BUSINESS ENVIRONMENTS DIFFERENT BUSINESS ENVIRONMENTS MICRO

IN THIS ENVIRONMENT, MANAGEMENT IS IN FULL CONTROL All companies must have some sort of VISION, MISSION & STRATEGY. This simply means that any business must WANT to achieve something and this can only be done by having a strategy. MANAGEMENT A company must have a manager due to the fact that they must provide some sort of leadership. Managers must decide how to use organisational resources and how to accomplish goals. Managers are therefore responsible for : Organising, Leading, Controlling the business which leads to the accomplishment of goals. BUSINESS FUNCTIONS There are a few functions that enable the business to deliver goods/services of a high quality. Such as : PRODUCING the best quality products. PURCHASING the best products at the best price so that you always have sufficient stock on hand. Developing PUBLIC RELATIONS which will give the business a good name. Effective MANAGEMENT. The way in which products are MARKETED (ie. Advertising). HUMAN RESOURCES, which is sourcing the best quality workers whose skills can be developed (eg. Enhance their technological skills). Finally the business must also funtion FINANCIALLY (ie. Budgets, increasing profitability etc.)

ORGANISATIONAL STRUCTURE This simlpy means that a company has different entities or levels within itself. The type of structure that a company has depends on the business itself and its size. WORKING ENVIRONMENT This is actually the way in which the company chooses to work. Therefore you can have strict or relaxed environments depending on the business and its owner. A good comparison is between Google(relaxed) & an accounting firm (more strict).

MARKET ENVIRONMENT CONSUMERS COMPETITORS IN THIS ENVIRONMENT MANAGEMENT HAS NO CONTROL OVER THE MARKET BUT MANAGEMENT CAN INFLUENCE CERTAIN FACTORS RELATING TO IT. CONSUMERS Consumers are a businesses customers. They provide most of the income but are also very important, not only to the company but the economy, because without their demand for goods there is no income therefore the economy collapses! It is always good to develop customer relations, this improves business.  COMPETITORS Competitiors are the other businesses that sell similar products or provide similar services as you. These businesses are your opposition and therefore your management of your company as well as the marketing of your products is very important. This will influence how well your company does and will therefore draw more customers.

EXAMPLE OF TWO COMPETITORS IN THE SOUTH AFRICAN MARKET VS

According to Outsurance we should “CUT OUT THE MIDDLE MAN” MARKET ENVIRONMENT SUPPLIERS A business will always have a/many suppliers(s) in order to purchase stock. This therefore relates to how the business PURCHASES goods which means a highly skilled manager is needed in order to source the right suppliers and good. INTERMEDIARIES Simply put, an intermediary is the ‘middle-man’. An example would be Adidas, them being the manufacturer of clothes etc. , a wholesale/retail store buying from Adidas to RESELL would be the intermediary and the customers are the consumers. According to Outsurance we should “CUT OUT THE MIDDLE MAN” …

MARKET ENVIRONMENT STRATEGIC ALLIES REGULATORS A strategic alliance is a relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organisations. In such an alliance, partners can provide resources such as, products, distribution channels, manufacturing capability, project funding, capital equipment and even expert skills. REGULATORS Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. Therefore one can consider regulation as actions of conduct imposing sanctions, such as a fine, to the extent permitted by the law of the country.

MACRO ENVIRONMENT POLITICAL FACTORS ECONOMIC FACTORS SOCIAL FACTORS IN THIS ENVIRONMENT, MANAGEMENT HAS NO CONTROL OVER THE ENVIRONMENT There is an abbreviation that summarises the MOST important factors in the macro environment: P E S T E L POLITICAL FACTORS ECONOMIC FACTORS SOCIAL FACTORS TECHNOLOGICAL FACTORS ENVIRONMENTAL FACTORS LEGAL FACTORS

MACRO ENVIRONMENT POLITICAL FACTORS These factors refer to government policy such as the degree of intervention in the economy. What goods and services does the government want to provide? To what extent does it believe in subsidising firms? And what are its priorities in terms of business support? Political decisions can impact on many vital areas for business such as the education of the workforce, the health services provided to the public and the quality of infrastructure of the economy such as road and rail transport systems. ECONOMIC FACTORS These include interest rates, taxation changes, economic growth, inflation and exchange rates. What does this mean ??? Higher interest rates may deter investment because it costs more to borrow. A strong currency may make exporting more difficult because it raises the price in terms of the foreign currency. Inflation may provoke higher wage demands (which we all know leads to strikes etc.) from employees and may therefore raise costs. Higher national income growth may boost the demand for a cpmpanies products.

Due to inflation, we see the value of some currencies decrease dramatically. In todays time, money is losing its value but the cost of living increases.

MACRO ENVIRONMENT SOCIAL FACTORS Changes in social trends can impact on the demand for a busineses products, the availability and willingness of individuals to work. E.g In the UK, the population has been ageing. This has increased costs for firms who are committed to pension paymentsfor their employees because their staff are living longer. Therefore the ageing population has an impact on demand. For the above situation, the demand for medicine will increase but the demand for toys falls. TECHNOLOGICAL FACTORS New technologies create new products and new processes. MP3 players, computer games and high definition TV’s are all new markets created by technological advances. Online shopping,bar coding and computer aided design are all improvements to the way we do businessas a result of better technology. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products.

In the pictures below it is evident that the advance in technology has improved the way we live even though it may come at a bit of a price. People also use smartphones and internet for information which means books are slowly falling away

MACRO ENVIRONMENT ENVIRONMENTAL FACTORS These factors include the weather and climate change. Changes in temperature can impact on industries such as farming and tourism. With the effects of global warming becoming more evident, the growinng desire to protect the environment is having an impact on travel and transportation industries. More money is being spent/invested into hybrid technology in order to save te environment. The general move towards environmentally friendly products and processes is affecting demand patterns and creating business opportunities.

MACRO ENVIRONMENT LEGAL FACTORS These are related to the legal environment in which businesses operate. In recent years in the UK there have been many significant legal changes that have affected businesses behaviour. The introduction of age discrimination, increase in the minimum wage and greater requirements for firms to recycle are examples of relatively new laws that affect an organisations actions. Some new laws passed in the UK : Consumer Laws, Competition Laws, Employment Laws and Health and Safety Legislation.

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