Business Environment Overview
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Questions and Answers

What does the business environment encompass?

  • Only external factors affecting a business
  • Only internal factors influencing a company
  • A combination of internal and external factors (correct)
  • Factors unrelated to a company's operations
  • Which of the following is NOT a component of the PEST analysis?

  • Political Factors
  • Social Factors
  • Technological Factors
  • Environmental Factors (correct)
  • How can environmental forces influence a business?

  • By solely dictating marketing strategies
  • By exclusively determining employee satisfaction
  • By affecting operations, ecosystems, and community interactions (correct)
  • By only impacting the financial aspect of the business
  • What type of analysis is used to identify Strengths, Weaknesses, Opportunities, and Threats?

    <p>SWOT Analysis</p> Signup and view all the answers

    Which of the following best defines environmental scanning?

    <p>The collection and analysis of information for strategic purposes</p> Signup and view all the answers

    Which macroenvironmental factor relates to population demographics?

    <p>Social Factors</p> Signup and view all the answers

    What aspect would not be included in the microenvironment of a business?

    <p>Global economic trends</p> Signup and view all the answers

    Which of the following is an example of a political factor in PEST analysis?

    <p>Tax regulations imposed by the government</p> Signup and view all the answers

    Which of the following best describes 'Strengths' in a SWOT analysis?

    <p>Internal capabilities aiding in achieving objectives</p> Signup and view all the answers

    What factors are included in the micro-environment of marketing?

    <p>The company itself and its customers</p> Signup and view all the answers

    Which of the following options is NOT considered an economic factor affecting consumer purchasing patterns?

    <p>Age demographics</p> Signup and view all the answers

    What is discretionary income?

    <p>Income left for non-essential purchases</p> Signup and view all the answers

    Which of the following correctly defines inflation?

    <p>An increase in prices resulting in diminished purchasing power</p> Signup and view all the answers

    What is the long-term benefit of new technology in terms of products?

    <p>It creates more and better products.</p> Signup and view all the answers

    Natural forces in marketing environment are best associated with which of the following?

    <p>Environmental conservation and energy efficiency</p> Signup and view all the answers

    Which of the following is not a reason for enacting legislation affecting business?

    <p>Promote business expansion.</p> Signup and view all the answers

    What does demarketing aim to achieve?

    <p>To reduce demand to sustainable supply levels</p> Signup and view all the answers

    Which factor is most influenced by political forces?

    <p>Marketing decisions.</p> Signup and view all the answers

    Which of the following is identified as a macro-environmental force?

    <p>Political regulations affecting industries</p> Signup and view all the answers

    What term describes reducing consumer demand to match the supply level?

    <p>Demarketing</p> Signup and view all the answers

    What type of forces includes aspects like natural habitats and energy-efficient products?

    <p>Natural Forces</p> Signup and view all the answers

    What booking engine has made interactions with intermediaries more complex?

    <p>Internet</p> Signup and view all the answers

    Which of the following is a core belief transmitted across generations?

    <p>Cultural values and traditions.</p> Signup and view all the answers

    What aspect of culture refers to the societal attitude toward art and beauty?

    <p>Aesthetics</p> Signup and view all the answers

    Study Notes

    Business Environment

    • Combination of internal and external factors influencing a company's operations.
    • Factors can directly or indirectly impact success or failure.

    Types of Business Environment

    • Macroenvironment: Larger societal forces affecting the entire microenvironment, including demographic, economic, technological, political, and cultural forces.
    • Microenvironment: Factors close to the company, such as internal capabilities and relationships with customers and suppliers.

    Environmental Scanning

    • Process of gathering, analyzing, and distributing information for strategic planning.
    • Identifies how external conditions influence organizations and ecosystems.

    PEST Analysis

    • Evaluates Political, Economic, Social, and Technological factors affecting business:
      • Political Factors: Government policies, trade restrictions, taxation.
      • Economic Factors: Economic growth rates, inflation, interest rates impacting consumer power.
      • Social Factors: Cultural trends, demographics, health consciousness affecting consumer behavior.
      • Technological Factors: Advancements in technology, research and development, automation.

    SWOT Analysis

    • Framework for analyzing organizational performance:
      • Strengths: Internal attributes that contribute to success.
      • Weaknesses: Internal limitations affecting performance.
      • Opportunities: External chances for growth and improvement.
      • Threats: External challenges that could hinder progress.

    Demographic Factors

    • Study of human populations based on size, location, age, gender, race, and occupation.

    Economic Factors

    • Influence consumer buying power and overall market strategies:
      • Inflation: Rise in prices decreasing purchasing power.
      • Deflation: Decrease in prices.
      • Unemployment: Percentage of actively seeking jobless individuals.
      • Discretionary Income: Money available for non-essential spending after necessities.

    Natural Forces

    • Encompasses environmental factors that attract tourism and focus on sustainability, including conservation and clean energy.

    Technological Forces

    • Application of innovations leading to competitive advantages:
      • Facilitates global communication and efficiency in distribution.
      • Obsolescence risk for existing products due to rapid tech advancements.

    Political Forces

    • Marketing strategies affected by political influences, including legislation aimed at protecting competition, customer rights, and the public interest.

    Cultural Forces

    • Core beliefs and values shaped by society that influence consumer behavior, including:
      • Language: Communication and expression within culture.
      • Manners and Customs: Social etiquette and cultural practices.
      • Education: Transmission of values and skills.
      • Religion: Belief systems shaping behaviors and preferences.

    Key Terms

    • Demarketing: Strategies to reduce consumer demand to a manageable level.
    • Green Movement: Advocates for marketing practices that emphasize environmental sustainability.

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    Description

    Explore the essential components of the business environment, including macro and micro factors that influence a company's operations. Learn about environmental scanning and PEST analysis to understand how external conditions can impact business success.

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