1. Chapter 1 Unlocking the Business Environment Chapter 1 Introduction By the end of this chapter you should have a better understanding of: the impact that business has on society; the fact that there are internal and external factors that affect how businesses operate; the difference between descriptive, prescriptive and a critique; the concepts of macro and micro analysis; the coverage of each of the different chapters in the book.

2. Chapter 1 Unlocking the Business Environment What is business? We live in a world dominated by business. By business we mean the organised effort that is required to produce services and goods that are required by society. Understanding businesses and the environment in which they operate is both fascinating and complex. To consider the main factors that have an impact on businesses we use the conventional classification of internal and external.

3. Chapter 1 Unlocking the Business Environment What is business? For many people business means a large profit- making organisation such as Tesco or HSBC, which have a variety of different internal departments (finance, human resources, marketing, etc.) but this is only a small subset of the differing types of organisations that exist. The majority of UK businesses are classified as small (less than ten employees) profit-making enterprises. Organisations are groups of people who are coordinated in order for them to achieve common goals.

4. Chapter 1 Unlocking the Business Environment What is business? Given the rich variety of differing businesses, it is useful to have a working definition of what we mean when we use the term business. By business we mean the organised effort that is required to produce services and goods that are required by society. Note that we include profit and non-profit concerns, and also we may mean just a one-person business or a large business organisation.

5. Chapter 1 Unlocking the Business Environment Factors that impact on business There are numerous different parts and processes that organisations require as they seek to conduct their business. Most of us will never actually engage with many of them, although we may well hear about them, for example: The Bank of England raising the base rate; The finance company who produces your payslip; The buying department of a company. Environmental and consumer groups now have an important impact on how a business operates. The first seven chapters of the book consider the internal factors that organisations need to be aware of; the later chapters consider external factors.

6. Chapter 1 Unlocking the Business Environment Macro or micro view Macro is a term used when we are trying to get an overview of what is going on, sometimes referred to as the bigger picture. A micro view is when we home in on the detail. For example, watching a horse race from the stands we would have a good view of the race (a macro view) but may miss the detail of one particular horse. If we looked through a pair of binoculars at a particular horse (a micro view) we would see that horse in detail but perhaps miss everything else.

7. Chapter 1 Unlocking the Business Environment The internal business environment This book will often take a macro view of an organisation when looking at the internal and external environment, and then focus on the micro view as we look in more detail at different parts of a business. Many big organisations have complex internal structures; however, most started out as small concerns. A business can choose to organise itself in a number of ways. There are advantages and disadvantages to the structures they choose.

8. Chapter 1 Unlocking the Business Environment The external business environment There are many factors that impact on a business over which the organisation has no control. The recent increases in fuel charges are a good example; another could be a shortage of a vital component that is no longer available. We classify the external factors that impact on organisations using PESTLED. That is the political, economic, social, technological, legal, environmental and demographic factors. PESTLED is useful when considering the external macro environment of an organisation.

9. Chapter 1 Unlocking the Business Environment How it all fits together As we stated at the start of Chapter 1, not only is business everywhere around us, but the types, varieties, structures and size of a business can vary enormously. Businesses must also identify the key influences that affect them given their particular circumstances, rather than creating a list of all the possible PESTLED influences. In studying business, however, it is important that you are aware of, and can start to assess, some of the options available to organisations.

10. Chapter 1 Unlocking the Business Environment Summary Reading the book would mean that you are interacting with the business that produced the book, the publisher Hodder Education. Indeed it is almost impossible not to interact with business; it is everywhere and fundamental to how our society operates. When studying any topic try and take an objective view, not a subjective one. We say something is subjective when it is based on personal opinions rather than hard facts.