Business

Environments
Chapter 1 – Page 1 to 26

Grd 12 BUSINESS
STUDIES
1
 Three
Business
Environments

Internal -
Micro inside the
business
Market external -
outside the
Macro business

Grd 12 BUSINESS
STUDIES
2
 Macro environment

No Design
Control Business
has
Business
needs to strategies

Example of the effect a macro http://www.infrastructurene.ws/2014/07/

15/strikes-have-negatively-affected-the-
environmental factor could have on the economy/
business.

Grd 12 BUSINESS
STUDIES
3
 Macro
Tools used to analyse the

environment
macro environment:

 an environmental scan

 a SWOT-analysis, and

 a PESTLE analysis or a PE²STLE analysis.

Grd 12 BUSINESS
STUDIES
4
 Macro
Environmental Scan

environment
http://www.gograph.com/stock-illustration/binocular.html

Identify factors that may impact on the business

then adjust existing plans or develop new plans to

deal with these factors / events.

Grd 12 BUSINESS
STUDIES
5
 Macro
A SWOT-analysis (Only O and T)

environment
Opportunities Threats:

O and T are external factors of the business

Grd 12 BUSINESS
STUDIES
6
 Macro
PE²STLE-analysis:
Political

environment
Environment Economic

PE Exp Legal Ethical

ST lan
LE ati
an on
al of
ys
is
Technological Social
https://www.yo
utube.com/wa
tch?v=sP2sD
w5waEU

Grd 12 BUSINESS
STUDIES
7
 Macro
Political
Political factors

environment
This factor is important in relation to:

 local political situation of the country

 political situation of other countries
www.immigrationsouthafrica.org

 world politics in general

/politics-and-government/

Look at the latest

Business Day articles
on politics
http://www.bdlive.co.za/

Grd 12 BUSINESS
STUDIES
8
 Macro
Economic Economic factors

environment
Economic factors that may affect the business:

 Economic growth and development.

 Inflation rates

 Interest rates

 Exchange rates

 High unemployment rates http://www.businesskorea.co.kr/

 Taxes such as income tax, VAT, import duties, etc.

Grd 12 BUSINESS
STUDIES
9
 Macro
Ethical factors
Ethical

environment
The principles and/or values that will
determine if decisions and actions are
acceptable. A guideline to evaluate how
to act in the “right” way.

Grd 12 BUSINESS
http://adaptiveframeworks.com.au/course/
business-ethics/ STUDIES
10
 Macro
Socio-economic factors
Social

environment
Refers to the impact that social
trends have on the role players in
the economy.

Activity 1
– Page 4
www.pinterest.com

Grd 12 BUSINESS
STUDIES
11
 Macro
Techno-
Technological factors
logical

environment
Technology refers to the equipment the
business uses to buy (or make), advertise or
sell the products or services.

Tesco virtual https://www.yout

ube.com/watch?v
subway store =fGaVFRzTTP4

https://www.youtu
Walmart Scan & Go be.com/watch?v=
NewDwJKAMI0

Grd 12 BUSINESS
STUDIES
12
 Macro
Legal factors
Legal

environment
The legal environment refers to all
laws that impact on the business.

Tougher BEE laws https://www.youtu

be.com/watch?v=2
in SA koep1lVY4Y

www.resourceinvestor.co
m

Grd 12 BUSINESS
STUDIES
13
 Physical environment and other

Macro
Environ-
ment Environmental factors

environment
Environmental factors are important if one
thinks of the growing awareness to protect
the environment and to prevent negative
consequences such as global warming and
changes in weather patterns.

http://www.orion4value.com/services/
Unilever investing in https://www.youtu
be.com/watch?v=
recycling-r2-rios-e-stewards/

eco friendly ways DySdRfVW_BE

Grd 12 BUSINESS
STUDIES
14
 Page 5
for a short
Refer to example of a
PESTLE analysis
on Dischem

