Business notes:
CHAPTER 1
, CHAPTER 1: BUSINESS ENVIRONMENTS
INTRODUCTION
External environment = unlimited and ever-changing demands that are out
of management’s and the organisation’s control.
The business needs to consider these events and must design strategies
(plans of action) to adapt to situations in the external environment.
Internal environment = within management’s control but presents its own
problems in the form of limited resources.
Management must use limited resources to build on Competitive advantage:
strengths and to protect weaknesses to = keep or increase This describes how the
competitive advantage. business has the edge in the
market or over competitors
It is also important to keep in mind that the events occurring (local/ international). If the
within the business may in turn impact on events in the business has a competitive
macro environment advantage, it enables the
business to exploit this
1. In the event of a strike, a business/ group of businesses advantage to sell more, to
(industry) may have an effect on the economy. attract more customers or to
reduce expenses, thus
2. A business employing or retrenching workers generating more profit.
contributes to the employment/ unemployment rate of the country.
3. The way the business operates may directly influence the physical
environment in which it operates, etc.
Different techniques or tools can be used to gather and analyse info relating
to the internal and external environments and to understand which factors can
be controlled and which cannot.
Some of the techniques/tools available can be used either (micro) or (market &
macro) while others can be used in all three.
o Micro: SWOT
o Market: SWOT or Porter’s Six Forces
, o Macro: SWOT or PESTLE
1 THE MACRO ENVIRONMENT
Various tools may be used to analyse events in macro environment in order to:
eliminate any threats
capitalise on opportunities
Some of the tools that may be used to analyse the macro environment include:
A. environmental scan
B. SWOT-analysis
C. PESTLE // P2ESTLE2
1.1 ENVIRONMETAL SCAN
Environmental scan used to assess the micro, market and macro environment.
Entrepreneurs must constantly be in touch with the world around them.
An environmental scan = will identify factors that may impact on the business so
that existing plans can be adjusted or new plans could be developed to deal
with these factors.
Benefits of an environmental scan:
Identifies threats before they happen
Identifies possible opportunities and gaps in the market
Keeps a finger on the pulse of the competitors
Allows an entrepreneur to create both short-term and long-term strategies
in order to protect their business.
Environmental scanning is a 360˚ process and includes both internal and
external aspects.
There are two types of environmental scanning:
Before starting the business Continuous environmental scanning
Before putting time, effort, money and other Environmental analysis is done on an ongoing basis
resources into a new venture, it is important through analysing each of the environments using
to skim over the market environment and various tools.
get more information on aspects such as:
Viability of the product or service If done in enough detail, the Social, Environmental
Strength of competitors
Size of the potential market to absorb a new and Economic effect (People, Planet, Profit) of the
player in the industry business can be identified and the factors behind
Stability of your resources: Suppliers, financiers,
this can be analysed in order to adjust the planning of
staff, fellow investors, premises…
the business, including but not limited to TBL.
, The environment scanning process in the macro environment:
1. Business will scan the macro environments to identify issues which need to be
addressed.
2. Although a SWOT analysis may be used to evaluate factors in both the external
and internal environments, in the macro environment, only OPPORTUNITIES
and THREATS are considered.
3. PESTLE is a useful tool to identify specific opportunities and threats in the
macro environment.
1.2 A SWOT- ANALYSIS (Only 0 and T)
The 0 and T refer to issues in the macro + market environments.
A PESTLE- ANALYSIS:
Political factors
Important terminology:
This factor is important in relation to: The Constitution forms the
local political situation of the country basis of all other laws in the
Political situation of other countries country and both private
world politics in general citizens and businesses have
Political factors and LEGAL factors are closely related to abide by this law. Some of
Because the political party running the country, will make the laws that the basic issues covered by
determine what is acceptable and what is not allowed, for example: the Constitution include:
1. Broad Based Black Economic Empowerment (BBBEE) to redress inequalities of the past and other national
employment laws
2. International trade regulations and restrictions
3. Monopolies and mergers’ rules
CHAPTER 1
, CHAPTER 1: BUSINESS ENVIRONMENTS
INTRODUCTION
External environment = unlimited and ever-changing demands that are out
of management’s and the organisation’s control.
