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Questions and Answers
What is the primary purpose of understanding the business environment?
What is the term used to describe the internal and external factors that affect a business's operations?
Which of the following is a component of the external environment?
What is the term used to describe the analysis of political, economic, social, technological, legal, and environmental factors?
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Which of the following is a factor in the non-market environment?
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What is the primary difference between the micro environment and the macro environment?
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Study Notes
Types of Business Environments
- Micro Environment: The internal and external factors that affect a business's operations, such as customers, suppliers, and competitors.
- Macro Environment: The broader external factors that affect all businesses, such as economic, social, political, and technological factors.
Components of the Business Environment
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Internal Environment:
- Management and organizational structure
- Company culture and values
- Resources and capabilities
-
External Environment:
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Market Environment:
- Customers and customer needs
- Competitors and market trends
-
Non-Market Environment:
- Economic environment (e.g. recession, inflation)
- Social environment (e.g. demographics, lifestyle)
- Political environment (e.g. government policies, regulations)
- Technological environment (e.g. innovation, R&D)
-
Market Environment:
Factors Influencing Business Environments
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PESTLE Analysis:
- Political factors (e.g. government policies, regulations)
- Economic factors (e.g. recession, inflation)
- Social factors (e.g. demographics, lifestyle)
- Technological factors (e.g. innovation, R&D)
- Legal factors (e.g. laws, regulations)
- Environmental factors (e.g. climate change, sustainability)
Importance of Understanding Business Environments
- Helps businesses to:
- Identify opportunities and threats
- Develop effective strategies and plans
- Make informed decisions
- Stay competitive and adapt to changes
Business Environments
- Two main types: Micro Environment (internal and external factors affecting a business) and Macro Environment (broader external factors affecting all businesses)
Components of Business Environment
- Internal Environment: Management, organizational structure, company culture, values, resources, and capabilities
-
External Environment:
Market Environment
- Customers and their needs
- Competitors and market trends
Non-Market Environment
- Economic environment (e.g. recession, inflation)
- Social environment (e.g. demographics, lifestyle)
- Political environment (e.g. government policies, regulations)
- Technological environment (e.g. innovation, R&D)
Factors Influencing Business Environments
-
PESTLE Analysis:
- Political factors (e.g. government policies, regulations)
- Economic factors (e.g. recession, inflation)
- Social factors (e.g. demographics, lifestyle)
- Technological factors (e.g. innovation, R&D)
- Legal factors (e.g. laws, regulations)
- Environmental factors (e.g. climate change, sustainability)
Importance of Understanding Business Environments
- Helps businesses to identify opportunities and threats
- Enables development of effective strategies and plans
- Facilitates informed decision-making
- Allows businesses to stay competitive and adapt to changes
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Description
Learn about the different types of business environments, including micro and macro environments, and their internal components. Understand the factors that affect business operations.