Activity 2
– Page 6

Grd 12 BUSINESS
STUDIES
15
The Macro Environment Match the columns
A reason to analyse the events in the macro A Economic
1 environment is to… B can be

Municipal elections in South Africa is a … factor. C Socio-economic

2
D can’t be
Having an edge over competitors in your market is E Propaganda
3 known as a … F competition gauge
Rise in fuel costs is a … factor. G Legal
4
H Environmental

5 R&D is a … factor. I change the macro environment events

Elements in the macro environment ..... controlled. J Law

6
K competitive advantage
Doing business with a country which employs L Ecological
7 underage, cheap labour is an … factor. M Political
The changing role of woman in society can be seen N Research
8 as a … factor. O Technological
Laws which are put in place to protect the earth P Cultural
9 against pollution is a … factor. Q eliminate threats to the business
The droughts which are having a ripple effect on our R Ethical
10 economy is a … factor. S Moral

Grd 12 5 min
BUSINESS
10 marks STUDIES
16
1 Q
Answers The Macro Environment
2 M

3 K

4 A

5 O

6 D

7 R

Grd 12 BUSINESS
STUDIES
17
 Market
Tools used to analyse

environment
the market environment:

 an environmental scan
 a SWOT-analysis O and T only
 Porters Six Force model

Grd 12 BUSINESS
STUDIES
18
Porters Six Force Model

environment
Market
Level of
Rivalry
Availability of
Power of substitute
complementary products
products
Th
e
fiv forc
e

Threat
co es
m

of New
pe

Power Entrants
titi
ve

of the
buyer
Power
www.youtube.com/ of the
watch?v=mYF2_F
BCvXw supplier

Grd 12 BUSINESS
STUDIES
19
 Market
Level of rivalry (current competitors)
Level of
Rivalry

environment
What are our competitors are
doing????

for details on
Page 7 comparing
with your
Refer to
competitors
and possible
strategies
http://www.slideshare.net/sampatpatnaik/coca-cola-vs-pepsi-
14181279

Grd 12 BUSINESS
STUDIES
20
 Market
Threat Threat of new entrants
of New
Entrants

environment
Not only current
competitors
“steal”
customers,
there may be a
challenge from
http://missniessbie.blogspot.co.za/2013_10_01_archive.html
a new business
that sees an
opportunity to
For examples
make money by
Refer to Page 7 of barriers to
entering the keep new
market. entrants out
the market

Grd 12 BUSINESS
STUDIES
21
 Market
Availabilit Availability of substitute products
y of
substitute
products
A substitute product does NOT refer to a

environment
different brand. A different brand is a
competitors in the market.

https://www.youtube.com/watch?v=KG_ybdk1VaE
http://www.sabc.co.za/wps/portal/news/main/tag?tag=Pick%20n%20Pay

Page 8 for more

examples of
Refer to
substitute
goods

Grd 12 BUSINESS
STUDIES
22
 Market
Power The power of suppliers
of the
supplier Any business that does not
have a reliable supplier is

environment
certain to encounter
problems more often than not
- Consequently, it is critical
that the business develops
and maintains good
relationships with suppliers.

for details on
suppliers and
Page 8 costs
http://www.stran.com/home-page-2/suppliers/
Refer to associated
Page x with
unavailable
stock.

Grd 12 BUSINESS
STUDIES
23
 Market
Power The power of buyers
of the
buyer

environment
The buyer may be a wholesaler
ordering from a manufacturer, or a
retailer buying the products for his
shop or even the consumer who has
to spend his or her hard earned
money at your business.

