CHAPTER 1 – BUSINESS ENVIRONMENTS
The Macro Environment
- Form part of the external environment.
- Business has no control over events in external environment.
- Needs to consider events and design strategies to adapt to situations in
external environment.
- Remember internal env. may impact external env.
o In a strike, 1/more businesses may have effect on economy.
o Employing/retrenching workers contributes to [un]employment.
o Way business operates influences physical env.
Tools used to analyse events in macro env. in order to:
Determine how business can eliminate any threats.
Capitalise on opportunities to achieve comp. advantage.
COMP ADVANTAGE = DESCRIBES HOW BUSINESS HAS THE EDGE IN THE MARKET OR OVER
COMPETITORS.
Tools to analyse macro env:
- Environmental scan
- SWOT-analysis
- PESTLE or PE2STLE analysis
ENVIRONMENTAL SCAN:
Important to identify factors that impact the business and adjust strategies accordingly.
Following process is applied:
- Business scans macro env. to identify issues that need addressing.
- Opportunities and threats considered.
- PE2STLE identifies specific O & T.
Purpose:
- Identify possible challenges/opportunities in changing environment
- Gain understanding, nature of changes, and pace.
o Crisis – quick unexpected, bus didn’t anticipate, probably no contingency
plan.
o Trend – Occur over period, forewarned to adapt strategies to deal w change.
- Management – use info to dev strategies – respond quickly to ^
- Help management understand impact of decisions on comp position and
sustainability
SWOT-ANALYSIS (ONLY O AND T):
Identifying all opportunities and threats that may impact the business.
, PE2STLE-ANALYSIS:
Each letter describes potential
threats/opportunities (strengthen Political
Economic Ethical Social
comp.
advantage) for the business.
Environment
Technological Legal
al
Political factors:
In relation to:
- Local political situation of country bus. operates in.
- Political situation of other countries bus. operates in.
- World politics in general.
Following aspects should be considered:
- Likelihood of government interference.
- Degree of political stability/unrest.
- Political ties with other countries.
- Degree of media freedom/freedom of speech.
- Attitude of political parties.
- Process followed when government tenders are allocated.
- Fiscal policies.
Economic factors:
- Economic growth and development rates of a country (refers to the standard of
living of the people in the country)
- Inflation rates – higher the inflation rate = the lower the purchasing power of the
monetary unit will be.
- Fluctuating exchange rates – strength of the local currency vs the currencies of
other countries.
- Interest rates (borrowing money from bank or the % return on investments
when saving in the bank.
- Unemployment – No money and as a result business’s have lower profits.
- Globalization – International influence for the business or the business starts operating
in an international scale.
- The state of the world economy
- Taxes such as income tax, VAT, import duties etc.
Ethical factors:
Principles or values that will determine if decisions and actions are acceptable. Ethics
provide a guideline for the person/business to evaluate how to act in the “right” way when
faced with a moral dilemma or difficult situation.
- Consider difference between legal and ethical.
- Fair trade refers to the respect and transparency in business dealings,
acknowledging that one party that will not exploit the other.
- Corporate social responsibility (Chapter 6).
- Employee privacy regarding the use of internet vs the right of the business to
expect reasonable behaviour from employees.
The Macro Environment
- Form part of the external environment.
- Business has no control over events in external environment.
- Needs to consider events and design strategies to adapt to situations in
external environment.
- Remember internal env. may impact external env.
o In a strike, 1/more businesses may have effect on economy.
o Employing/retrenching workers contributes to [un]employment.
o Way business operates influences physical env.
Tools used to analyse events in macro env. in order to:
Determine how business can eliminate any threats.
Capitalise on opportunities to achieve comp. advantage.
COMP ADVANTAGE = DESCRIBES HOW BUSINESS HAS THE EDGE IN THE MARKET OR OVER
COMPETITORS.
Tools to analyse macro env:
- Environmental scan
- SWOT-analysis
- PESTLE or PE2STLE analysis
ENVIRONMENTAL SCAN:
Important to identify factors that impact the business and adjust strategies accordingly.
Following process is applied:
- Business scans macro env. to identify issues that need addressing.
- Opportunities and threats considered.
- PE2STLE identifies specific O & T.
Purpose:
- Identify possible challenges/opportunities in changing environment
- Gain understanding, nature of changes, and pace.
o Crisis – quick unexpected, bus didn’t anticipate, probably no contingency
plan.
o Trend – Occur over period, forewarned to adapt strategies to deal w change.
- Management – use info to dev strategies – respond quickly to ^
- Help management understand impact of decisions on comp position and
sustainability
SWOT-ANALYSIS (ONLY O AND T):
Identifying all opportunities and threats that may impact the business.
, PE2STLE-ANALYSIS:
Each letter describes potential
threats/opportunities (strengthen Political
Economic Ethical Social
comp.
advantage) for the business.
Environment
Technological Legal
al
Political factors:
In relation to:
- Local political situation of country bus. operates in.
- Political situation of other countries bus. operates in.
- World politics in general.
Following aspects should be considered:
- Likelihood of government interference.
- Degree of political stability/unrest.
- Political ties with other countries.
- Degree of media freedom/freedom of speech.
- Attitude of political parties.
- Process followed when government tenders are allocated.
- Fiscal policies.
Economic factors:
- Economic growth and development rates of a country (refers to the standard of
living of the people in the country)
- Inflation rates – higher the inflation rate = the lower the purchasing power of the
monetary unit will be.
- Fluctuating exchange rates – strength of the local currency vs the currencies of
other countries.
- Interest rates (borrowing money from bank or the % return on investments
when saving in the bank.
- Unemployment – No money and as a result business’s have lower profits.
- Globalization – International influence for the business or the business starts operating
in an international scale.
- The state of the world economy
- Taxes such as income tax, VAT, import duties etc.
Ethical factors:
Principles or values that will determine if decisions and actions are acceptable. Ethics
provide a guideline for the person/business to evaluate how to act in the “right” way when
faced with a moral dilemma or difficult situation.
- Consider difference between legal and ethical.
- Fair trade refers to the respect and transparency in business dealings,
acknowledging that one party that will not exploit the other.
- Corporate social responsibility (Chapter 6).
- Employee privacy regarding the use of internet vs the right of the business to
expect reasonable behaviour from employees.
