Chapter 4

Social environment is affected by:

1. Demographic organisatio
2. Urbanisation
3. Level of Education
4. Changing role of women
5. Consumerism
6. Social Responsibility
7. Business Ethics
8. HIV/Aids
9. Culture

Fiscals policy affects business and consumers

Inflation needs to be analysed and managed permanently

Economy playsa big role in business, but is still influenced by technology.

Technonlogy mainly responsbile for rate of change

1. New Machinery
2. New Products
3. New Process and methods
4. New approaches to management

Macro variables causes changes in business environment

1. Mineral Technology
2. Water Technology
3. Marine Technology
4. Agriculture Technology
5. Veterinary Technology
6. Medical Technology
7. Transport Technology
8. Power Technology

Mega-Trends: Uncontrollable forces in external environment

Monitoring environment

Scanning for threats

Scanning for opportunitie

Subtopic

Systematically scan environment

Adapt to change

3 sets of variables

vision, mission and objectives

management

set of variables that have interfaces with external enviroment

resources

1.Tangible resources
2.Intangible resources
3.Organisational capabilities

Market

Purchasing power

Consumer market

1.Durable products
2.Semi durable products
3.Services

Suppliers

Materials

1.Raw materials
2.Capital
3.Labour
4.Equipment, Energy

Competitors

5 Competitive Factors

1.Possibility of new entrants
2.Barganing power of client and customers
3.Barganing power of suppliers
4.The availabilty or non-availabiliy of substitute products and services
5.Number of existing competitors

Intermediaries

Dynamic and everchanging nature

1.New trends and markets

Relationship with intermediaries affects decision making

1.Long-term agreements
2.The power of large retailers
3.New trends

Main issues

Cost of energy

Biodiversity

Energy and climate

Enviromentilism

Scarce resources

Growing cost of population

Water

Food

Subtopic

Population and health patterns

Definition: change from condition of stability to instability

Enviromental variables

Constantly changing, including technological innovations

Economic fluctuations

Business enviroment

1.Factors or variables, inside and outside, influence continued successful existence.
2.Internal, external factors

Micro-enviroment

management has complete control

Variables:
1. Vision of organisation
2. Business functions
3.Resources

Influence market environment:
Strategy - protect, maintain and increase business share

Market environment

Immediatley outside business organisation

Variables:
* Determine nature and strength of competition

1.Consumers- buying power
2.Competitors- new and potential comp, maintain or improve position
3. Intermediaries- competition for business product
4.Suppliers- supply raw materials, products, services and finance

Opportunities and Threats
- identify, assess and take advantage from opportunities

Macro- environment

subenvironment external

Variables:
1. Technological environment-change and innovation
2.Economic environment- eg.inflation, recessions influence prosperity of business
3.Social environment- consumer habits, lifestyles,values make demands through Consumerism
4.Institutional environment-government, political legislative involvement
5.Physical environment- natural resources
6.International- local and foreign political trends affect both micro-environment and macro environment

Interrelatedness of environmental factors

Change in one external factor may cause change in environment OR other external factor

Increasing Instability and change

consequences of interdependance in business environment

Environmental uncertainty

dependant on information that management has about environmental variables

Complexity of environment

1. indicates number of external variables, respondant to
2.Variations in variables themselves

means in which government intervenes

Health regulations

Import tarrifs

Import control

Legislation

Annual budget

Taxation

Promotion of exports

Price controls

Incentives