THE BUSINESS ENVIRONMENT

Study Unit 2

LECTURE OUTLINE
1 2 3 4 5 6 7 8 9 10 11 12 INTRODUCTION COMPONENTS OF THE BUSINESS ENVIRONMENT INTERNAL (MICRO) BUSINESS ENVIRONMENT EXTERNAL MARKET (TASK) ENVIRONMENT MACRO (MEGA) BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS OF FIRMS OPEN SYSTEMS TYPES OF MARKETS IN THE MARKET ENVIRONMENT ENVIRONMENTAL SCANNING ANALYSIS OF THE BUSINESS ENVIRONMENT (SWOTs) VARIABLES IN THE BUSINESS ENVIRONMENT REVIEW OF THE STUDY UNIT APPLICATION EXERCISES
2

INTRODUCTION
 Business enterprises cannot function in isolation  Open systems interact with their environment  Business enterprises exist in and are surrounded by an environment the business or organisational environment  Society and business enterprises are mutually dependent Business enterprises satisfy societal needs  Relationship between society and business enterprises takes place in a changing environment

COMPONENTS OF THE BUSINESS ENVIRONMENT

 Different environmental variables exist internally and externally to the business enterprise  Environmental variables have a positive or negative influence on the enterprise  Business environment consists of two sub-environments: Internal (micro) environment External environment  Market environment  Macro environment  Mutual relationships exist between these environments

ENVIRONMENTAL SCANNING
 Identification and forecasting phenomena in the environment  Ongoing environmental scanning is essential for strategy formulation  Enterprises continuously engage in identifying and forecasting opportunities and threats  Enterprises need to proactively or reactively respond to changing conditions in the environment  Various sources of information are available to assist with scanning

ANALYSIS OF THE BUSINESS ENVIRONMENT

 SWOTs analysis  Environmental conditions may be favourable or unfavourable: Opportunity Represents favourable (positive) conditions in micro, market, macro environments Advantageous to firm

ANALYSIS OF THE BUSINESS ENVIRONMENT

 SWOTs

Threat
Represents unfavourable (negative) conditions in micro, market, macro environments Detrimental to firm