Page 12 for details on

Refer to retailers selling
to the final
consumer
http://www.business2community.com/consumer-marketing/how-to-attract-
the-right-buyers

Grd 12 BUSINESS
STUDIES
24
 The Power of complementary products

Where the use of one product is interrelated with the use of

another

Products are paired together

.g:
E
https://adashofdelish.wordpress.com/tag/bread/

http://resources.urnex.com/blog/which-kind-
of-milk-should-you-choose-for-coffee
https://www.reference.com/health/alternative-can-
used-place-contact-lens-solution-f7b016818102cfbb

Grd 12 https://www.behance.net/
BUSINESS
gallery/3306406/Mr-Delivery
STUDIES
25
 Page 9 & 10 for a short example
Refer to of a Porters Six
Force Model on:

Activity 3
– Page 10

Grd 12 BUSINESS
STUDIES
26
 Each of the following statements is FALSE. Change the bold
The Market Environment word(s) in each statement to make the statement TRUE.

1 A substitute product refers to a different brand, which satisfies the same need.

2 When KFC introduced ‘Streewise pap’ they were considering the Power of the competition.

3 Power of the individual will ensure prompt delivery of products to your business.

4 Porters is used to analyse the internal environment.

5 Government legislation is a barrier to keep current competition out the market.

6 Brand loyalty needs to be considered when analysing the Power of the supplier.

7 Artificial sweeteners would be a different brand to sugar.

8 Only Opportunities and weaknesses are used to analyse the market environment.

“Added-value” or the image associated with the product may influence where the consumer
9 buys the product.

10 A plan of action implemented to improve the businesses performance is called a plan.

5 min
Grd 12 BUSINESS
10 marks
STUDIES
27
1 Product

Answers
The Market Environment
2 Power of the buyer

3 Power of the supplier

4 External

5 New entrant

6 Power of the buyer

7 Substitute

Grd 12 BUSINESS
STUDIES
28
 Micro
Tools used to analyse the
micro environment:

environment
 An environmental scan
 A SWOT-analysis (S and W only)
 A resource-based analysis
 A value-chain analysis

When the Micro environment is analysed, the

focus is on the internal business functions

Grd 12 BUSINESS
STUDIES
29
Eight functional areas of a business:

Purc
hasi k e t in g
ng Mar
Prod s
uctio R e la t io n
Fina n Pub lic
ncia r a t i o n
l m i n is t
Hu
ma Ad nt
nC a g eme
api a n
tal General m

Grd 12 BUSINESS
STUDIES
30
 Purchasing function

environment
Micro
Buys goods and services needed by all departments

Page 11 for details on

Refer to three types of
purchases http://www.westada.org/domain/3630

Grd 12 BUSINESS
STUDIES
31
Production function

environment
Micro
 Aim is to transform raw materials into a products to satisfy needs.
 It is NB to keep manufacturing cost low, while maintaining quality.
 Continuous product design is important to satisfy consumers.

Automation and
quality control for details
Page 12
are becoming Refer to automation
more important and quality
control

fully Automated https://www.youtu

be.com/watch?v=
BMW Car Factory VpwkT2zV9H0

Grd 12 BUSINESS
STUDIES
32
Financial function

environment
Business needs capital to start the business. Capital can be either

Micro
own or borrowed.

Financial Statements -
Statement of Comprehensive
Income (Income Statement)
and the Statement of
Financial Position (Balance
Sheet). http://www.clark.com/gold-bubble-bursts

Figures from financial statements used

to explain four main objectives :
Refer to: A) Maximise profits
Page 13-16
B) Increase profitability
C) Ensure Liquidity
D) Remain solvent

Grd 12 BUSINESS
STUDIES
33
 Financial function Another important

environment
consideration in the
financial function …

Micro
Whether or not to
allow customers to
buy on credit ???

Page 17
for
Refer to
http://www.riyazmahendy.com/how-come-i-am-so-poor/
advantages &
disadvantages
of credit sales

Grd 12 BUSINESS
STUDIES
34
 Human Capital (HC) function /

environment
ai l s in Human Resources (HR) function
Det pter 4

Micro
Cha
Labour is an important
factor of production.

