Business Management Unit 3

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Questions and Answers

What is the primary focus of the Management Environment section?

The organisation's financial management

The composition of the management environment (correct)

The human resources department

The organisation's internal structure

What is the core argument of Systems Theory?

Organisations are not affected by changes in their environment

Organisations can function independently of their environment

Organisations are closed systems

Organisations are dependent on their environment to survive (correct)

What is the term for the state of balance that organisations strive to attain and maintain?

Stability

Sustainability

Equilibrium

Homeostasis (correct)

What could result from a change in the environment, such as the emergence of new technology?

An imbalance between the organisation and its environment Signup and view all the answers

What is the term for the organisation's interaction with its environment?

Interface with the environment Signup and view all the answers

What is the result of the organisation's dependency on its environment?

The organisation becomes an open system Signup and view all the answers

What is the primary goal for an IT organisation that has achieved a state of incongruence with its environment?

To restore equilibrium through necessary adjustments Signup and view all the answers

What is the primary reason for understanding the management environment?

To ensure the effectiveness and survival of the organisation Signup and view all the answers

What is the main characteristic of the Macro-Environment?

It is the greater environment, existing outside of the market and task environment Signup and view all the answers

What is the Systems Theory used to explain?

The inter-relatedness of environmental factors Signup and view all the answers

What is the main characteristic of Chaos Theory?

It highlights the complexity of the environment Signup and view all the answers

What is the result of a change in one environmental factor in the Systems Theory?

A change in another environmental factor Signup and view all the answers

What is the main characteristic of the Micro-Environment?

It is comprised of the organisation itself Signup and view all the answers

What is the impact of a drought on the hospitality industry?

A decrease in business Signup and view all the answers

What is the result of an increase in the price of fuel for a transport business?

A decrease in business Signup and view all the answers

What is the relationship between the Macro-Environment and the organisation?

The Macro-Environment has a significant influence on the organisation Signup and view all the answers

What is a crucial aspect for companies to survive during a period of change?

To adapt to the new environment Signup and view all the answers

What is the main reason why companies should learn from the past?

Because it helps companies to understand the changes taking place Signup and view all the answers

What is the main characteristic of good business models?

They are able to adapt to changes in the environment Signup and view all the answers

What is a common reaction of companies to changes in the environment?

They look for temporary solutions until they can return to normal operations Signup and view all the answers

What is a major challenge for companies in a changing environment?

Coping with uncertainty Signup and view all the answers

What is the main benefit of understanding the changes taking place in the environment?

It can be turned into a benefit Signup and view all the answers

What is the main limitation of a clothing retailer's initiatives to stimulate business?

Inability to make a significant impact on the overall economy Signup and view all the answers

What are the six sub-environments of the macro-environment?

Technological, Economic, Socio-cultural, Institutional, International, and Ecological Signup and view all the answers

What is the primary function of intermediaries in the market environment?

To bridge the gap between the producer and the consumer Signup and view all the answers

According to Michael Porter, what determines the nature of competition within an industry?

The prevalence of five forces: threat of new entrants, bargaining power of consumers, bargaining power of suppliers, threat of substitute products or services, and jockeying for position amongst the current competitors Signup and view all the answers

What is the result of established economies of scale within an industry?

Reduced significance of potential new entrants to the market Signup and view all the answers

What is the primary concern of a powerful supplier in an industry?

Exercising bargaining power by reducing the quality of goods and services supplied and/or raising the prices of goods and services supplied Signup and view all the answers

What is the key characteristic of a chaordic organisation?

Being able to adapt to changing environments Signup and view all the answers

What is the primary function of the market environment?

To comprise the industry in which the organisation operates Signup and view all the answers

What is the primary purpose of environmental scanning?

To identify threats and opportunities within the environment Signup and view all the answers

What is the outcome of a powerful buyer in an industry?

Significant impact on the nature of competition within an industry Signup and view all the answers

What is the primary goal of a clothing retailer's initiatives to stimulate business?

To stimulate business within the locality Signup and view all the answers

What is the result of not adapting to changes in the external environment?

Tilted previously valid laws of business off balance Signup and view all the answers

What is the term used to describe the environment that immediately surrounds the organisation?

Market environment Signup and view all the answers

What is an example of a successful business that emerged from a crisis?

Airbnb Signup and view all the answers

What is the term for the process of adjusting an organisation's strategy to respond to changes in the environment?

Strategic Response Signup and view all the answers

What is the result of a crisis, according to Jan Recker?

An opportunity to develop a better business strategy Signup and view all the answers

What is the term for the process of acquiring and maintaining knowledge of the organisation's environment?

Information Management Signup and view all the answers

What is the benefit of implementing chaordic organisational principles in a complex environment?

Better adaptability to changing environments Signup and view all the answers

What is the purpose of recording information obtained from environmental scanning?

