Business Functions - Chapter 2

What is the business environment?

All the factors and forces outside the business's boundaries which influence its establishment, growth, and continued existence.

List the main characteristics of the business environment.

Interrelated, unstable, uncertain, complex, unpredictable.

What are the two main types of business environments?

Internal environment and external environment.

How does the macro-environment influence a business?

The macro-environment consists of various factors that directly affect the business's operations and success.

What is the difference between micro-environment and macro-environment?

The micro-environment includes the internal factors affecting the business, while the macro-environment encompasses external factors.

What are some key components of the macro-environment?

Economic, social, technological, natural, political, and international factors.

Give an example of how changes in the economic environment can affect businesses.

Interest rates can influence disposable income, affecting consumer purchasing behavior.

What is environmental uncertainty?

Limited and often inaccurate information leads to increased uncertainty in planning and decision making.

What influences a business's micro-environment?

The business's mission statement, goals, functions, and available resources.

How can competition affect businesses?

Competitors can present both threats and opportunities, influencing market strategies and consumer choices.

What constitutes the market environment?

Factors such as suppliers, competitors, and the market itself that directly impact a business's operations.

What is a consumer market?

A market where end-consumers buy and consume products.

What does the technological environment provide for businesses?

New products and opportunities, while also presenting threats of obsolescence.

What role does the political environment play in business?

Influences through legislation and regulations set by government and authorities.

How does the natural environment impact businesses?

Availability of natural resources and potential challenges like pollution and environmentalism.

What is the significance of a mission statement in the micro-environment?

It guides the goals and functions of the business, aligning them with external demands.

Why must businesses be aware of their external environment?

To adapt to changes and make informed decisions for achieving objectives.

What factors can contribute to instability in the business environment?

Changes in economic conditions, social trends, and various external variables.

How can businesses respond to unpredictable changes in their environment?

By being flexible and innovative, adapting their strategies to new circumstances.

What is the relationship between micro-environment and market environment?

The micro-environment influences how a business interacts with its market environment.

Identify one characteristic of the external environment.

It is subject to frequent changes beyond the control of an individual business.