T1: t2: Challenges Of Business Environments

Question 1

List the challenges of the micro environment

Answer 1

1. difficult employees
2. lack of vision and mission
3. lack of adequate management skills
4. unions
5. strikes and go-slows
6. Skills shortages among employees
7. High employee turnover
8. Employee absenteeism

Question 2

List the challenges of the market environment

Answer 2

1. Competition
2. Shortage of supply
3. Changes in consumer behavior
4. Demographics and psychographics
5. Socio-cultural factors

Question 3

List the challenges of the macro environment

Answer 3

1. Changes in income levels
2. Political changes
3. Contemporary legislation
4. Labour restrictions
5. Micro lending
6. Globalization/international challenges
7. Social values and demographics
8. Socio-economic issues
9. Socio-economic challenges

Question 4

Why are difficult employees a challenge?

Answer 4

1. They could harm the business image if they say negative things or have an unprofessional attitude when dealing with customers
2. They may need supervision to complete tasks

Question 5

Why is lack of vision and mission a challenge?

Answer 5

1. Leads to a lack of focus and direction for the business
2. Employees will be without meaningful guidance as the business doesn’t have a goal to work towards

Question 6

Why are lack of adequate managerial skills a challenge?

Answer 6

1. Results in goals being unachieved
2. Managers might not be able to provide meaningful guidance and leadership towards employees
3. Ineffective management can affect productivity and profitability

Question 7

Why is the impact of unions a challenge?

Answer 7

1. May create tension between management and employees
2. Business may be unable to meet the demands of trade unions

Question 8

Why are strikes and go-slows a challenge?

Answer 8

It affects the business as production will decrease

Question 9

Why are skills shortages among employees a challenge?

Answer 9

1. It’s difficult to find suitable employees with the right skills and experience
2. Some businesses employ unqualified workers
3. May contribute to bad decision making and slow production

Question 10

Why is high employee turnover a challenge?

Answer 10

1. Employees resign frequently
2. High TO affects productivity negatively

Question 11

Why is employee absenteeism a challenge?

Answer 11

It decreases productivity and affects profitability

Question 12

Why is strong competition a challenge?

Answer 12

1. Competitors pose a problem to business success
2. Consumers buy where they get the most value for money
3. Must differentiate itself from competitors to gain competitive advantage
4. Should be aware of competitors and prices

Question 13

Why is shortage of supply a challenge?

Answer 13

1. Negative effect on production and profit
2. Raw materials may be unavailable (droughts, interruptions)
3. Poor stock control will result in customers not getting orders
4. Dissatisfied customers can damage reputation and threaten business future

Question 14

Why are changes in consumer behavior a challenge?

Answer 14

1. Product/service no longer suits the target market and sales decrease
2. Preferences and tastes change as fashions change and technology advances
3. Keeping up with changes in taste and demand by doing research, finding ways to influence demand and conducting advertising campaigns add to challenge

Question 15

Why are demographics and psychographics a challenge?

Answer 15

1. Attitude, interest, opinions, lifestyle determine consumer characteristics
2. Difficult to determine demographic and psychographic of target market due to frequent change
3. Should be aware of market’s diversity and cultural + social influences on consumer choices
4. Need to study attitudes, tastes, desires of market

Question 16

Why are socio-cultural factors a challenge?

Answer 16

1. Describes common behavior and attitudes of a particular society
2. As society changes, so will cultural values and practices
3. Be aware of change so they can avoid threats and take advantage of new opportunities that the change may present
4. Be aware of social trends and influential campaigns that promote buying

Question 17

List four ways in which businesses can overcome competition in the market

Answer 17

1. Offering a different product or service
2. Offering a more personal service
3. Having the lowest prices
4. Having superior quality products

Question 18

List four ways in which businesses can develop strong relationships with their suppliers

Answer 18

1. Find and compare different suppliers
2. BBBEE compliant
3. Enter contractual agreement with your suppliers
4. Ensure suppliers are paid promptly

Question 19

Why are changes in income levels a challenge?

Answer 19

1. Factors (unemployment, high interest rate) can leave consumers with less disposable income
2. Decrease in consumer spending results in lower profit

Eg. COVID-19 caused unemployment and salary reduction which resulted in consumers having less money to spend and businesses receiving less profit

Question 20

Why are political changes a challenge?

Answer 20

1. Change in government can result in political instability and scare away potential investors
2. Businesses that rely on imported or exported goods may be challenged by the government’s attitude on duties and tariffs to be imposed

Question 21

Why is contemporary legislation a challenge?

Answer 21

1. Failure to comply can lead to fines or penalties which affects profitability
2. Legislation might limit the number of qualified and skilled staff that the business can employ
3. Might have to pay someone to ensure compliance with legislation, which can be costly

Question 22

Why are labour restrictions a challenge?

Answer 22

1. Government passed laws which impose restrictions on labour practices
2. Restrictions pose a challenge to find the right candidate for the job and employ suitable people locally and internationally

Question 23

Why is micro lending a challenge?

Answer 23

1. Granting small loans to people who can’t obtain credit from banks
2. Puts pressure on businesses since they want to support micro businesses, but they’re a big risk as many fail and can’t repay debt

Question 24

Why are social values and demographics a challenge?

Answer 24

1. Influence buying behaviour as they buy products they identify with (eg. brand name clothing)
2. Attitudes towards saving and brand loyalty can impact spending habits

Question 25

Why is globalization a challenge?

Answer 25

1. Exchange of products, services, capital, labour across countries
2. Local businesses compete with international businesses for local consumers
3. More competition for businesses that are already under pressure to compete locally
4. Be aware of global networks and their effects on them

Question 26

Why are Socio-economic issues a challenge?

Answer 26

1. Many challenges of poverty, unemployment, inadequate education, skills shortages, crime, HIV and Aids
2. All make running a successful business difficult

Question 27

List examples of contemporary legislation

Answer 27

1. National Credit Act
2. Consumer Protection Act
3. Employment Equity Act
4. Broad Based Black Economic Empowerment
5. Basic Conditions of Employment Act
6. Labour Relations Act
7. Skills Development Act
8. Compensation for Occupational Injuries and Diseases act