Chapter 1: Business Environments – PESTLE & SWOT

These flashcards cover key points on PESTLE factors, SWOT analysis, internal vs external business factors, and the characteristics of business environments described in the Chapter 1 lecture notes.

What is meant by a business’s macro environment?

The external environment over which a business has little or no control; developments here can positively or negatively affect the business.

Which six major factors make up a PESTLE analysis?

Political, Economic, Social, Technological, Legal, and Environmental factors.

Give an example of a political factor that can affect businesses, as mentioned in the notes.

UN sanctions on Zimbabwe, which influenced both Zimbabwean and neighbouring South African businesses.

Name four economic factors considered in PESTLE analysis.

Inflation, exchange rates, interest rates, and taxes.

How can economic factors influence a business’s pricing decisions?

They affect the cost of raw materials and manufactured goods, influencing the final selling price.

List four social factors that may impact a business.

Poverty, crime, HIV/Aids, and unemployment.

How do social factors typically affect a business’s market?

They influence standard of living, quality of life, and disposable income levels of consumers.

Why is advancing technology regarded as both a threat and an opportunity?

Technology can become outdated (threat) but also create competitive advantage through faster, more reliable production and reduced waste (opportunity).

Mention three legal acts that can influence South African businesses.

Labour Relations Act, Consumer Protection Act, and Occupational Health and Safety Act.

Identify three environmental factors included in PESTLE.

Pollution, natural disasters, and oil spills.

Which analytical tool is mainly used to study the macro environment?

PESTLE analysis.

Within SWOT, which two elements are used to analyse the micro environment?

Strengths and Weaknesses.

Which parts of SWOT focus on the market environment?

Opportunities and Threats.

What does the acronym SWOT stand for?

Strengths, Weaknesses, Opportunities, Threats.

Which SWOT elements are internal to the business?

Strengths and Weaknesses.

Which SWOT elements are external to the business?

Opportunities and Threats.

Provide one example of a potential business strength.

Strong brand, secure access to raw materials, or valuable intellectual property.

Give one example of a business weakness.

Poor marketing, lack of resources, or low-skilled employees.

What is considered an ‘opportunity’ in SWOT analysis?

A favourable external factor that the business can exploit to increase demand or customer loyalty.

How is a ‘threat’ defined in SWOT analysis?

An unfavourable external factor from the market or macro environments that could harm the business.

List the three key characteristics of business environments described in the notes.

Complex, Multi-faceted, and Dynamic.

Why are business environments labelled ‘complex’?

They constantly change due to competitive and hostile factors, while limited resources must satisfy various stakeholders.

Explain why business environments are ‘multi-faceted’.

Business actions impact different stakeholder groups in different ways; what benefits one group may harm another (e.g., automation helping profits but costing jobs).

What does it mean when business environments are called ‘dynamic’?

They undergo continual change, requiring flexible strategies and contingency (plan B) preparations.

Differentiate between a trend and a crisis in the business context.

A trend is a gradual, anticipated change; a crisis is a sudden, unexpected change with no pre-existing plan.

Define an intrapreneur.

An employee who innovates within a company to create new value and additional profit for the business.

Why should a company develop a contingency plan?

To ensure it can respond effectively if the original strategy fails due to sudden changes in the dynamic business environment.