Micro Environment Challenges

• The chapter discusses the challenges of the business environment.

Micro Environment Challenges

• Difficult employees do not support the vision and goals of the business, complain, are lazy, and can break down team spirit.
• Lack of vision and mission can cause conflict, negatively affect productivity, and make resource allocation difficult.
• Shortage of skilled employees lead to poor customer service, negatively impacting the company's image and resulting in loss of customers.
• Lack of adequate management skills means managers cannot effectively lead, direct, and control personnel and resources, and leads to unhappy staff.
• Unions are organizations that protect employee interests but can make impossible demands and create tension.
• Strikes and go-slows are industrial actions, examples include trade union actions, that negatively impact business operations.
• A strike is when employees refuse to work until their complaints are addressed.
• A go-slow is when employees report for duty but deliberately work at a slower pace, decreasing productivity.

Market Environment Challenges

• Competition can cause businesses to lower prices, decreasing profit margins and causing closures.
• Shortage of suppliers means raw materials are not available to produce goods/services.
• Changes in consumer tastes/habits can cause a decline in sales/profits.
• Demographics are statistics of the population, challenges stem from constant demographic changes.
• Psychographics defines customers' lifestyles and behavior so businesses must stay aware of these.
• Socio-cultural factors include language, customs, income levels, and the preferences associated with cultures.

Macro Environment Challenges

• Changes in income levels with consumers' net incomes driving purchases. Net income = Gross income - all deductions.
• Political changes are when the government decides its own objectives and ideologies.
• Contemporary legislation requires compliance and can result in fines or imprisonment for non-compliance.
• The Employment Equity Act (EEA) (No. 55 of 1998) compels businesses to give preference to previously disadvantaged individuals
• Labour restrictions are the laws that impose restrictions and create a legal framework which protects the employees.
• Micro lending are small loans to those who cannot get credit from commercial banks with higher interest rates.
• Globalisation and international trade means businesses are competing with international businesses for local customers across national borders.
• Social values and demographics are when social values impact consumers’ habits and demographics affect the products/services produced.
• Socio-economic issues like crime, poverty, HIV/AIDS, and corruption influence business operations.

Overcoming Competition

• Ways to overcome competition include creating a positive image, customer service improvements, marketing campaigns, affordable extras, and well-trained employees creating a better atmosphere.

Contemporary Legislation Examples

• The Labour Relations Act (LRA) (No. 66 of 1995) regulates the relationship between employer and employees.
• The Basic Conditions of Employment Act (BCEA) (No. 75 of 1997) describes the conditions of employment.
• The Compensation for Occupational Injuries and Diseases Act (COIDA) (No. 61 of 1997) provides compensation for work injuries or diseases.
• The Skills Development Act (SDA) (No. 97 of 1998) ensures employers contribute towards employee education and training.
• The Consumer Protection Act (CPA) (No. 68 of 2008) promotes and advances the social welfare of consumers.
• The National Credit Act (NCA) (No. 34 of 2005) protects businesses and consumers from negligent lending practices.
• The Employment Equity Act (EEA) (No. 55 of 1998) eliminates unfair discrimination.
• Broad Based Black Economic Empowerment (BBBEE) (No. 53 of 2003, amended in 2013) ensures participation of previously disadvantaged individuals.