Topic 4 Flashcards
Meaning of macro environment
Always changing and developing.
Businesses have no control over environment
Reasons why the macro environment can be a challenge to the business.
Business has no control.
Environment always changing.
Components of the macro environment and examples of each
Physical environment
Economic
Social
Cultural
Technological
Demographic
Legal
Ploticam
International
Institutional
Pestil
Political
Economic
Social
Technological
Legal
Environmental
Political environment
Represents government and institutions and public and private stake holders that influence the business. Actions taken by the government.
Examples of Political environment
Tax policy :
Tax rates decided by the giv that impact businesses.
Corruption:
Impacts the implementation of the rule of law and democratic values.
Political instability :
Protects and strikes impact on investment , consumption and economic growth
Challenges of political environment
Political instability:
Strikes protest cause instability and delays in productivity.
Tax policy :
Increased taxation same the same effect as an increase in costs.
Corruption:
Can cause shareholders and investors to lose trust and confidence in business
Economic environment
External economic factors that influence buying habits of consumers and businesses.
Economic environment examples
Inflation
Inflation decreases the value money.
Intrest rate:
Influence the cost of the capital of the business.
Exchange rate :
Price of rand in terms of another currency imports and exports
Social environment
The intermediate lyrical and social setting in which people lice and they society in which the business operates.
Economic environment challenges
Inflation :
Rising costs could affect business sales and profitability.
Intrest rates:
High intrst rates mean that olasns will become more expensive
Exchange rates:
Fluctuations in foreign currency ay restrict imports
Social environment examples
1.Social issues
Includes poverty
2.Health issues
Hiv and aids , tb
3.Language
Social environment challenges
- Social issues affect consumer spending and business profitability
- Serious health issues have negative effect on employee productivity.
- Business may nit br conversant woth local language of their customers
Technological environment
Development in the field of technology with new innovative knowledge.
Technological examples
1.Technological developments
Wireless communication, bus techniques and smartphone applications.
2. Technical skills
Requires training and retaining employees
3. High maintenance cost
Expensive to buy new tech but expensive to maintain
Technological Challenges
- Business may not be aware or able to keep up with latest tech.
- Employees may not be skilled to maintain new tech equipment.
3.staying up to date with latest and greatest tech is important
Legal environment
Laws passed by the government with affect businesses
Legal environment examples
1.Business law
Skills development act (SDA)
Employment Equity act ( EEA)
2. Competition laws
Promotes market competition by regulating anti competitive conduct by companies.
3. Municipal laws
Law passed by local gov such as zoning ordinances, business hours , permits and licenses
Legal environment challenges
- Consider certain acts that may have direct impact on the business.
- businesses may be liable to paying fines for non adherence
- Businesses have to apply for trading license before they are able to legally trade
Environmental
Refers to physical and natural and international and global environment
Physical environment
Natural and man made variables that surround businesses
Examples of physical environment
1.Non renewable resources
Depletion of non renewable resources
2.Pollution
Air , water and noise
Challenges of physical environment
- Some natural resources are expensive.
- Measures to dispose waste material also expensive
International environment
Uncontrollable local and international interactions that influence how a business operates
International environment examples
- Globilisation
International trade - Civil wars
International environment challenges
1.Exploitative nature of large multinational corporations
2. International problems impact businesses across the world
