Summary Business studies the enviroments (micro,market and macro)

THE MICRO, MARKET AND MACRO
ENVIRONMENT
GR 11/12 NOTES

Contents
ENVIROMENTS AND STRATEGIES................................................................................................................................2
Tools used to scan the market environment..............................................................................................................3
Porter’s 6 FORCES:..................................................................................................................................................3
PESTEL analysis:...........................................................................................................................................................6
Strategies:...................................................................................................................................................................7
Corporate strategies...............................................................................................................................................7
Business Report (50 Marks)..........................................................................................................................................11
Guide for Answering Business Report......................................................................................................................12
LOOK AT OUR SAMMARY BUSINESS STUDIES REPORT NOTES IEB...............................................................................13




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,ENVIROMENTS AND STRATEGIES



Levels of control
Micro environment
 Full control
 Mission
 Objectives
 Management structure
 Resources
 Culture


Market environment
 External
 Limited co troll
 Ability to adapt
 Customers
 Supplies
 Competitors
 Intermediaries



Macro environment
 External
 Little co troll to none
 Ability to adapt
 Socio-economic
 Legal
 Technological
 Political
 Government
 Economic
 International




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,Environmental scanning

Is an analysis of each of the environment/factors of a business in order to increase
strengths, decrease weakness, adapt to threats and take advantages of opportunities =
SWOT analysis

 Identifies threats before they are imminent
 Identifies possible opportunities And gaps in the market
 Allows entrepreneurs to make both long and short term strategies
Tools used in the micro environment

 SWOT ANALYSIS
 Resource based approach
 Value Chan analysis
 Balanced scorecard


If a business wants to expand and increase sales:

 Market Penetration
 Market Development
 Product Development
 Diversification

TOOLS USED TO SCAN THE MARKET ENVIRONMENT


PORTER’S 6 FORCES:
1. Threat of New Entrants:

- New entrants pose a threat when it's easy for them to enter a market, making existing
businesses lose customers or lower prices.

- Level of Rivalry: High, if new businesses can easily start; Moderate to Low, if entry
barriers are high.

2. Availability of Substitute:

- Substitutes are alternatives that fulfil the same purpose, and their availability can impact
a company's market share and pricing.

- Level of Rivalry: High, if substitutes are readily available and comparable; Moderate to
Low, if substitutes are limited.

3. Power of Suppliers:

- Suppliers have power when they can control prices, quality, or supply, impacting the
profitability of the companies they supply.




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, - Level of Rivalry: High, if suppliers have significant power; Moderate to Low, if there are
multiple suppliers.



4. Power of Buyers:

- Buyers have power when they can influence prices, demand quality, or easily switch
between competitors.

- Level of Rivalry: High, if buyers have significant power; Moderate to Low, if buyers have
limited influence.

5. Power of Complementary Products/Services:

- The power of complementary products or services is how they can affect the demand for
the main product or service.

- Level of Rivalry: High, if complementary products are influential; Moderate to Low, if their
impact is limited.

6. Level of Rivalry:

- Rivalry among existing competitors is high when there are many competitors, low when
there are few, and it can be influenced by other forces.

- Overall Level of Rivalry: High, if all forces are strong; Moderate, if some forces are
moderate; Low, if forces are generally weak.


 Opportunities and threats

 Non-Governmental Organizations (NGOs):
o NGOs are independent entities that operate without government
control, working towards social, environmental, or humanitarian goals
often through charitable activities and advocacy.
Example:
Fashion Revolution
Description: Fashion Revolution is an NGO that operates independently
to advocate for transparency and ethical practices within the fashion
industry. It focuses on raising awareness about the social and
environmental impacts of clothing production. Fashion Revolution
engages in charitable activities, campaigns, and initiatives to
encourage sustainable and fair practices among clothing retailers.
They may conduct audits, promote fair labor conditions, and push for
environmentally responsible sourcing of materials.

 Community-Based Organizations (CBOs): - CBOs are local groups or
associations formed by community members to address specific needs or



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