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The business enviroment

The intuitional – government environment Management decisions are affected by the cause of politics, by making administration and his intuitions Government affects business environment and business enterprise in a regulating capacity Government also influences the market through government expenditure. The international environment International dimensions adds more complexities to the business environment – because every country has its own peculiar environment factors, laws, economics, culture etc. The international and multi organisations are susceptible to all funds of international currencies and trends. Opportunities and threats in the market environment and macro environement Two groups: Changes that offer opportunity, changes that pose a threat Entails environmental opportunities that's defined as a favourable within or trend in the market that's used to the business advantage by a dubitable management effort. Environmental threat defined as a n unfavourable condition or trend in the marketing environment that leads to business failure.

The organisational Environmental change • Environment variables are constantly changing the environment in which business organisation operate include technological innovations, economic fluctuation, new laws and social factors. • The interaction between the environment and a business organisation is an on-going process that often results in a new environment with new threats and new opportunities.

The composition of the business environment: Definition: All factors or variables, both inside and outside, the business organisation, which may influence the continued and successful existence of the business organisation. • The three sub-environment: o The Micro-environment:  It consists of the business itself, over which management has complete control. E.g. The vision of the business organisation, the various business functions and the resources of the business. o The Market-environment: (Task environment) is encountered immediately outside the business organisation.  Consumers: has a particular lying power and behaviour.  Competitors: New and potential competitors who want to maintain or improve their position.  Intermediaries: They compete against each other to handle the business’s products.  Supplier: who Supply or do not wish to supply raw materials products, services and finance to the business organisation.

Respond as well as variations in the variables themselves • The Macro-environment: 1. It is the sub-environment that is external to both the organisation and the market environment. • Consist of six distinct components or variables: 1. The technological environment 2. The economic environment 3. The social environment 4. The social environment 5. The physical environment 6. The institutional environment 7. The international environment • The characteristics of the business environment: 1. The interrelatedness of the environmental factors or variables. 2. Increasing instability and change. 3. Environmental uncertainty 4. The complexity of the environment change in one factor may cause a change in the macro-environment comprise one of the consequences of interdependence in the environment 5. Is dependent on the amount of information that management has about environmental variables, and on the confidence that management has in such information. 6. Indicates the number of variables to which a business organisation has to.

The Market-environment • The market: It refers to people who have needs to satisfy and have the financial means to do so. • The consumer market can be subdivided according to the products that are brought: o Durables products(Furniture, domestic appliances and motorcars) o Semi-durable products(food and tobacco) o Services( insurance, rental and communication)

The micro-environment

• Management: o Marketing management o Financial management o Human resource management • Resources o Tangible resources e.g. raw materials, financial resources, production facilities o Intangible recourses: e.g. brand names, patents, trademarks, etc. o Organisational capabilities. The ability to combine resources, people and processes in particular ways.

The micro-environment may be viewed as an environment with three sets of variables: • The vision, mission and objectives of the business: o It is the reason for the existence of a business  It is the reason for the existence of a business. • Vision: What do we want to become? • Mission: What is our business? • Objectives: What do we aim to achieve?

Culture: Extended family, women becoming more independent & negative attitudes towards marriages are frequently being expressed Shape of market influences of culture etc. Are only a few ways in which culture can affect an organisation The physical environment: Includes population of health patterns, bread, water, energy and climate The environment from which the business obtains its physical resources

Environmental scanning The process of measurement projection and evaluation of change regularly the different environmental variable Importance of environmental scanning: Environment is constantly changing, to determine what factors in the environment offers opportunity Best method of scanning will be determined by the importance the business attaches to the environment Summary Business and the environment in which it operates, depend on each other for survival Together they form a complex dynamic of business environment Management is responsible to adapt the organisation to change the environment Knowledge of a changing environment is a prerequisite for taking advantage of the opportunities and averting threads The Social environment Affects management indirectly in form of consumers and directly in the form of employees Demographic change: Change in the growth and composition of populations Urbanisation: Movement of people from rural areas towards the cities is urbanisation.

Final comments on the market environment The interaction between a business and its suppliers, consumers and competitors can result in opportunities or threats to a business Management must be aware of the trends in the market environment so that the business can exploit opportunities profitably and avoid threats in good time. ic

Level of education: Affects management of the population SA’s educational level of all consumers no longer rise The changing role of women: Social variable that causes clear implications for management Women make up the minority of top management positions in SA. Women are still being appointed in high status positions Consumerism: Social force that protects the consumer by exerting legal, political and economical pressure on management Includes right to safety to be informed, freedom of choice and the right to be heard Social responsibility & business ethics. Pressure that society exerts on business organisers, forcing them to seek legitimacy by being socially responsible CSR (Corporate Social Responsibility), the concept that businesses are more than just a profit – seeking organisations HIV / AIDS SA has an estimated 5.7 million people living with HIV, with a thousand AIDS deaths daily Huge social problem

The composition of the macro – environment This wider macro-environment have variables that directly or indirectly exert an influence on a business and its market environment Macro – variables (variables that exist in the macro-environment) have an effect not only on the making by management, but also on each other and this constantly causes change in the business environment. The emphasis is on changed caused by the uncontrollable macro-variables and the implications for management. opic

The economic environment The economic well being of a country or its economic growth rate, is measured by the range and number of products and services. The Gross Domestic Products (GDP) is the total valve of all the products and services finally produced within the borders of a country in a particular period (usually one year) Inflation like the economic growth is an economic variable that affects the decisions management has to make The governments monetary policy influences the money supply, interest rates and the strength of the currency and therefore has important implications for management . The governments fiscal policy in contrast affects both business and consumers through taxation and tax reforms. c

The technological environment Technological innovation originates in research and development +(R&D) by mainly business universities and the government. This technological innovation results not only in new machinery or products but also in new machinery or products but also in process methods services and even approaches to management which brings about change in the environment

Continued assessment of the technological environment should include: Identification of important technological trends An analysis of potential change in important technological trends A list of priorities that should be included in a technology strategy for the organisation c