Business Operations, Environments, and Management Lecture Notes
Business Environments: Micro, Market, and Macro
Micro Environment:
Definition: The environment in which the business operates and consists of the business itself; includes everything inside the business.
Components of the Micro Environment:
Organisational structure
Organisational resources
Organisational culture: Defined as how things are done in the business
Eight business functions
Vision: Statement explaining what the business wants to achieve
Mission: The core reason for the business's existence
Goals: Long-term objectives of the business
Objectives: Short-term tasks designed to meet long-term goals
Market Environment:
Definition: Outside challenges and elements that influence the business and determine its reason for existence.
Components of the Market Environment:
Market
Suppliers
Competitors
Intermediaries
Civil society
Strategic Alliances:
Involves two or more businesses working together in a joint venture.
Purpose: To obtain expertise or become more competitive in the market.
Impact and Challenges of Competition:
Keeps prices low and reduces overall profit.
Businesses may close if they are unable to compete effectively.
Reduces both market share and the viable target market.
Drives the context of opportunities and threats due to high levels of competition between businesses.
Macro Environment:
Definition: Also known as the external environment; exists outside the business. The business cannot control this environment, but the macro environment influences the business.
Components of the Macro Environment:
Physical
Economic
Legal and Political
Institutional
Organisational Structures and Resources
Organisational Resources:
Physical resources
Financial resources
Human resources
Information and Technological resources
Purpose of Organisational Structures:
Ensure the smooth and efficient functioning of the enterprise.
Direct efforts and work toward organisational goals.
Illustrate clear connections between positions, roles, and tasks.
Factors Influencing Organisational Structure:
Size of the company
Technology employed
Available resources
Strategic goals
Types of Organisational Structures:
Line organisational structure
Project organisational structure
Matrix organisational structure
Functional organisational structure
Management, Leadership, and Business Operations
Leadership vs. Management:
Leadership:
People-orientated focus.
Motivational approach.
Influences human behaviour.
Defined as the ability of an individual to inspire, motivate, and influence subordinates.
Management:
Task-orientated focus.
Instructional approach.
Guides human behaviour.
Focuses on guiding and directing the organisation.
The Eight Core Business Functions:
Administration
Financial
Purchasing
Public Relations
Human Resources
Production
General Management
Marketing
Levels of Management:
Top Management:
Consists of the Board of Directors.
Responsible for long-term strategic decisions.
Handles directing, controlling, and managing risks.
Middle Management:
Responsible for medium-term tactical decisions.
Implements the vision and strategic plans developed by top management.
Lower Management:
Focuses on short-term tasks and operational decisions.
Responsible for directly motivating employees.
Core Management Tasks:
Planning
Organizing
Leadership
Controlling
Risk management
Administration and Information Management
Core Responsibilities of the Administration Function:
Handling of information and data.
Execution and management of general office work.
Data vs. Information:
Data: Raw facts that cannot be used directly; must be processed before use.
Information: Processed data that is meaningful and operational; must always have a secure backup.
Financial Function and Capital Management
Financial Function Responsibilities:
Determines how much capital the business requires.
Ensures that the business generates sufficient income to sustain operations.
Sources of finance include:
Grants
Investments
Angel Funding
Types of Capital:
Fixed Capital: Capital tied up in fixed assets.
Working Capital: Capital used to pay for daily business activities and operational expenses.
Own Capital: Capital sourced directly from the business owner.
Borrowed Capital: Capital acquired from financial institutions.
Owned Capital vs. Borrowed Capital Comparison:
Owned Capital:
Source: Provided by the owner.
Liability status: Not a liability.
Duration: Permanent capital.
Borrowed Capital:
Source: Obtained from financial institutions.
Liability status: Represents a business liability.
Duration: Temporary capital.
Purchasing Function, Credit Purchasing, and Stock Control
Standard Purchasing Procedure:
Step 1: Determine the need for the product.
Step 2: Determine the acceptable price.
Step 3: Choose a suitable supplier.
Step 4: Place the order.
Step 5: Collect the order.
Step 6: Pay the supplier.
Step 7: Distribute the stock.
Credit Purchasing:
Advantages of Credit Purchasing:
No discrimination among buyers.
Enables purchasing through affordable repayments.
Damaged goods can be replaced.
Disadvantages of Credit Purchasing:
Poses a high risk of unsettled debts.
Suppliers can refuse credit.
Debtor accounts and statements must be regularly sent out to debtors.
Importance of Stock Control:
Keeps correct and optimal levels of stock on hand.
Maintains an accurate record of stock cost and selling prices.
Identifies and prevents theft.
Public Relations Function
Public Relations Overview:
Focuses on keeping stakeholders engaged and aligned with the enterprise.
Ensures good, clear communication across all channels.
Internal vs. External Public Relations:
Internal Public Relations: Focuses on establishing and maintaining a good image among employees.
External Public Relations: Focuses on presenting a good image to parties outside the company.
Methods of Conducting Public Relations:
Media
Direct contact
Brochures
Telephone
Importance and Activities of Public Relations:
Volunteering for community initiatives.
Publishing annual reports.
Sponsoring community events.