Business Environments – Grade 10 Chapter 1

29 question-and-answer flashcards covering suppliers, consumers, competitors, strategic alliances, intermediaries, NGOs, industry regulators, Porter’s six forces, business culture, policy, structure, MIS, risk management, factors of production, and the eight business functions.

What is the primary role of suppliers in the market environment?

To provide the materials and/or services a business needs to manufacture or sell its products to the target market.

How can suppliers exert power over a business?

By demanding higher prices or failing to deliver on time, forcing the business to raise selling prices or lose sales.

Who are considered consumers of a business?

The people who buy and/or use the business’s products or services.

Why must both buyer and user sometimes be convinced to purchase a product?

Because the buyer is not always the consumer (e.g., a mother buys a toy her child will use), so both parties’ needs must be met.

How can consumers’ buying power influence a business’s pricing decisions?

If consumers feel a price is too high, they may stop purchasing, pressuring the business to reduce the price or lose customers.

Who are a business’s competitors?

Companies that sell the same, similar, or substitute products/services to the same target market.

Besides current competitors, what competitive threat must businesses watch?

Potential new entrants to the market who could capture market share.

Give three ways a business can create a competitive advantage.

Superior quality, lower price, advanced technology, higher service levels, superior resources, or advantageous location.

What is a strategic alliance?

An agreement where two or more businesses join forces to pursue a market opportunity or mutual benefit.

Provide two real-world examples of strategic alliances from the notes.

Discovery Vitality cardholders receiving discounts at Ster-Kinekor; ABSA Rewards converting to extra Pick n Pay Smart Shopper points.

What are intermediaries in a distribution channel?

‘Middlemen’ that link a business to its consumers, giving the firm easier market access.

Why might a new designer choose to sell through an established boutique?

The boutique already has direct customer access, making market entry easier than opening a new store.

Besides distribution, how else do intermediaries assist businesses?

They help track trends in customers’ needs and wants.

What are NGOs, and what do they expect from businesses?

Non-profit organisations focused on social or environmental issues; they expect businesses to behave ethically and act as responsible corporate citizens.

Name three NGO examples cited in the notes.

SPCA, Nelson Mandela Children’s Fund, Doctors Without Borders (also Junior Achievement, NSRI).

What function do industry regulators perform?

They set guidelines and act as watchdogs to ensure businesses operate ethically.

Give two South African examples of industry regulators.

SABS, SACOB, insurance or financial ombudsmen, and trade unions.

List Porter’s six forces in the market environment.

Power of consumers, power of suppliers, power of competitors (rivalry), power of potential new competitors, power of substitute products, power of complementary products.

How is the market environment characterised from a business’s perspective?

It consists of external elements beyond the firm’s control that still affect it, requiring assessment and planning.

Define business culture.

The shared beliefs and values in a business that guide employees’ and managers’ behaviour and attitudes.

How does a positive business culture affect performance?

It fosters teamwork, synergy, and broad buy-in to management decisions.

What is the purpose of business policy?

To provide direction and a consistent framework aligned with the business’s vision, mission, goals, and objectives.

Where do business policies originate, and why must they be consistent?

They are formulated by top management; inconsistency creates confusion and chaos.

What is organisational structure and why is it important?

The arrangement of people, authority, and information so all components work together; it clarifies roles and reporting lines.

Name four organisational structure types mentioned.

Line, line-and-staff, matrix, project, divisional by product, and divisional by region (any four).

What does MIS stand for, and what is its role?

Management Information Systems; they ensure the right technology and information are available across all business functions.

Define risk management in a business context.

The process of identifying, monitoring, and minimising risks through appropriate strategies across all functions.

List the four factors of production identified as internal resources.

Entrepreneurship, human resources (labour), raw materials (natural resources), and capital.

Identify the eight business functions referenced in the notes.

Purchasing, production, human capital, finance, marketing, public relations, administration, and general management.