Business management 1 a lu2


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Business management 1 a lu2

  1. 1. Different Business Environments0 Economic systems- pg 70 “ the way in which a state or a nation allocates its resources and apportions goods and services in the national community”.0 An ‘economy’ is the system of production, distribution and consumption0 There are four economic systems 0 Traditional, market, command and mixed economic systems
  2. 2. Different Business Environments0 Traditional 0 People use resources available to produce what they need 0 People plant and harvest food on their own land 0 They follow what their parents did and what their parents’ parents did back in the day 0 Tradition decides what they do for a living 0 Typically they produce only as much as they need for themselves
  3. 3. Different Business Environments0 Market system – capitalism 0 Country’s economic decisions are the result of individual buyers and sellers in the market 0 Anybody is free to enter the business market 0 No restrictions on who may run a business, sell goods, deliver services, who may trade or where they may trade 0 This allows entrepreneurs to start businesses that satisfy needs and wants 0 Essential principle is competition
  4. 4. Different Business Environments0 Market system – capitalism 0 Competitions Act ensures there is free competition and that big companies do not have an advantage over smaller companies 0 Nowhere in the world is there a perfect free-market system 0 In SA the market system has a high level of government intervention and control- we therefore have a controlled free market system
  5. 5. Different Business Environments0 Command system- communism 0 Main decision maker about how resources are used is the government 0 No individual may independently decide to start and run any type of business 0 The government decides how the economy will operate and which resources are used 0 Eg, North Korea, Cuba
  6. 6. Different Business Environments0 Mixed System- socialism 0 Mix the elements of several systems 0 Government controls major sectors such as roads, electricity, even some major manufacturing plans 0 Smaller services such as consumer products are left for the entrepreneurs to provide 0 State still provides infrastructure and social welfare benefits 0 Table 1.1 on page 9- compares the economic systems
  7. 7. Different Business Environments0 How economic systems affect businesses 0 Level of development of the country 0 SA has a combination of economies 0 Government passes laws to protect local industries and businesses from stronger foreign competition 0 Government needs to provide investors with security of a stable environment 0 Political upheaval causes much insecurity
  8. 8. Business Environments0 Business is reliant on the community to purchase their good/services and visa versa0 Therefore a business operates within an environment which can cause the business to either lose or make money0 The environment changes continually so the manager/owner needs to be on track with the trends and changes
  9. 9. Business Environments0 If people do not buy from a business it will suffer0 Competition can also kill a business0 Labour strikes and natural disasters can also impact a business0 In addition, happenings from around the world can affect business, eg, Tsunami, US greed, Whitney Houston0 Internal environment- micro environment0 External environment- market, macro environments
  10. 10. MicroEnvironmentMarketEnvironmentMacroEnvironment
  11. 11. Micro Environment0 It’s the business itself, everything that occurs internally in the business0 Eight interdependent tasks 0 General management 0 Purchasing 0 Operations and logistics 0 Marketing 0 Finances 0 Human resources 0 Public relations 0 administration
  12. 12. Market Environment0 Part of the business’s external environment and includes consumers, competitors, regulatory bodies, labour market and special interest groups0 These factors can influence a business positively or negatively0 Managers are unable to control these variables but may have an impact on them
  13. 13. Macro Environment0 All variables outside of the business0 Economic, social- cultural, political, technological, physical and international environments0 The macro environment can influence the business but the business cannot affect the macro environment0 However the business can influence a sub- environment within the macro-environment
  14. 14. Exercises and Activities0 Revision exercise in your manual on page 38 0 Questions 1-30 Briefly describe the four (4) economic systems and state in which of these SA operates and motivate your answer