Grade 11 Business Studies Study
Guide: Environments, Functions, and
Personal Management
1. The Eight Business Functions and the Micro
Environment
Contextualising the Micro Environment
The micro environment refers to the internal business environment and
encompasses all elements found within the organisation. Often described as the
internal operating system, this environment includes all internal affairs managed
directly by the directors or owners. Because these components are internal to the
organisation, the business exercises full and complete control over the micro
environment.
Components of the Micro Environment
Management must oversee several interrelated components within this environment
to ensure organizational success:
• Vision and mission statements
• Goals and objectives
• Organisational structure
• Organisational resources
• Organisational culture
• Management and leadership
• The eight business functions (the primary functional areas of the business)
The eight business functions include:
• General Management: This function is responsible for the overall direction of the
business. Examples include establishing the vision, mission statement,
goals, and objectives to move the business in the right direction and leading
employees to achieve them.
• Marketing Function: This function connects customers with products or
services. Examples include conducting market research to identify customer
needs, running promotional campaigns (like "Buy one, get one free" deals), and
setting pricing policies.
• Production Function: This involves transforming raw materials into finished
goods. Examples include manufacturing tiles or furniture, as well as
production planning (routing and scheduling) and quality control to ensure
goods meet high standards.
• Financial Function: This function manages the money within the business.
Examples include obtaining funding through bank overdrafts or loans and
calculating production costs to ensure profitability.
, • Purchasing Function: This function is responsible for acquiring necessary
inputs. Examples include signing long-term contracts with suppliers for raw
materials and buying in bulk to secure discounts.
• Human Resources Function: This function manages the personnel of the
organisation. Examples include recruitment, selecting the best candidates for a
job, and inducting new employees into their roles.
• Administration Function: This function handles the collection and management
of information. An example is information management, which involves the
recording, storing, and retrieving of data so it can be used effectively by the
business.
• Public Relations Function: This function focuses on maintaining a positive
image of the business. Examples include managing press releases to the
media and handling publicity to build brand loyalty with external stakeholders
The Role of Management in Business Functions
To maintain control over the internal operating system, management must align all
functional areas with the business’s core values. In large organisations, the Chief
Executive Officer (CEO) works in conjunction with the eight business functions to
oversee the micro environment. Control is often decentralised, meaning each
departmental head is responsible for managing the specific aspects of the micro
environment within their respective departments. This ensures that
all stakeholders—parties who can affect or be affected by the business—are
accommodated through agreed-upon goals.
Internal Functioning Challenges
Challenges within the micro environment can threaten a business's profitability and
long-term survival. The table below details specific internal challenges and their
corresponding impact on productivity.
Challenge Type Impact on Productivity
These individuals may fail to support the vision, complain about
work systems, or show a lack of commitment. This results in
Difficult
workplace conflict, a breakdown of team spirit, delays in meeting
Employees
deadlines, and the production of sub-standard work during working
hours.
When employees are not well-trained, performance fails to meet
Shortage of
standards. This leads to poor customer service, which damages
Skilled
the business's image and causes a loss of customers to
Employees
competitors.
Lack of Adequate Managers unable to lead or direct personnel effectively cause
Management resources to be wasted. This results in a frustrated workforce and
Skills a decrease in overall productivity and profitability.
Employee Frequent absence disrupts production schedules and places
Absenteeism additional strain on remaining staff, leading to decreased output.
Guide: Environments, Functions, and
Personal Management
1. The Eight Business Functions and the Micro
Environment
Contextualising the Micro Environment
The micro environment refers to the internal business environment and
encompasses all elements found within the organisation. Often described as the
internal operating system, this environment includes all internal affairs managed
directly by the directors or owners. Because these components are internal to the
organisation, the business exercises full and complete control over the micro
environment.
Components of the Micro Environment
Management must oversee several interrelated components within this environment
to ensure organizational success:
• Vision and mission statements
• Goals and objectives
• Organisational structure
• Organisational resources
• Organisational culture
• Management and leadership
• The eight business functions (the primary functional areas of the business)
The eight business functions include:
• General Management: This function is responsible for the overall direction of the
business. Examples include establishing the vision, mission statement,
goals, and objectives to move the business in the right direction and leading
employees to achieve them.
• Marketing Function: This function connects customers with products or
services. Examples include conducting market research to identify customer
needs, running promotional campaigns (like "Buy one, get one free" deals), and
setting pricing policies.
• Production Function: This involves transforming raw materials into finished
goods. Examples include manufacturing tiles or furniture, as well as
production planning (routing and scheduling) and quality control to ensure
goods meet high standards.
• Financial Function: This function manages the money within the business.
Examples include obtaining funding through bank overdrafts or loans and
calculating production costs to ensure profitability.
, • Purchasing Function: This function is responsible for acquiring necessary
inputs. Examples include signing long-term contracts with suppliers for raw
materials and buying in bulk to secure discounts.
• Human Resources Function: This function manages the personnel of the
organisation. Examples include recruitment, selecting the best candidates for a
job, and inducting new employees into their roles.
• Administration Function: This function handles the collection and management
of information. An example is information management, which involves the
recording, storing, and retrieving of data so it can be used effectively by the
business.
• Public Relations Function: This function focuses on maintaining a positive
image of the business. Examples include managing press releases to the
media and handling publicity to build brand loyalty with external stakeholders
The Role of Management in Business Functions
To maintain control over the internal operating system, management must align all
functional areas with the business’s core values. In large organisations, the Chief
Executive Officer (CEO) works in conjunction with the eight business functions to
oversee the micro environment. Control is often decentralised, meaning each
departmental head is responsible for managing the specific aspects of the micro
environment within their respective departments. This ensures that
all stakeholders—parties who can affect or be affected by the business—are
accommodated through agreed-upon goals.
Internal Functioning Challenges
Challenges within the micro environment can threaten a business's profitability and
long-term survival. The table below details specific internal challenges and their
corresponding impact on productivity.
Challenge Type Impact on Productivity
These individuals may fail to support the vision, complain about
work systems, or show a lack of commitment. This results in
Difficult
workplace conflict, a breakdown of team spirit, delays in meeting
Employees
deadlines, and the production of sub-standard work during working
hours.
When employees are not well-trained, performance fails to meet
Shortage of
standards. This leads to poor customer service, which damages
Skilled
the business's image and causes a loss of customers to
Employees
competitors.
Lack of Adequate Managers unable to lead or direct personnel effectively cause
Management resources to be wasted. This results in a frustrated workforce and
Skills a decrease in overall productivity and profitability.
Employee Frequent absence disrupts production schedules and places
Absenteeism additional strain on remaining staff, leading to decreased output.
