L6 l Micro Environment l Elements

Question 1

What are the 4 factors of production?

Answer 1

HR
Capital
Entrepreneurship
Raw Material

Question 2

How are Business policies formulated?

Answer 2

They are formed whilst keeping the vision, mission, goals, and objectives of the business in mind.

Question 3

What is the purpose of business policies?

Answer 3

To give direction to the different functions and create a framework in which all business functions operate.

Question 4

How can policies be worth nothing.

Answer 4

If they are not bieng monotored by managment.

Question 5

What is business culture?

Answer 5

The beliefs and values in the business.

Question 6

Why is business culture important?

Answer 6

It directs the behaviour and attitudes of the internal stakeholders of the business.

Question 7

What does a positive business calture lead to?

Answer 7

Team work, synergy and a general buy-in of decisions taken by management.

Question 8

What does the market environment consist of?

Answer 8

Elements outside (external) the business.

Question 9

What does the business need to do in order that these elements dont affect the business?

Answer 9

-assess the extent these elements could impact on the business

-put the necessary plans in place to deal with these elements.

Question 10

What elements are found in the market environment?

Answer 10

-Suppliers

-Consumers

-Competitors

-Strategic Alliances

-Intermediaries

-NGO’s

-Industry Regulators

Question 11

Suppliers?

Answer 11

• Dependent for materials and/or services to ensure it can manufacture the product and/or sell to its target market.
• Business needs to form strong relationship.

Question 12

How do suppliers have ‘’some power over the business’’?

Answer 12

• If the supplier demands a higher price for materials, it will result in the businesses having to increase their own selling price.
• If the supplier does not deliver the materials on time, the business will not be able to meet its objectives, which could result in a loss of sales for the business.

Question 13

Consumers?

Answer 13

• The people who buy and/or use the business’s products/services.
• The business has to follow consumer trends to make sure that the business is consistently meeting the demands of its customer base.

Question 14

What buying power do consumers have over the business?

Answer 14

If the consumer feels that the price of the product is too high, he/she will stop purchasing the product and this may force the business to lower its price (or lose customers).

Question 15

Competitors?

Answer 15

• These are companies that sell the same, similar or substitute products (or services) to the same target market as the business.
• The business has to ensure that it creates and maintains a competitive advantage in the market, to maintain or increase its market share.

Question 16

Strategic Alliances?

Answer 16

This is where two or more businesses decide to join forces to take advantage of opportunities in the market.

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Question 17

Intermediaries?

Answer 17

• Intermediaries are ‘’middlemen’’ who form a link between the business and its consumers in the distribution channel.
• Intermediaries are also able to assist the business in tracking trends in customers’ needs and wants.

Question 18

NGOs ( Non-Government Organisations)?

Answer 18

• These are non-profit businesses that focus on issues such as uplifting or developing certain groups in society or protecting the environment.
• These NGO’s demand that businesses act in an ethical manner and that the business plays an active role as a corporate citizen when it comes to social responsibility issues.

Question 19

Industry Regulators?

Answer 19

• These groups provide guidelines to businesses on how to act to ensure that businesses are operating in an ethical manner. They are the watchdogs of industry.
• Trade unions also form part of the industry regulators.
• SABS for example