Micro Environment Flashcards
Components
Vision, mission, strategy, goals and objectives
Organizational : resources, culture, structure
Management and leadership
8 business functions
Capital resources
Money that is invested so that the business can acquire capital goods
Human Resources
Work people do to produce products
Labor
Natural resources
All natural assets used by a business to produce products and services
Examples: water, coal, gold
Entrepreneurial resources
People that combine all factors of production in such a way the the business becomes operational and profitable
8 business functions
Purchasing Production Public relations Financing Human Resources Administration General management Marketing
Alignments between levels of management
Top:
Sets the direction of the business
Middle:
Serves as a link between top and lower level
Carries out strategic decisions made by top
Lower:
Carries out tactical decisions made by middle
Management responsibilities
Top:
Long term planning
Making strategic decisions
Managing change and risk
Middle:
Medium term planning
Making tactical decisions
Managing each department
Lower:
Short term planning
Making operational decisions
Setting daily performance targets
Steps for controlling risks
Identify from all environments
Determine the extent to which the business is exposed
Evaluate risk
Control risk
Different organizational structures
Line
Functional
Line and staff
Project or matrix
Responsibilities of administrations
Collecting data and info
Handling data and info
Managing info
Office practice
Info Tech
Responsibilities of financing
Plan how money will be spent
Get financing if necessary
Follow up on outstanding money
To pay the businesses accounts
Types of financing
Own capital
Borrowed capital
What is budgeting
Serves as the business’s financial planning
Indicates possible future income and expenditure
Two types of budgeting
Capital budgeting:
- long term
- determines businesses fixed capital and how money will be spent
Cash budgeting:
- short term
- determines businesses working capital and how money will be spent
What is investments
Refers to the use of money to generate wealth and income without having to work
Businesses invest surplus funds
What is an investment portfolio
Refers to the different kinds of investments made by a business
Money can be invested in:
Property Unit trusts Foreign currency Shares Gold
Two kinds of capital
Fixed capital:
- capital that is invested in non-current assets
- vehicles, equipment, land and buildings
Working capital:
- capital used to grant credit, buy stock and pay for expenses
Responsibilities of purchasing
To purchase everything a business needs
Managing stock
Finding best suppliers
Follow up on orders that were placed with suppliers
Employees will engage in the following purchasing activities:
Finding out the business’s needs
Looking for best suppliers
Enough stock
Getting best terms of payment with suppliers
Placing orders
Sending damaged goods back
What is the purchasing procedure
Requisition
Enquire
Select supplier
Order
Accept delivery
Store new stock
Distribute
Advantages of cash trading
Cash traders don’t have problems with unsettled debts
No account has to be sent to debtors
The cash purchaser can qualify for a chase discount
Disadvantages of cash trading
The cash trader can lose the support of customers who don’t have enough money to make cash purchases
If a cash trader makes a payment, there is less money in the business’s bank account that can earn interest
Advantages of credit trading
Credit trader is entitled to charge more for his products to compensate for the time he waits for payment
Credit purchasing enables people who can’t afford to pay on the spot to satisfy urgent needs immediately
Definition of stock control
To monitor stock levels to ensure that the business keeps the right amount of stock
Purpose of stock control
To determine the number and value of stock
To ensure sufficient stock to meet normal demand for customers at all times
To compare stock on shelves with stock records to detect obsolescence and theft
What is stock holding costs
The cost of keeping stock
What are the costs associated with storage
Rent, electricity, heating and light
Businesses that have too much stock may suffer losses,
Such as:
Losses owing to dated and perished goods
Losses owing to theft
Losses owing to fire
Insurance on stock in the store room
The role of public relations
Aims to create a good image for the business
Why is public relations important to a business
It will help a business to:
Attract customers
Satisfy shareholders
Attract good employees
Gain goodwill of community
What are the different methods of public relations
Use of the telephone Word of mouth Publicity Media Exhibitions Social responsibility
Definition of a public organization
And organization that is owned and managed by the government
Definition of private organization and who it is managed by
An organization that is owned and managed by private persons
- depends on type of business
Sole proprietorship - members
Partnership- members
Cc- members
Companies- directors
Definition of quality
Refers to the features and characteristics of goods
What is quality control
Involves control of material, workmanship and machinery used in production process
Aim is to ensure that products are of high standards and are delivered to consumers
Advantages of quality control
Dealers and consumers are assured that products are of good quality
Encourages workers to continue to produce quality products
Production costs can be reduced through elimination if poor products
Leads to improved quality and product design
What are the four basic management activities in the general management function
Planning
Organizing
Leading
Control
Main responsibility of the market function
Distributing and selling products
Main responsibility of Human Resources function
Recruiting, selecting and appointing new employees
