Chapter one : Business environments
There are 3 environments in total :
1.Micro environment (internal): the business’s own functions. The business has full control over this.
2.Market environment (external): suppliers, competitors, customers. The business has some influence but no control.
3.Macro environment (external): the wider economy, politics, laws and society. The business has no control and can only adapt
through strategies.
These 3 environments affect each other. For eg. A strike, retrenchments or pollution caused by a business can affect the
macro environment.
KEY TERMS :
1. Competitive advantage: the edge a business has over local or international competitors, which lets it sell more, attract
more customers or cut out costs, and so make more profit.
2. Strategy: Either a formal plan to reach a short or long term goal, or simply a plan of action to improve performance.
A) Macro environment
Tools – environmental scanning →SWOT (O+T) →PESTLE(PE2 STLE)
Environmental scan: Looking at the environment to identify issues, then adjust existing plans or make new ones. It can be
used in all three environments.
PESTLE factors (each can be a threat or an opportunity, and they overlap) :
1. Political
a. Government interference in the economy (free market vs socialism vs communism)
b. Political stability and investor confidence (eg. Cabinet reshuffles led to the junk downgrade and less foreign direct
investment )
c. Ties with other countries, which affect trade agreements
d. Media freedom
e. Opposition party views (eg. EFF on nationalism)
, f. How tenders are allocated
g. Post-1994 changes, the constitution and the Bill of Rights, and the BBBEE
2. Economic:
a. Growth and standard of living
b. Inflation; prices rise continuously, so purchasing power falls
c. Interest rates: high rates make borrowing to expand harder
d. Exchange rates: a weaker Rand makes imports more expensive
e. Unemployment, which means less spending
f. Taxes ( income tax, VAT, import duties )
3. Social:
a. Social media and mobile devices
b. Ageing population and health consciousness
c. Single-parent households
d. HIV/AIDS, Tb and malaria
e. Literacy levels and unemployment
f. Crime
g. Pollution and recycling awareness
h. Wealth and poverty gaps
i. The changing role of women
4. Technological:
a. Automation, which reduces the need for low skilled labour
b. Online banking and efts
c. Online shopping
d. EPOSSE
e. Research and development
5. Legal:
a. Labour laws: LRA, BCEA, BBBEE, Skills development act, OHSA
b. Consumer laws: CPA and the Credit Act
c. Environmental laws
d. Privacy protection
e. Laws on tax, registration and food safety
6. Ethical:
There are 3 environments in total :
1.Micro environment (internal): the business’s own functions. The business has full control over this.
2.Market environment (external): suppliers, competitors, customers. The business has some influence but no control.
3.Macro environment (external): the wider economy, politics, laws and society. The business has no control and can only adapt
through strategies.
These 3 environments affect each other. For eg. A strike, retrenchments or pollution caused by a business can affect the
macro environment.
KEY TERMS :
1. Competitive advantage: the edge a business has over local or international competitors, which lets it sell more, attract
more customers or cut out costs, and so make more profit.
2. Strategy: Either a formal plan to reach a short or long term goal, or simply a plan of action to improve performance.
A) Macro environment
Tools – environmental scanning →SWOT (O+T) →PESTLE(PE2 STLE)
Environmental scan: Looking at the environment to identify issues, then adjust existing plans or make new ones. It can be
used in all three environments.
PESTLE factors (each can be a threat or an opportunity, and they overlap) :
1. Political
a. Government interference in the economy (free market vs socialism vs communism)
b. Political stability and investor confidence (eg. Cabinet reshuffles led to the junk downgrade and less foreign direct
investment )
c. Ties with other countries, which affect trade agreements
d. Media freedom
e. Opposition party views (eg. EFF on nationalism)
, f. How tenders are allocated
g. Post-1994 changes, the constitution and the Bill of Rights, and the BBBEE
2. Economic:
a. Growth and standard of living
b. Inflation; prices rise continuously, so purchasing power falls
c. Interest rates: high rates make borrowing to expand harder
d. Exchange rates: a weaker Rand makes imports more expensive
e. Unemployment, which means less spending
f. Taxes ( income tax, VAT, import duties )
3. Social:
a. Social media and mobile devices
b. Ageing population and health consciousness
c. Single-parent households
d. HIV/AIDS, Tb and malaria
e. Literacy levels and unemployment
f. Crime
g. Pollution and recycling awareness
h. Wealth and poverty gaps
i. The changing role of women
4. Technological:
a. Automation, which reduces the need for low skilled labour
b. Online banking and efts
c. Online shopping
d. EPOSSE
e. Research and development
5. Legal:
a. Labour laws: LRA, BCEA, BBBEE, Skills development act, OHSA
b. Consumer laws: CPA and the Credit Act
c. Environmental laws
d. Privacy protection
e. Laws on tax, registration and food safety
6. Ethical:
