer 10

Unions protect and promote the rights of their members in the workplace, and they negotiate with employers around issues such as wages and working conditions.

Question 11

What are some examples of unions?

Answer 11

• Congress of South Africa Trade Unions (COSATU)
• Federation of Unions of South Africa (FEDUSA)

Question 12

Describe intermediaries.

Answer 12

Intermediaries are those people or businesses that link the micro environment to the market environment. They bring the final product or service closer to the customer or consumer.

Question 13

What are some examples of intermediaries?

Answer 13

Retailers, transport and e-commerce sites.

Question 14

Describe civil society.

Answer 14

Civil society is made up of organisations that are not associated with government, such as:
- CBOs
- NGOs
Schools and universities

Question 15

What amount of control does the business have over the market environment?

Answer 15

Limited control and influence.

Question 16

What is the threat and opportunity in a consumer changing buying behaviour?

Answer 16

Opp: Develop the product/service to meet the new need/want.
Threat: Loss of income due to loss of sales.

Question 17

What is the threat and opportunity in new competitors entering the market?

Answer 17

Opp: improve customer service to ensure customer loyalty.
Threat: decrease in customers resulting in decrease in income.

Question 18

What is psychographics?

Answer 18

The study of consumers based on their activities, interests, and opinions.

Question 19

What is strategic management?

Answer 19

Involves the creation of plans based on the long-term goals of the business.

Question 20

How should a business adapt to challenges relating to competitors?

Answer 20

• Be aware of the market and any new entrants into the market.
• Conduct constant market research.
• Improve customer service.

Question 21

What is a contingency plan?

Answer 21

A plan that is created to be implemented if an unexpected occurrence happens.

Question 22

What is backwards integration?

Answer 22

When a business merges with other businesses that supply raw materials.