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Influences on and Control Factors Relating to Business Environments Businesses Operate Within an ‘Environment’

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Influences on and Control Factors Relating to Business Environments Businesses Operate Within an ‘Environment’ Influences on and control factors relating to business environments Businesses operate within an ‘environment’. A ‘business environment’ is what we call a business influenced by both internal and external factors. These factors can influence each other and work together to affect a business. A business environment consists of the Micro, Market and Macro Environment. The Micro environment is the internal organisation structure within a business entity which has a direct and measurable impact on the business organisation. This includes the vision, mission, goals, objectives, strategy and structure of the business. These Micro Environment factors have a direct impact on its business operations and success. When deciding on corporate strategy, a business should carry out a full analysis of their Micro Environment. Other factors include the cost involved in the establishment and growth of the business, availability of resources, and skills development with regard to organisation knowledge, mentorship, quality control and employment. Explain how a lack of adequate management skills could be a challenge in the Micro Environment: _____________________________________________________________________________________ _____________________________________________________________________________________ Why could ‘strikes’ be a challenge in the Micro Environment? _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ Grade 11 Use the elements below as topic headings to create a mind map. Research the topic headings and expand the definition of each. MANAGEMENT AND PERSONNEL (EMPLOYEES) VISION, MISSION, GOALS AND OBJECTIVES ORGANISATIONAL STRUCTURE ORGANISATIONAL CULTURE FUNCTION AND ACTIVITIES RESOURCES Imagine you are a Spur Franchisee owner. Design your own Vision and Mission statement that you would use. Look at the ’10 Non-Negotiables’ for the Spur group: Grade 11 22528S 10 non-negotiables 2 FA.indd 1 2014/03/24 11:36 AM Market Environment The Market Environment refers to the variables directly outside the business or organisation that might have a positive or negative effect on the functioning of the business. These variables can vary from day-to-day and the business has no direct power in these factors but can have some influence. For example, a business can use promotions to attract consumer attention but cannot force the consumer to purchase its product. The external stakeholders include customers, suppliers, competitors, intermediaries, trade unions, NGO and Industry regulators. When looking at the Market Environment, Porters Five Forces Model is useful. This model investigates: • The level of rivalry in the market • The availability of substitute products in the market • The threat of substitute products or services that may join the market • The bargaining power of suppliers • The bargaining power of buyers List the possible ways in which changes in consumer behaviour could affect business: _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ All businesses will be affected by things from time to time that are ‘out of their control'. These are called ‘External Factors’ or Macro Environment. The external factors are factors influencing/affecting business, that are not within their control. These factors are often assessed in a ‘PESTLE’ analysis – Political, Economic, Social, Technological, Legal and Environmental. For example: A business will have no control over power cuts or strikes. A Pestle analysis gives a certain overview of the different external factors that the company has to take into consideration. Grade 11 1. Use the PESTLE analysis to identify challenges and strategies a SPUR franchise would face with political, economic and social factors: _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 2. List three possible situations relating to each heading on the mind map. For example: Technological = advancing technology. _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 3. How could a business owner use strategies to ensure the business’s success against these factors? _________________________________________________________________________________ _________________________________________________________________________________ 4. List and explain the socioeconomic issues that would make running a business difficult. _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 5. Explain three methods a business could use to adapt to changes in the Market and Macro Environment: _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ Organisational Culture is important as it sets the structure, values, vision, norms and standards of a business. Internal factors include the size of a business; the type of products or services it offers; staff skills and the levels of change and development within the business. Preventative Measures are already in place before an operational event occurs. They can act proactively to an event to prevent that event from occurring at all. If, however, the event has taken place, one can prevent further loss. Grade 11 Remedial controls do not operate automatically. They are consciously implemented after an event or loss has occurred to ‘remedy’ the situation. 6. Identify a Spur franchise in your area and examine their approach to: • Customer Satisfaction • Innovation and Product Development • Social Responsibility • Give a summary of your findings as a presentation to the class. Further research may include: * Interviewing the Spur Manager to investigate the impact each of these factors has on the business and the community; * Internet research; * Local media articles about the business; * Personal knowledge/experience. Grade 11.
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