Directorate: Curriculum FET

SUBJECT and GRADE BUSINESS STUDIES; GRADE 10

TERM 1 WEEK 6 4 HOURS
TOPIC INTERRELATIONSHIP BETWEEN MICRO, MARKET & MACRO ENVIRONMENTS
AIMS OF LESSON Learners should be able to:
• Explain/Describe the link/relationship between the features/components of the micro-environment
• Explain the reasons why competition poses a challenge to businesses.
• Explain the interrelation between micro (internal) and market environments.
• Give examples of the relationship between the:
o Business and consumer
o Business and suppliers
o Business and intermediaries
o Business and competitors
RESOURCES Paper based resources
• 2020 WCED Grade 10 notes: Business Environments
• 2020 WCED Grade 10 Workbooks
• Via Afrika Business Studies Grade 10 Learner's Book
• Platinum Business Studies Grade 10 Learner's Book
• Oxford Successful Business Studies Grade 10 Learner's Book
• Solutions for a Business Studies Grade 10 Learner's Book
• Focus Business Studies Grade 10 Learner's Book
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INTRODUCTION • Refer to your previous knowledge of the three environments.
• Do you know the difference between the three environments and components of the Micro, Market and Macro- environment?
• Summarize it in this table

Environment MICRO MARKET MACRO

Short description

Components

MEMORANDUM:

Environment MICRO MARKET MACRO

• The business itself • It is the environment • The macro environment refers to
• The internal environment immediately outside the interaction of the business with
business. everything outside of the
Short
• Market environment surrounds business.
description
the micro-environment. • The macro environment is also
known as the external
environment.
1. Vision, mission, goals and 1. Consumers (Market) 1. Physical/natural environment
objectives 2. Suppliers 2. Economic environment
2. Organisational culture 3. Intermediaries 3. Social, Cultural and demographic
3. Organisational resources 4. Competitors environment
Components
4. Management and 5. Other organisations / Civil 4. Technological environment
leadership Societies 5. Legal and political environment
5. Organisational structure 6. International/global environment
6. Eight business functions 7. Institutional environment

• Do you know the level of control the business has over each environment?
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• Summarize it in this table

Environment MICRO MARKET MACRO

Extent of control

MEMORANDUM:

Environment Micro Market Macro

Full control Little / Limited control No control
Extent of control
Business can influence
The purpose of the lesson is:
• To explain and create understanding of how the business controls his internal environment (Micro)
• To explain and create understanding of how the business can influence the Market environment.
• To explain and create understanding of how the Market environment influences the business.
• To explain and create understanding of how the Macro environment influence the business.
• To explain and create understanding of how the business can react to the influence of the Macro environment.
CONCEPTS AND SKILLS • Remember not to see each environment as a separate entity, all three of them interact with each other all the time and influence
each other. The management of the business (Micro environment) has to look at the effect of the other environments (Market
and Macro) on the business and take decisions to deal with it, so that the business can flourish.
• Read through and ensure that you understand can describe the following concepts:
TERM DEFINITION
Interrelation The way in which more than one component are related to each other and how they influence each other.
(Explanation - Think about relationships between people – different people have different effect on each other
e.g., your girlfriend or your teacher or your father so the environments and components in each environment
relates differently to each other)
Sufficient stock enough stock – not too much or too little.
Too much stock: business lose money due to cost of stock
Too little stock: business lose money as there is no stock to sell
Affirmative Refers to the practice of businesses to promote equal opportunities among races, genders, religions, people with
action disabilities to redress past inequalities.
(Explanation – Government requires the business to employ people from all race groups and genders and give
them equal opportunities for training and promotion.
Latest trends The newest products that customers prefer to buy or are fashionable.
BEE Black Economic Empowerment – Government expects business to enable previously disadvantaged groups to be
part of management and ownership of the business.
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The first aspect we look at is why competition is a threat to business.

• The market environment creates a lot of competition.

• In the market goods and services are sold and prices of these goods and services are determined. – (think of supply and demand)
• Within the market is there are a lot of competition and different components influence each other.
• Different components are also all interrelated.
(Remember when your service or product is more expensive than that of your competitor, the consumer will rather buy from your
competitor)
Now list the components of the Market environment and try to list two ways of how each of them will affect the business.
Refer to pages 13 & 14 in your Core Notes to assist you with this.