Page 18
for objectives
Refer to
of the HC
department

http://firststepfinance.net/category/employment/

A funny look at Job https://www.youtu

be.com/watch?v=
Interviews Qm1eAOzMy8k

Grd 12 BUSINESS
STUDIES
35
 Marketing function

environment
l s in
ai
Det pter 7

Micro
Illustration of the four policy instruments
Cha and the relevant sub-sections.

Marketing mix (4 Ps)

Place
Product policy Price policy Promotion policy
(distribution)

Advertising Sales promotion Personal sales Publicity

Marketing communication mix (4 Ps)

To determine the needs - do market research!

Grd 12 BUSINESS
STUDIES
36
 Public Relations function

environment
Micro
To create and maintain a
favourable image of the
business with all relevant
interest groups and
stakeholders.

http://longlegmedia.com/public-relation/

What is Public https://www.youtu

be.com/watch?v=_
Relations Amu3sHkpnw

Grd 12 BUSINESS
STUDIES
37
 Administrative function

environment
Micro
…is responsible for collecting all data in the
business and the business environment.
The data will then be
processed into
information.
The information is
stored and made
available to
management as and
when needed.

Admin handles all the

‘paper work’ and
http://www.it-doctor.co.th/computer_network_administration.html
record keeping in the
business to comply
with legislation.

Grd 12 BUSINESS
STUDIES
38
 General Management function

environment
l s in
ai
Det pter 5

Micro
Planning, Organising, Leading,
Cha
Controlling, Coordination,

a ls, Communication, Delegation, Disciplinary

n , go
is sio and action, Decision making and Motivation.
io n, m tives r the
vis objec s fo
eg ie s.
r a t e s
st busin

Leadership styles

http://www.business2community.com/leadership/5-tips-help-become-ceo-
01567776

Grd 12 BUSINESS
STUDIES
39
 Overall business as an organisation

environment
Micro
 The business is the sum of individual components (Synergy)

 The following have an effect on modern business:

 Technology and IT

 Logistics
Activity 4
– Page 23

Grd 12 BUSINESS
STUDIES
40
Back to….. Tools used to analyse the micro environment….

environment
Resource-based Analysis

Micro
Identify the resource
gap and obtain these
fo r
k
or y
resources
e w
F r am trateg
t i c al a s a s ed
c g
Pra elopin urce-b Identify the strategic
d ev a r es o a c h : Formulate a strategy to
ensure each resource
value of each resource

s i n g p ro by looking at the ability

u a p is utilised in an optimal
manner
of competitors to
obtain or duplicate the
resource

How does the resource

create a sustainable Is it possible to utilise
competitive advantage the resource better and
Activity 5 and what is the if so, HOW?
– Page 24 resource's ROI?

Grd 12 BUSINESS
STUDIES
41
 Value Chain Analysis

environment
Micro
The process of thinking
about the different ways in
which the business
creates value.
http://enovationpartners.com/strengthening-value-chain/

Activity 6 Page 24 for the value

– Page 25 Refer to chain
approach in 3
steps

Grd 12 BUSINESS
STUDIES
42
The Micro Environment State whether the following is TRUE or FALSE.

The four factors of production include – Natural Resources, Labour, Production &
1 Entrepreneurship.

2 A disadvantage of automation is lower capital investments.

3 A function of the purchasing department is stock control.

4 Inspection is when a sample in the batch is tested for quality standards.

5 Profitability means ROI.

6 Solvency ratio is → Current assets : Current liabilities

7 All businesses have to sell their goods on credit according to legislation.

8 Product, Price, distribution, Promotion are part of the marketing mix.

A service industry can’t use a value chain analysis as they don’t have tangible products to
9 evaluate.

10 Resource-based analysis is about how the resources create value.

Grd 12 5 min
BUSINESS
10 marks
STUDIES
43
1 False
The Micro Environment
Answers

2 False

3 True

4 False

5 True

6 False

7 False

Grd 12 BUSINESS
STUDIES
44
 Chapter 1:
Additional
Page 1-26
activity Page 26

Business
Environments

Grd 12 BUSINESS
STUDIES
45