Topic 3

Question 1

What is the The Macro environment

Answer 1

• External influences and challenges on the business.
• Influences are completely out of the control of the business
• Remember in the micro environment the influences were under the control of the business and in the market environment it was out of their control but they were able to influence it.

Question 2

What are the Elements of The Macro environment

Answer 2

• Physical or Natural environment
• Economical environment
• Social, cultural and demographic environment
• Technological environment
• Legal and political environment
• International environment
• Institutional environment

Question 3

What is Physical or Natural environment

Answer 3

-This environment refers to physical elements that can affect a business

Question 4

What is the Natural resources of the Physical or Natural environment

Answer 4

• Crucial for the production of goods
• Definite amount available and difficult to renew
• Scarce and therefore very expensive
• The only way to influence this element is to reuse and recycle

Question 5

What is the Infrastructure of the Physical or Natural environment

Answer 5

• Is provided by the government
• Shortages of infrastructure can have very negative effects on a business
• South Africa is a developing country and therefore there is constantly improvement in our infrastructure.
• Upgraded highways, the Gautrain and 4G are a few examples of improvement in our infrastructure

Question 6

What is the Pollution of the Physical or Natural environment

Answer 6

• There is a duty on all businesses to cause as little as possible pollution during production.
• The best way to reduce polution is to recycle already produces goods

Question 7

What is the Economic environment

Answer 7

-Refers to economic forces that can have an impact on a business

Question 8

What is the Exchange rates of the Economic environment

Answer 8

• When the Rand is strong, imports have to take place because it will cost less to do so
• When the Rand is weak, exports have to take place because we are getting paid in currency that is more valuable than our own

Question 9

What is the Interest rates of the Economic environment

Answer 9

• When interest rates increase it means that the amount of money that was borrowed by businesses and individuals increase, this causes them to have less to spend and less eager to buy more goods on credit.
• When the interest rates decrease, the exact opposite is true.

Question 10

What is the Inflation Rate of the Economic environment

Answer 10

• When inflation increase, it means you pay more for the same goods and services and the quality of the product remains the same
• Increased prices for goods and services also leads to an increase in production costs
• When the price of goods and services increase, consumers have less money to spend and it affects the profit of businesses

Question 11

What is the Labour action by employees of the Economic environment

Answer 11

• The main reason for this is normally employees striking for higher wages
• During a strike production comes to a halt and businesses suffer huge losses that need to be recovered and higher wages also have to be paid.
• For some businesses the losses are too great and they sometimes have to close and leave their employees unemployed.

Question 12

What is the Dumping of the Economic environment

Answer 12

• Developed countries with large amounts of resources often produce goods at much lower prices than local producers
• These countries then flood local markets with their products and sell them at lower prices than locally produced goods
• The demand for local products decline and this cause financial strain on local businesses which sometimes causes them to lay off workers and even close their doors.

Question 13

What is Social, cultural and demographic environment

Answer 13

-Refers to all people their behaviour, likes and dislikes

Question 14

What is the Social environment of the Social, cultural and demographic environment

Answer 14

• People are consumers and employees
• Consumers spend money at businesses
• Employees work and produce goods and services for businesses
• Consumers and employees affect the profit of a business

Question 15

What is the Cultural environment of the Social, cultural and demographic environment

Answer 15

• Culture determines people’s lifestyle and behavior
• Cultural differences between employees can have a negative effect on a business
• Businesses need to know their target market’s culture and provide goods and service that fit the requirements of such culture
• Different cultures have different needs and while one culture will buy a lot of one product another culture will not buy it at all

Question 16

What is the Demographic environment of the Social, cultural and demographic environment

Answer 16

-This environment is important for businesses because it is based on people and people are consumers

Question 17

What is the composition of a population based on:

Answer 17

-Size
Density
Location
Age
Gender
Race
Occupation
Income

Question 18

What is Technological environment

Answer 18

• Technology is both an advantage and a disadvantage for businesses.
• It widens the clientèle of a business because of on-line shopping
• Technology forces businesses to constantly improve their products and this is often very costly.
• Technology increases the speed at which trade is done.

Question 19

What is the Legal environment of the Legal and political

Answer 19

• Refers to all rules, polices and legislation that businesses need to adhere to
• Contracts with employees

Question 20

What is the Political environment of the Legal and political

Answer 20

• Foreign investments are determined by political stability
• When other countries do not agree with the political policies of a country they can introduce sanctions and limited or end economical activities with that country.

Question 21

What is the International environment

Answer 21

• Due to advances in technology, communication, and trade the world has become a global village and enterprises now not only have to compete with other local businesses but also with international businesses
• International trade now also affects local suppliers

Question 22

What is the Institutional environment

Answer 22

-Organisations exist that regulate trade

Question 23

What services do the Institutional environment offer

Answer 23

• Testing of products
• Preventing the formation of monopolies
• Protecting of legal trade
• Combattting illegal trade activities

Question 24

What are the examples of institutions that assist in the provision of these services

Answer 24

SABS - facilities for the testing of materials and products
JSE - share prices on a daily basis
SARB - issues bank notes

Question 25

What is the The Relationship between the environments

Answer 25

• Employees are part of the micro environment.
• When a business employs a person, it needs to issue the new employee with an employment contract, register the employee with SARS for tax deductions, as well as with the Department of Labour for UIF deductions
• This process forms part of the legal environment, which forms part of the macro environment.

Question 26

What are the events in one business that can have an effect on all three business environments

Answer 26

• If a business wants to pursue a new business opportunity
• Opportunities are part of the market environment
• Because this is a new business opportunity, the business will have to employ new employees
• Employees are part of the micro environment.