The different components of the Market environment and how each component will influence the business.

Business and CONSUMERS

• Goods and services are advertised to potential consumers.
• Market research is carried out on consumers to determine their preferences and tastes. (newest trends)
• The public relations department ensures that customers remain loyal. (to keep customers)

Business and SUPPLIERS

• Using the best supplier ensures the best quality at the best price.
• Business communicates with suppliers about the latest technology and products.
• Business ensures that the suppliers have sufficient stock to meet the demand of customers.
• Businesses pay their suppliers as they are also their customers.
(The way to look at is that if the business builds a good relationship with the suppliers, the suppliers will try to help the business if there
are problems with products or orders.)

Business and INTERMEDIARIES

• Business must maintain a good relationship with intermediaries. (To get good service from them)
• Intermediaries help the business to access consumers and they influence sales.
• Business must access reliable transport and marketing for their products.

Business and COMPETITORS

• Business must be aware of competitors’ products and prices. (To try to offer better products and prices)
• Business must keep abreast of the latest trends. (Or create their own new trend)
• Business must keep up to date with advertising and marketing trends.
• Businesses must be creative to change competition into something positive.
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To study the influence of the Market environment, start with the components and think of their relation to the business, that is what do
they do for the business or what does the business get from them.

Read through the following section and try to group them into Micro-, Market-, Macro-environment or General statements. That way
you will remember them better.

The RELATIONSHIP between MICRO, MARKET and MACRO environment.

• There is constant interaction between the business and the elements present in all three business environments. (General)
• An entrepreneur uses the factors of production to produce goods and services. (Micro)
• An entrepreneur wants to satisfy the needs of consumers to make a profit. (Market = Consumers)
• During this process, the entrepreneur is exposed to challenges of competitors (Market), as well as the government (Macro).
• Entrepreneurs must face labour crises, BEE claims and affirmative action handle. (Micro and Macro)
• It is a complicated process and many influences are present. (General)
• A business has full control over most elements in the micro-environment. (Micro)
• A business cannot control or influence the elements in the macro environment. (Macro)
• A business must adapt to challenges of the macro environment and be able to formulate strategies to deal with these challenges.
(General)
• The three business environments are interrelated. (General)
ACTIVITIES/ Do the following questions and use the Marking Guideline to mark your answers.
ASSESSMENT
SECTION A:
1. Identify the environment in which the following challenges to the business will be classified. Only write down the name of the
Environment next to the number of the statement as your answer.
1.1. Due to the severe drought sheep farmers in the Karoo had to retrench some of their workers.
1.2. Meaty Butchers obtain most of their meat from the Karoo and due to the drought farmers cannot deliver.
1.3. Government has increased the fuel prices.
1.4. A new butchery has opened in the town offering cheaper prices than Meaty Butchers.
1.5. Strict regulations were introduced concerning the selling of liquor due to COVID
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SECTION B:
Ayesha is the owner of a wig factory called African Styles. She has done a lot of market research and is up to date with the newest trends
in the market and industry. Her main supplier of hair, Nyerenda Hair Ltd, has increased their prices and battles to supply enough hair of
the right quality and colour for her wigs. Ayesha has a reliable company that delivers her wigs to the various hairdressers, called Springer
Transporters.
2. Identify THREE components from the Market environment and justify your answer by quoting from the scenario above. Use the
following table as a guide to answer the question.
COMPONENT QUOTE
2.1.
2.2.
2.3.

3. Expand on the reasons why competition poses a challenge to businesses.

4. Discuss the relationship between Micro-, Market-, and Macro- environments.

SECTION C:

It is important for management to realize that the business is not an entity on its own, it has to function within the business
environments. They have to be aware of the various factors and challenges business faces and know how to deal with them.
Write an essay addressing the following aspects:
• Explain reasons why competition is a threat to business.
• Discuss the components of the market environment and how they influence the business.
• Discuss the relationship between the micro-, market- and macro environments.
• Advise the business on the control it has over the three environments.

