Topic 1 Micro Environment Flashcards
The 3 Business Environments
⟿Micro Environment (internal)
⟿Market Environment (external)
⟿Macro Environment (external)
These 3 business environments are interrelated and influence one another. They can also influence the success or failure of a business.
The meaning of the micro environment
The micro environment of a business** includes everything inside the business. **
All the internal affairs of the business are managed by the directors or the owners of the business.
The business has full/complete control over its micro environment.
List the…
6 Components of the Micro Environment
1. vision, mission statement, goals and objectives
**2. **organisational culture
**3. **organisational resources
**4. **management and leadership
**5. **organisational structure
**6. **eight business functions.
Vision
The vision of a business describes its long-term goal, that is, where the business sees itself in the future.
⟴Example⟴ To create a world where everyone has access to clean and safe drinking water.
✶Future-Oriented✶ The vision statement is all about what the organization aspires to achieve in the long term. It paints a picture of the ideal future they are working towards.
✶Inspirational✶ It’s meant to be a source of inspiration and motivation, not just for employees, but also for stakeholders and customers.
Mission Statement
The mission statement describes:
what the business provides or produces, and
why the business exists.
It explains clearly the aims and values of the business.
⟴Example⟴ To develop and distribute innovative water purification systems to underserved communities globally.
✤Present-Focused✤ The mission statement describes what the organization does now, its core purpose, and how it aims to achieve its vision.
**✤Action-Oriented✤ **It lays out the specific actions or strategies the organization is taking to reach its goals.
Goals
Goals are the long-term plans that the business wants to accomplish.
They serve as guidelines to help businesses achieve what they set out to do.
⟴Example⟴ To open five more branches in the next five years.
Objectives
Objectives describe HOW goals will be achieved.
They are the short-term, measurable steps that will guide the business owner on **how **their goals can be accomplished/achieved.
They serve as guidelines to help businesses achieve what they set out to do.
**⟴Example⟴ **In order to open up five more branches in the next five years:
* we will upskill our current employees by offering specific and targeted employee training
* we will increase our efforts to reduce carbon emissions
* we will set up specific marketing campaigns to gain greater market share and increase our profit margins.
What is Organisational culture
Organisational culture refers to how things are done in the business.
⟴Example⟴ How the employees communicate among themselves, their dress code and their administration policy,
Organisational culture **also includes **
the values, beliefs, norms and standards that are shared among the employees and management.
The Purpose of Organisational Culture
The purpose of the organisational culture is to **define the business’ internal and external identity as well as it’s core values. **
- A strong business culture has the power to turn employees into ambassadors of the business.
- It helps businesses to retain its employees and clients.
- It breaks down boundaries between teams, guides decision-making, and improves productivity.
Organisational resources (OR)
Refer to the people, equipment and machinery
that a business uses to produce its goods and services.
The FOUR main groups that Organisational Resources are classified into
1. human resources
2. physical resources
3 financial resources
4 technological resources.
OR1 Human resources
Human resources is a set of people who make up the workforce of the business.
OR2 Physical resources
Physical resources are tangible
items that are used in the operation
of the business
Examples: raw materials, building machinery
and vehicles.
OR3 Financial resources
Financial resources refers to the
capital that the business owns or
has borrowed from a financial institute. It includes all the funds that are available to the business,
Examples: bank overdraft, credit cards, long-term and short-term loans.
OR4 Technological resources
Technological resources are intangible resources such as software licences and patents, that can help improve performance of an organisation.
Examples include: computer software, laptops, computers, websites, internet facilities, cell phones, photocopy machines, and so on.
Overdraft
When a bank allows a person with a cheque account to withdraw more than he/she has in the account and charges interest on the extra amount used
Long-term loans
Money that is borrowed and repayable over a number of years.
For example, bonds, debentures,
Short-term loans
Money that is borrowed and repayable within a period of less than a year.
For example, bank overdraft, credit cards, and so on
Competitive advantage
Factors that allow businesses to produce goods or services better or cheaper than its rivals
Subordinate
A person under the authority or control of another within an organisation
Eg: Janines area managers are her subordinates
Organisational structure
Refers to the different levels of authority in an
organisation. That is who does which tasks in the organisation.
https://m.youtube.com/
watch?v=zWy65DdbadE
The purpose of the organisational structure :
The purpose of the organisational structure includes:
- Helping to ensure the smooth and efficient functioning of the business.
- Ensuring that work happens with precise co-ordination and minimum wastage of resources.
- Helping the business to work towards its goals.
- Show the connections between various positions and tasks in the business.
- It describes the coordination between various departments in the business.
Organogram
An organogram shows the level of authority, responsibility and tasks of the various departments in the business.
An organogram shows the hierarchical structure of the business.
The purpose of the Organisational Structure
The organisational structure shows the different departments in the organisation and how they are organised. The organisational structure is also known as an organogram.
Management
The way the business is managed.
The process whereby an individual or individuals guide and direct the organisation to achieve its goals and objectives.
This entails
**1. planning,
2. leading,
3. organising and
4. controlling **
the people and resources in the business.
Leadership
Leadership is the ability of an individual to inspire, influence or motivate their subordinates to achieve the goals and objectives of the business.
What are business functions?
Business functions: the **tasks requiring **specific knowledge and skills that are carried out by the various departments to achieve the goals of the business.
The eight business functions depend on each other to achieve the business goals. These functions work together to ensure the survival and sustainability of the business.
List the 8 Business Functions (BF)
- General Management Function
- Administration function
- Financial function
- Human resources function
- Marketing function
- Production function
- Public relations function
- Purchasing function
BF1 General management
The general management in a business COORDINATES the other business functions to achieve the goals and objectives of the business.
The general management function
* plans,
* organises,
* leads and
* controls resources in the business.
BF2 Administration function
The administration function is responsible for collecting, processing and storing all the data and information required by the business.
The administration function has to be up to date with the latest information technology.
BF3 Financial function
The financial function is responsible for determining all the financial needs of the business.
It ensures that the business’s funds are used efficiently.
It manages all the funds and financial assets of the business.
BF4 Human resources function
The human resources function is responsible for attracting new employees into the business.
It also has to manage all the people in the business by providing education and training for their employees.
BF5 Marketing function
The marketing function undertakes market research to determine the real needs of the target market. It is also responsible for the advertising/promotion of goods and services to customers.
BF6 Production function
The production function is responsible for changing/processing raw materials into finished or semi-finished products.
It ensures that the business creates quality products to meet the demands of the target market.
BF7 Public relations
The public relations function is responsible for creating a good public image for the business.
It ensures that there is proper communication between the business and all its stakeholders.
BF8 Purchasing function
The purchasing function is responsible for buying all the resources that the business needs in order to produce its goods and services.
