Chapter 1 – Business Environments part 2

Business Environments

  • Business environment split into Internal (Micro) and External (Market & Macro)
  • Internal/Micro = factors inside the firm that management controls ➜ direct impact on performance
  • External (Market & Macro) = factors outside the firm ➜ can only be influenced/anticipated

Micro Environment: Core Elements

  • Business Functions (core & additional)
  • Resources (human, financial, physical, information)
  • Business Policy & Strategy alignment
  • Organisational Culture
  • Structure & workflow

Core Business Functions ( 88 )

General Management
  • Sets strategic direction: Vision → Mission → Goals (long-term) → Objectives (short-term) → Strategy
  • Core tasks: Planning, Organising, Leading, Controlling, Communicating, Coordinating, Decision-making, Delegating, Disciplining, Motivating
Purchasing (Procurement)
  • Secures inputs so other departments achieve objectives
  • Must obtain: right Quality, Price, Quantity, Place, Time, Supplier
Production
  • Combines factors of production to create outputs; aims to minimise INPUT cost\text{INPUT cost} without harming OUTPUT quality\text{OUTPUT quality}
  • Choose method: Mass, Batch, Jobbing
  • Product must be Safe, Reliable, Durable, supported by good After-sales service
  • Monitor Product Life Cycle with Marketing
Marketing
  • Conducts market research to define Product, Price, Place, Promotion (4P’s)
  • Analyses target market variables: age, income, interests, gender, occupation, marital status
  • Tools: advertising, sales promotion, personal selling, feedback monitoring
Financial
  • Secures & manages capital
    • Fixed (long-term) capital → assets
    • Working (short-term) capital → inventory & expenses
  • Calculates start-up vs running costs; prepares budgets; evaluates affordability of loans (capital + interest)
Administration
  • Collects, processes, stores, and supplies accurate information in usable format and time
Human Resources / Human Capital
  • Plans workforce size & skills; recruits, selects, trains, retains
  • Complies with legislation: LRA\text{LRA}, BCEA\text{BCEA}, BBBEE\text{BBBEE}, Employment Equity\text{Employment Equity}, SDA\text{SDA}
  • Designs fair remuneration; monitors performance
Public Relations
  • Maintains positive brand image; ensures ethical & sustainable engagement with stakeholders (internal & external)

Additional Business Functions

  • Risk Management ➜ identifies, evaluates, mitigates threats
  • Information / Management Systems ➜ provides reliable data & tech support for decision-making