Business_studies_Grade_10_Chapter_1_BUSINESS_ENVIRONMENTS_MICRO_ENVIRONMENT

THE BUSINESS ENVIRONMENT

• The concept of the business environment encompasses various external conditions affecting the operations and success of businesses.

• Businesses must analyze risks inherent in their environments to adapt and thrive.

BUSINESS RISKS

• Business risks can be categorized into three distinct environments:

  • Macro-Environment: Larger economic, political, social, and environmental forces that affect all businesses.

  • Market-Environment: Specific market-related factors including competition, market trends, and customer behavior.

  • Micro-Environment: Internal factors that directly influence a business's operations and decision-making.

MICRO ENVIRONMENT

• The micro environment consists of internal elements that affect the business outcomes.

ELEMENTS IN THE MICRO ENVIRONMENT

• Business Functions: Different roles and responsibilities within the organization.

• Resources: The materials and personnel needed to conduct business.

• Business Policy: Guidelines directing operational and strategic initiatives.

• Business Culture: The shared values and beliefs within the organization.

• Structure: The arrangement of roles, responsibilities, and communication flow within the organization.

BUSINESS FUNCTIONS

• There are traditionally EIGHT business functions, which managers must understand:

  • General Management

  • Purchasing

  • Production

  • Marketing

  • Financial Management

  • Administration

  • Human Resources

  • Public Relations

• These functions are interrelated and fundamental for strategic planning and operational execution.

GOALS AND OBJECTIVES IN GENERAL MANAGEMENT

• Goals and objectives are essential for shaping the direction of a business:

  • Goals: Long-term vision of the business.

  • Objectives: Short-term targets aiding in the attainment of goals.

• Key processes within management include:

  • Planning: Preparing future strategies and initiatives.

  • Organising: Structuring teams to optimize resources.

  • Leading: Guiding and motivating employees.

  • Controlling: Monitoring outcomes to ensure standards are met.

  • Disciplining: Maintaining a conduct system for upholding company standards.

SPECIFICS OF EACH FUNCTION

Purchasing

• Selecting reliable suppliers and ensuring quality resources at the right price and time.

Production

• Responsible for the actual creation of goods and services and optimizing production processes.

Financial Function

• Involves acquiring sufficient capital for operations and effectively managing both fixed and working capital.

Administration

• Conducting market research, setting pricing strategies, handling effective packaging, and ensuring efficient distribution.

Public Relations

• Maintaining a positive business image and ensuring ethical conduct towards stakeholders.

Human Resources

• Managing recruitment, training, labor laws compliance, and employee performance assessments.

ADDITIONAL BUSINESS FUNCTIONS

• Risk Management: Identify, assess, and strategize around business risks to mitigate their impact.

• Management Information Systems (MIS): Essential technology infrastructure facilitating all business functions.

RESOURCES

• Resources are classified under the four factors of production: land, labor, capital, and entrepreneurship, and are crucial for operational success.

BUSINESS POLICY

• Policies guide business functions by providing a structured framework based on the overarching vision and goals.

• Policies need to be coherent, clear, and regularly reviewed to ensure alignment with business objectives.

BUSINESS CULTURE

• Defined by the values and beliefs that shape behavior and attitudes of employees, fostering teamwork and collaboration.

ORGANISATIONAL STRUCTURE

• Refers to the hierarchy within a business, outlining roles and responsibilities:

  • Variants include:

    • Functional Structure

    • Line Structure

    • Line-and-Staff Structure

    • Matrix Structure

    • Divisional Structure: Based on products or regions.