MEMORANDUM
Section A:
1.1 Micro
1.2 Market
1.3 Macro
1.4 Market
1.5 Macro
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SECTION B

COMPONENT QUOTE
2.1 Consumers “She has done a lot of market research and is up to date with the newest trends in the market and
industry.”
2.2 Suppliers “Her main supplier of hair, Nyerenda Hair Ltd, has increased their prices and battles to supply enough
hair of the right quality and colour for her wigs.”
2.3 Intermediaries “Ayesha has a reliable company that delivers her wigs to the various hairdressers, called Springer
Transporters.”
3. Expand on the reasons why competition poses a challenge to businesses.
• The market environment creates a lot of competition.
• In the market goods and services are sold and prices of these goods and services are determined.
• Within the market is there are a lot of competition and different components influence each other.
• Different components are also all interrelated.

4. Discuss the relationship between Micro-, Market-, and Macro- environment.

• There is constant interaction between the business and the elements present in all three business environments.
• An entrepreneur uses the factors of production to produce goods and services.
• An entrepreneur wants to satisfy the needs of consumers to make a profit.
• During this process, the entrepreneur is exposed to challenges that of, among others, competitors, as well as the government.
• Entrepreneurs must face labour crises, BEE claims and affirmative action handle.
• It is a complicated process and many influences are present.
• A business has full control over most elements in the micro-environment.
• A business cannot control or influence the elements in the macro environment.
• A business must adapt to challenges of the macro environment and be able to formulate strategies to deal with these challenges.
• The three business environments are interrelated.

SECTION C

Introduction:
• There are three business environments.
• They are the micro-, market-, and macro-environments
• These environments all interact with each other.
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The reasons why competition is a threat to business.
• The market environment creates a lot of competition.
• In the market goods and services are sold and prices of these goods and services are determined.
• Within the market is there are a lot of competition and different components influence each other.
• Different components are also all interrelated.

Components of the market environment and how they influence the business.
Business and consumers
• Goods and services are advertised to potential consumers.
• Market research is carried out on consumers to determine their preferences and tastes.
• The public relations department ensures that customers remain loyal.
Business and suppliers
• Using the best supplier ensures the best quality at the best price.
• Business communicates with suppliers about the latest technology and products.
• Business ensures that the suppliers have sufficient stock to meet the demand of customers.
• Businesses pay their suppliers as they are also their customers.
Business and intermediaries
• Business must maintain a good relationship with intermediaries.
• Intermediaries help the business to access consumers and they influence sales.
• Business must access reliable transport and marketing for their products.
Business and competitors
• Business must be aware of competitors’ products and prices.
• Business must keep abreast of the latest trends.
• Business must keep up to date with advertising and marketing trends.
• Businesses must be creative to change competition into something positive.
The relationship between the micro-, market- and macro environments.
• There is constant interaction between the business and the elements present in all three business environments.
• An entrepreneur uses the factors of production to produce goods and services.
• An entrepreneur wants to satisfy the needs of consumers to make a profit.
• During this process, the entrepreneur is exposed to challenges that of, among others, competitors, as well as the government.
• Entrepreneurs must face labour crises, BEE claims and affirmative action handle.
• It is a complicated process and many influences are present.
• A business has full control over most elements in the micro-environment.
• A business cannot control or influence the elements in the macro environment.
• A business must adapt to challenges of the macro environment and be able to formulate strategies to deal with these challenges.
• The three business environments are interrelated.
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The control the business has on the three environments.
• Micro-environment is the business itself; management has full control.
• Market-environment – the business has limited control.
• Macro-environment – the business has no control.

Conclusion:
It is important for management to know the factors influencing each environment and the interrelationship between environments to
determine strategies to deal with the challenges and maintain the profitability of the business.

CONSOLIDATION • You should understand and explain how the business can influence the Micro-, Market-, and Macro environments and how these
environments influence/affect the business.
• You will know how Consumers, Suppliers, Intermediaries and Competitors influence the business and how the business can influence
them.
• Most important facts to remember is:
a. The business is in full control of the Micro environment, cannot control Market environment, but has some influence and has
no control over the Macro environment.
b. There is constant interaction between the business and the elements present in all three business environments.
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