The business needs to consider these events and must design strategies
(plans of action) to adapt to situations in the external environment.
Internal environment = within management’s control but presents its own
problems in the form of limited resources.
Management must use limited resources to build on Competitive advantage:
strengths and to protect weaknesses to = keep or increase This describes how the
competitive advantage. business has the edge in the
market or over competitors
It is also important to keep in mind that the events occurring (local/ international). If the
within the business may in turn impact on events in the business has a competitive
macro environment advantage, it enables the
business to exploit this
1. In the event of a strike, a business/ group of businesses advantage to sell more, to
(industry) may have an effect on the economy. attract more customers or to
reduce expenses, thus
2. A business employing or retrenching workers generating more profit.
contributes to the employment/ unemployment rate of the country.
3. The way the business operates may directly influence the physical
environment in which it operates, etc.
Different techniques or tools can be used to gather and analyse info relating
to the internal and external environments and to understand which factors can
be controlled and which cannot.
Some of the techniques/tools available can be used either (micro) or (market &
macro) while others can be used in all three.
o Micro: SWOT
o Market: SWOT or Porter’s Six Forces
, o Macro: SWOT or PESTLE
1 THE MACRO ENVIRONMENT
Various tools may be used to analyse events in macro environment in order to:
eliminate any threats
capitalise on opportunities
Some of the tools that may be used to analyse the macro environment include:
A. environmental scan
B. SWOT-analysis
C. PESTLE // P2ESTLE2
1.1 ENVIRONMETAL SCAN
Environmental scan used to assess the micro, market and macro environment.
Entrepreneurs must constantly be in touch with the world around them.
An environmental scan = will identify factors that may impact on the business so
that existing plans can be adjusted or new plans could be developed to deal
with these factors.
Benefits of an environmental scan:
Identifies threats before they happen
Identifies possible opportunities and gaps in the market
Keeps a finger on the pulse of the competitors
Allows an entrepreneur to create both short-term and long-term strategies
in order to protect their business.
Environmental scanning is a 360˚ process and includes both internal and
external aspects.
There are two types of environmental scanning:
Before starting the business Continuous environmental scanning
Before putting time, effort, money and other Environmental analysis is done on an ongoing basis
resources into a new venture, it is important through analysing each of the environments using
to skim over the market environment and various tools.
get more information on aspects such as:
Viability of the product or service If done in enough detail, the Social, Environmental
Strength of competitors
Size of the potential market to absorb a new and Economic effect (People, Planet, Profit) of the
player in the industry business can be identified and the factors behind
Stability of your resources: Suppliers, financiers,
this can be analysed in order to adjust the planning of
staff, fellow investors, premises…
the business, including but not limited to TBL.
, The environment scanning process in the macro environment:
1. Business will scan the macro environments to identify issues which need to be
addressed.
2. Although a SWOT analysis may be used to evaluate factors in both the external
and internal environments, in the macro environment, only OPPORTUNITIES
and THREATS are considered.
3. PESTLE is a useful tool to identify specific opportunities and threats in the
macro environment.
1.2 A SWOT- ANALYSIS (Only 0 and T)
The 0 and T refer to issues in the macro + market environments.
A PESTLE- ANALYSIS:
Political factors
Important terminology:
This factor is important in relation to: The Constitution forms the
local political situation of the country basis of all other laws in the
Political situation of other countries country and both private
world politics in general citizens and businesses have
Political factors and LEGAL factors are closely related to abide by this law. Some of
Because the political party running the country, will make the laws that the basic issues covered by
determine what is acceptable and what is not allowed, for example: the Constitution include:
1. Broad Based Black Economic Empowerment (BBBEE) to redress inequalities of the past and other national
employment laws
2. International trade regulations and restrictions
3. Monopolies and mergers’ rules
