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Chapter 4 - The business environment - Recorded
Chapter 4 - The business environment - Recorded
Management
11th edition
Ancillary material
ISBN 978 019 07 4576 9
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Chapter 4
The business environment
Learning outcomes
• Introduction
• The business and environmental change
• The composition of the business environment
• The micro-environment
• The market environment
• The macro-environment
• Opportunities and threats in the market environment and the
macro-environment
• Environmental scanning
• Summary
The business and environmental change
The market
• ‘Market’ consists of people who have needs to satisfy and the
financial means to do so
• To be successful, management must be informed regarding
consumer needs, purchasing power and buying behaviour
• Directly influenced by variables in the
macro-environment
• Purchasing power is represented by consumers’ personal
disposable income
The market environment (continued)
Suppliers
• A business organisation is a system that receives inputs from the
environment and converts them into outputs in the form of
products and services
• Inputs include materials (raw materials, equipment and energy),
capital and labour
• Suppliers provide these inputs to businesses
• Without the correct suppliers a business can not achieve success in
a competitive market environment
The market environment (continued)
Intermediaries
• Intermediaries play an vital role in bridging the gap between the
manufacturer and the consumer
• Includes wholesalers, retailers, agents, brokers, representatives and
spaza shops
• Decision-making in respect of intermediaries is complicated by:
• The dynamic and ever-changing nature of intermediaries
• Relationships with intermediaries
The market environment (continued)
Competitors
• Businesses are constantly facing competition and competitors
often determine at what price products can be sold.
• Businesses compete for a share of the market and also compete
with other businesses for productive resources
• Competition is defined as the situation in the market environment
in which several businesses, offering more or less the same kind of
product or service, compete for the patronage of the same
customers
The market environment (continued)
Competitors
• The nature and intensity of competition can be determined by:
• The possibility of new entrants
• The bargaining power of clients and consumers
• The bargaining power of suppliers
• Availability or non-availability of substitute products or services
• The number of existing competitors
The macro-environment
Technological environment
• Technological innovation originates in research and development
• Includes the development of new processes, methods, services and
approaches to management
• Continued assessment of the technological environment is vital for
the success of the business
The macro-environment (continued)