Business Environments: Influences and Challenges

Influences and Challenges of Business Environments

• Exam guidelines for business environments are available on page 2.
• Important terms and definitions are explained on pages 2-3.
• Components of the micro, market, and macro environments are recapped on page 4.
• Reasons why businesses have more control over the micro environment, less control over the market environment, and no control over the macro environment are detailed on page 5.
• Ways businesses can be involved in the macro environment are outlined on page 5.
• Benefits/advantages of being involved in the macro environment are discussed on page 6.
• Challenges of the business environments are presented from scenarios/case studies/statements, examining the extent of control a business has over these environments on page 6.
• An explanation of the challenges of the business environment is on pages 6-7.
• Challenges of the market environment are explained on pages 8-9.
• Challenges of the macro environment are explained on pages 9-10.
• Examples of how challenges of the business environment can be assessed using scenarios are found on pages 10-11.
• Examples of contemporary legislation are mentioned on page 11.

Key Terms and Definitions

• Control: The power to influence or direct people's behavior.
• Organizational Structure: A framework defining responsibilities and roles of managers and stakeholders.
• Organizational Culture: Influences how a business is conducted.
• Vision: Reflects the future aspirations of the business.
• Mission Statement: Defines the business's daily purpose and operational approach.
• Human Resources: The personnel of a business, valued for skills and abilities.
• Suppliers: Providers of goods/services needed for business operations.
• Competitors: Businesses offering similar products/services.
• Deforestation: Clearing trees for other land uses like industrialization.
• Redressing: Making amends.
• Nepotism: Favoritism towards family/friends in employment.
• Retrenchment: Involuntary termination of an service contract due to operational needs.
• Go-slows: Reduced work pace as a form of protest for better pay.
• Trade Union: An association protecting workers' rights.
• Strike: Work stoppage to protest or strengthen bargaining position.
• Industrial Action: Actions including strikes or go-slows.
• Open Market: A market with no control over suppliers or pricing.
• Demographics: Statistical population data, including age, gender, income, occupation, etc.
• Psychographics: Classification by attitudes, aspirations, and psychological criteria.
• Globalization: Increased trade and collaboration through technology.
• Physical Environment: Ecological elements like pollution, deforestation, and natural resources.
• Institutional Environment: Public-private partnerships.

Components of the Micro Environment

• Business mission and objectives
• Management structure
• Resources
• Culture are primarily controlled by the enterprise's management.

Components of the Market Environment

• Customers/Buyers are final users of products/services
• Suppliers include factories/providers of goods/services that businesses need to operate
• Intermediaries/Agents help promote, sell, and distribute
• Competitors may have an impact
• Regulators control activities
• Strategic allies collaborate for expertise
• Unions aim to improve labor conditions.

Components of the Macro Environment

• Encompasses factors that influence an organization's decision making. These factors include:
• Physical/Natural environment
• Economic environment
• Social/Cultural/Demographic environment
• Technological environment
• Legal/Political environment
• Environmental/Global environment and the Institutional environment.

Challenges in the Business Environment

• Micro environment challenges include difficult employees, lack of vision, inadequate management skills, unions, strikes, skills shortages, high turnover, and absenteeism, and lack of vision/mission hamper meaningful guidance and leadership.
• Market environment challenges include competition, supply shortages, consumer behavior changes, demographics, and socio-cultural factors.
• Macro environment challenges include income level changes, political changes, contemporary legislation, labor restrictions, micro lending, globalization, social values, and socio-economic issues.

Adapting to Challenges

• Businesses can adapt to the macro environment through information Management by finding, recording, storing and retrieving of various sources so that it can be used effectively by the business Strategic responses, by reacting to a need by developing a system that will meet the long term that has been identified. Mergers, takeovers, acquisitions and alliances Organization design and flexibility Direct influence of the environment and social responsibility

Overcoming Market Competition

• Management differentiates the business tapped into what the customer wants
• Enhanced personal services are offered, responding to consumer needs/expectations.
• Low-cost extras include improved credit, discounts, and loyalty schemes.
• Competitive pricing includes charging lower than the other businesses
• Superior quality includes new offers to appeal to customers
• Improved working conditions are achieved through well-trained staff.
• Enhanced marketing is achieved through ads

Contemporary Socio-Economic Issues

Socio-Economic Challenges for Businesses

• These include poverty, unemployment, illiteracy, and health issues.
• Illiteracy impacts the workforce, needing extra training and reducing efficiency.
• Lack of skills limits growth and requires more investment in employee training.
• Unavailability and inefficient use of natural resources raise costs and increase ecological concerns, so this will lead to exhaustion.
• Economic crime increases operation costs, loss of income/profits and decreases investors.
• Ethical misconduct leads to legal and public relations problems, therefore impacting the working environment.
• Inflation and changing income levels are impacting consumer behavior and profitability.
• Piracy affects copyright/patent, this may require stronger protection and reduce innovation.
• These issues can destabilize economy, reduces labor production and increase operation costs
• Addressing these socio-economic issues is essential for sustainable business in society.

Industrial Action and Trade Unions

• Industrial relations focus on relationships between employers and employees.
• Labour Relations Act oversees fair labor practices and unions
• Trade unions protect workers rights, advocate for better wages and working conditions.
• Meaning of Trade Unions an organization that protects and lobbies for the rights of workers and represent their interest in negotiations with employers Reasons for establishment-Engaging in protest and strikes, influencing government strat, providing protection

Strikes Defined

• Strikes are work stoppages that may result in violence/assaults and intimidation.
• Decreases production levels and impact potential investors
• Employees suffer due to loss of income To avoid, managers deal transparently, build positive relationships
• Must resolve disputes quickly to avoid escalation

Addressing Ethical Concerns

• Business should maintain with laws and standards to ensure moral conduct
• Moral values that uplift the weak and help those that are oppressed.
• Establish a strong ethics practice to discourage dishonest actions like bribery (corruption) and sexual harassment.
• To make the business a sound, safe ethical environment that can improve public relations

Ways in which business can form power relationships

• Strategic alliance agreements

• Persuasion of large investors

• Company representatives' influence

• **

• Avenues of acquiring a business

• Exam guidelines on page 1

• Terms and definitions on page 3

• Reason why entreprenuers may decide to purchase an existing buisness: 4

• Advantages/disadvantages and contractual of franchising: 4-5

• Avantages de/disadvantages and contractual of outsourcing: 6-7

• Advantages/disadvantages and contractual of leasing: 7-9

• Identify avenues from statements with a business avenue statement: 9

Royalties Terms

• Royalty payments to others have the right to use services or goods for sales
• Payments are made to others who sell the right to sell

Leasing Terms

• Lease out assets for a specified period at a certain cost
• Give the buyer the right to use it from now until specified
• A lessor is a business who owns assets for a specified period
• A lessee is a business who uses an asset from a business for a specified period

Outsource Terms

• Another who is paid for job, service instead of doing the job
• Outsource the sales task to third party for completion

Good Terms

• A vendor is a amount of trade names and client details the businesses use
• More services may be provided, like brand and client relations
• Businesses who maintain solvent are valued when the values exceeds those of the liabilities
• Liquid businesses with high cash to handle fees are valued over the liabilities.