WEEKDAYS –MON-FRIDAY ;8;00-14;00
1. The learner should able to demonstrate knowledge and analyse the impact of
changing and challenging environments on business practice in all sectors.
• Identifying the components of business environments (micro, market
• Analysing and describing the features of the business environment and
• Exploring contemporary socio-economic issues (e.g. poverty,
HIV/AIDS, unemployment, gambling, skills levy, violence, crime, riots,
inclusivity) and analysing their impact on business.
• Investigating and classifying the nature of business (primary, secondary
and tertiary sectors).
WE HAVE THREE BUSINESS
The micro environment refers to the internal factors that will influence the
performance of the business.
These include aspects such as:
-The different business functions;
- The resources available to the business; and
The business policy.
All the' elements of the micro environment are directly controlled by management
There are eight main functions in a business. The entrepreneur must know how to manage
all aspects of the
business, but if he does not know how to do everything himself, he can employ other
people to help in the
business. The functions in the business are as follows:
Personnel/Human resources (HR)
Public relations (PR)
human resources (employees),
financial resources (capital) or
physical resources such as raw material or equipment used in the business in order to
The organisational culture can be described as the values and beliefs that are shared
business. People's attitudes and behaviour will be guided by the culture in the
If the culture is positive, cooperation and achievement will be the mutual
goal, while a negative culture
could lead to conflict and employees undermining one another.
The organisational structure refers to the way in which labour, authority,
and other resources are organised to ensure all components will work
together to form a system in
which business objectives can be met
The market environment consists of elements immediately outside the business; therefore management
very little control over the market environment.
IT CONSIST OF ;
The market environment will consist of SUPPLIERSselling the required quality
products to the business at a fair price at the time when they are needed. These
products will then
be delivered to the place where they are needed. Alternatively the supplier does not
have to sell a product, but can also deliver a service to the business.
CONSUMERS are the A purchaser of a good or service in retail.
Or An end user, and not necessarily a purchaser, in the distribution chain of a good
COMPETITOR are other businesses that sell the same, similar or substitute products
to the same target market. It is not only existing competitors that will influence the
business's actions, but also potential new entrants to the market. The higher the level
of competition, the better the quality of product that has to be delivered to the
consumer and the lower the business has to keep the price in order to make it
attractive to the customer.
A business may decide to form a STRATEGIC ALLIANCE with another business in
order to potentially expand the target market. An example of such an alliance is the
agreement between Edcon and Medicross that patients may use their Edgars cards to
pay for doctors' consultations at Medicross. This ensures that people who do not have
cash or medical aid facilities to pay for the doctor can use their Edgars credit facility to
obtain the services they need. This enlarges the potential customer base for sales
transactions for both Medicross and Edgars
Agents or brokers act as INTERMEDIARIES between the business and the
consumer and therefore they also form part of the market environment. In fact all
members of the distribution channel can be seen as intermediaries between the
manufacturer and the consumer. The wholesaler acts as a link between the producer
and retailer, while the retailer interacts with the consumer as the last link in the
Non-Government Organisations (NGOs) are usually non-profit organisations that
focus on environmental, social or educational issues. One such organisation is Junior
Achievement (JA) which uses sponsorships from businesses to provide
entrepreneurial education to both the youth and adults.
Industry regulators also form part of the business' market environment as
they control and guide the actions of businesses to ensure consumers are
not exploited. Examples of such regulators include the Financial Services
Board and the Ombudsman for Insurance
Developments on the national and international scene, technological advances, economic
influences, po-litical pressures and social factors all impact on the business from the macro
P - Political environment
E - Economics
S - Social factors
T - Technology
L - Legislation
E - Environmental factors
Extended PESTLE or P*E*STLE
P - Physical
E - Ethical
On the political front developments may impact on the businesses of the country. Do
we need a better example than our neighbour to the north, Zimbabwe, to see what the
impact of politics can be on con-sumers, businesses and the economy in general?
Factors in the economic sphere that are impacting on the business include aspects
such as inflation, fluctuating exchange rates (imports and exports), interest rates,
unemployment, globalisation and the state of the world economy. In late 2008 the
world entered a period of recession which caught up with South Africa in the second
quarter of 2009. This means that people in the country are experiencing economic
hardship and as a result the general standard of living will be lower due to the reduced
purchasing power. Businesses also feel the pressure on their bottom line (profit) as
employees demand higher wages while consumers spend less.
Socio-economic issues form part of the macro- or external environment, and especially
in the South African context they influence the day-to-day management of the business.
It is important to be aware of these issues and how they affect the business.
Technology is constantly changing at a rapid pace and this leads to both opportunities
and challenges for the business. Think about the impact of technology such as the
advancement in computers and the Internet and how this has impacted on the world of
business. New production processes also mean faster and mostly more accurate
production, but may lead to socio-economic problems such as job losses and
unemployment as a result of retrenchments
Legislation (the laws of the country) could have a huge influence on the corporate
world should Govern-ment decide to introduce new laws. In this regard we may think
about labour laws such as Employment Equity or the Credit Agreement Act that
stipulates conditions for allowing credit to consumers.
Environmental factors such as pollution (noise, water and air), bio-fuels, recycling and
nature conservation may also have an impact on the business
Physical factors relate to the immediate environment of the business. Is it
situated in a mountainous area where access is difficult; next to the coast
where the weather may affect the products; etc?
Ethical factors are becoming increasingly important as businesses are held
responsible for the morality of their decisions and the effect that those
decisions have on their employees, clients and other stakeholders.
IN THE NEXT LECTURE WE
WILL BE DISCUSSING THE