Chapter 1 (Environment) - Eng

Chapter 1: The Business Environment

Overview of the Business Environment

• The business environment consists of various factors influencing business activities.

• Key framework: PESTLE (Political, Economic, Social, Technological, Legal, Environmental).

• Note: This section is additional and does not appear in the prescribed textbook.

Importance of Analyzing Environments

• Businesses must analyze the various environments to adapt and thrive.

• For each environment, consider:

  • Importance: Why is this environment significant for businesses?

  • Current Trends: What trends are emerging within these environments?

  • Impact on Business: How do these trends influence business operations and strategy?

  • Overcoming Challenges: What strategies can businesses employ to address challenges or capitalize on positive trends?

Political Environment

Stability and Impact

• Political stability can significantly affect business operations and market predictability.

• Recent example: Rand gains strength to 12.5200 per dollar as Cyril Ramaphosa wins ANC leadership.

• Expectation of leadership change can influence economic perceptions and currency strength.

Economic Environment

Current Trends and Projections

• Economic Growth: Insights from Global Growth Projections focusing on predicted annual growth rates up to 2025.

  • Example: Uganda's projected growth rate illustrates variance across different markets.

• Economic complexity and interconnectedness affect investment decisions and market opportunities.

Unemployment Trends

• Illustrative data on South African unemployment shows a high rate hovering around 27.5%.

• Businesses need to consider the socio-economic implications of high unemployment.

Circular Economy

Principles and Importance

• The circular economy focuses on sustainability by promoting the reuse of products, minimizing waste, and recycling.

• Emphasis on eliminating waste to promote a sustainable lifestyle beyond mere recycling.

Food Wastage

Implications and Statistics

• Food wastage: 10 million tons lost annually, equating to one-third of total production (31 million tons).

  • Sources of Waste: Fruits, vegetables, and cereals account for 70% of losses.

  • Economic impact of food loss: Estimated at R61.5 trillion.

  • Resource loss: Enough energy to power Johannesburg for 16 weeks; water loss sufficient to fill 600,000 Olympic swimming pools.

Technological Environment

Innovations Impacting Business

• Virtual Reality Trends: eBay introduces the first virtual department store, enhancing consumer shopping experiences.

Checkout Innovations

• Amazon Go: Pioneering check-out free shopping; enhancing convenience and speeding up the retail process.

Recycling Trends

Current Practices and Statistics

• Recycling is becoming a significant trend among consumers:

  • Cans: 69% recycled

  • Paper: 59% recycled

  • Glass: 25% recycled

  • Plastic: 17% recycled

• Questions about the adequacy of South African recycling infrastructure arise.

• National organization: National Recycling Forum (NRF) plays a role in promoting recycling in South Africa.