To inform decision-making Signup and view all the answers

What can powerful customers do in a market environment?

Reduce prices and insist on higher quality products Signup and view all the answers

What is the term for an adjustment to an organisation's structure to align with its revised strategy?

Structural Change Signup and view all the answers

What is the primary function of substitute products in a market environment?

To impose a price ceiling Signup and view all the answers

What is referred to as the fifth competitive force in a market environment?

Jockeying for position Signup and view all the answers

What is the micro-environment primarily concerned with?

The organisation itself Signup and view all the answers

What is the primary purpose of analysing the competitive forces in a market environment?

To identify strengths and weaknesses Signup and view all the answers

What is the primary characteristic of the twenty-first century according to Tetenbaum?

Discontinuous and rapid change Signup and view all the answers

What is the value chain primarily concerned with?

The processes within an organisation Signup and view all the answers

What type of activities are focused on providing the product and/or service to the consumer?

Primary activities Signup and view all the answers

What is the main difference between the first curve and the second curve markets?

The focus on people and knowledge Signup and view all the answers

What is the primary objective of an organisation operating in the market environment?

To better meet the market needs than competitors Signup and view all the answers

What is the primary implication of environmental change for an organisation?

It demands a focus on agility and adaptability Signup and view all the answers

What is the impact of the micro-environment on the macro-environment?

The micro-environment is rarely able to influence the macro-environment Signup and view all the answers

What is the main characteristic of the environment in which organisations operate according to Cronjé?

Uncertainty and change Signup and view all the answers

What is the primary purpose of configuring the activities in the micro-environment?

To better meet the market needs Signup and view all the answers

What is the primary way to cope with uncertainty in the environment according to Morrison?

Embrace emerging changes and markets Signup and view all the answers

What is the primary focus of the second curve organisation?

People and knowledge Signup and view all the answers

What is the primary difference between the first curve and the second curve organisations?

The role of people and knowledge Signup and view all the answers

What is the primary characteristic of the second curve market?

Focus on people and knowledge Signup and view all the answers

What is the primary way to build a second curve organisation?

By building a diverse management team Signup and view all the answers

What is the primary implication of the second curve market for organisations?

They need to adapt to emerging changes and markets Signup and view all the answers

Study Notes

Management Environment

The management environment is complex and consists of three sub-environments: micro-environment, market/task environment, and macro-environment.
The Systems Theory approach highlights the inter-relatedness of environmental factors, where a change in one factor can result in a change in another.

Micro-Environment

The micro-environment refers to the organisation itself and is influenced by the macro-environment and market environment.
The micro-environment is characterised by issues such as management roles and functions, organisational structure, and management processes.

Market/Task Environment

The market/task environment refers to the environment that immediately surrounds the organisation and includes competitors, suppliers, and customers.
The market environment is influenced by the macro-environment and has a direct influence on the organisation.
Porter's five forces model (threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products, and jockeying for position) is used to analyse the competitive forces within an industry.

Macro-Environment

The macro-environment refers to the greater environment outside of the market and task environment and includes factors such as technological, economic, socio-cultural, institutional, international, and ecological environments.
The macro-environment influences the organisation directly and indirectly through the market environment.

Interfaces between the Organisation and the Environment

The organisation is an open system and interacts with the environment to survive.
Change is a characteristic of the management environment, and organisations must be agile to meet new demands.
The concept of the second curve market and organisation (Morrison, 1996) highlights the need for organisations to adapt to changing environmental forces.

Ways in which Management can react to the Environment

Three inter-related approaches to react to the environment are: information management, strategic response, and environmental scanning.
Environmental scanning involves acquiring and maintaining knowledge of the organisation's environment to identify threats and opportunities.
A strategic response involves adjusting the organisation's strategy to align with emerging changes in the environment.### Factors Affecting Businesses
The temperance movement in the USA in the 1920s was a huge disruption in the market that led to business success for companies like Pepsi and Coca-Cola.
The COVID-19 pandemic is another example of a huge disruption that startups can take advantage of to succeed.

Responding to Environmental Change

Organisations may need to adjust their strategy and structure in response to environmental change.
In a stable environment, certain approaches may be effective, but in an environment of dynamic change and complexity, chaordic organisational principles may be more beneficial.

Coping with Uncertainty

Understanding the changes taking place and their effects on companies is crucial for survival and can be turned into a benefit.
Companies should focus on adapting their business models to cope with uncertainty, rather than seeking temporary interim solutions.
History can be a valuable teacher in learning how to adapt to change.

The Management Environment

The management environment consists of the macro-environment, market/task environment, and micro-environment.
The inter-relations between these environments are important to understand, as they can affect the organisation.
Change and uncertainty can have a significant impact on the organisation, and management must respond accordingly.

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