Business studies paper 1 Study Guide

Business Environments
Micro environment - Full control

Businesses have full control over all the features/elements/components of the micro environment. E.g.
A business determines its own mission, organizational structure and resources.

Market environment - Little/Limited control

Businesses have little control over all the features/elements/components of the market environment.

E.g., A business cannot force its suppliers to reduce the prices of their goods, but it can buy goods in
bulk and claim discounts.

Macro environment - No control

Businesses have no control over all the features/elements/components of the macro environment.

Organizational culture
Values could include the upliftment of disadvantaged people and equal job opportunities,

Beliefs – what an organstation feels true purpose aims of goals of an origination

purpose of a business should not only be to strive for optimum profits but also to create jobs and be
involved in social upliftment

Organizational structure
What work to be done and by whom

The connection between various positions and tasks (lower, middle or top management)

The co-ordination between various departments (e.g., human resource management and marketing
management).

8 x business functions

General management
Manage and oversees the other seven business function by planning, organizing, leading

and control, so that business goals can be achieved.

Purchasing function
Buys goods and services needed by other functions. Goods and services must be bought at

the right price and time, in the right quantities and of the right quality.

Production function
Changes raw materials into finish products by combining raw materials with labor, capital

and entrepreneurial skill.

Marketing function
Responsible for sale of goods and services to meet needs of consumers. The right product

must be sold at the right price in the right place and using the best promotion.

Public relations function

Responsible for creating a positive image of the business to the public.

Human resource function

Responsible for finding the correctly qualified employees as well as training, evaluating

and remunerating them.

Administration function
Responsible for collecting and processing information used for decision-making as well as

general office work such as filing and storing of information.

Financial function
Responsible for planning a managing all the funds and assets in the business as well as

Investments.

Management
TOP management STRATEGIC DECISIONS made regarding the
goals, vision and mission of a company.
CEOs, Directors, Owner of sole trader, Partners in
partnership

MIDDLE management TACTICAL DECISIONS communicates with top

level management and implements plans
 Departmental managers. e.g., marketing manager.
financial manager etc.

LOWER management OPERATIONAL DECISIONS are processes that

are put in place to carry out strategic and tactical
Foreman, Supervisor, Team leaders. decisions.

• Managers have FOUR main tasks or basic activities (POLC):

Planning Organizing Leading Control

Look at what you need Use all resources in the Guide and motivate Check that business
to do. Decide how to do business to achieve people to carry out activities are carried out
it. goals. plans of business. Give as planned.
directions.

The national credit acts

The NCA was introduced to provide both credit providers and credit applicants

with clear guidelines regarding their rights and responsibilities.

Purpose of the NCA

1.Promotes the development of a credit market that is accessible to all

South Africans.

2. Discourages reckless credit granting by credit providers

3. encourages responsible borrowing

Consumer rights outlined in the NCA

Consumer protection act

It promotes fair business practice

It aims at improving consumer awareness and encouraging responsible and consumer choices and
behavior Product

Quality control
QUALITY CONTROL QUALITY ASSURANCE
• Inspection of the final product to ensure that it • Inspection is carried out during and after the
meets the required standards. production process to ensure required standards
are met at every stage of the process

• Includes setting targets/measuring performance • Ensures that every process is aimed at getting
and taking corrective measures the product right the first time and prevents
mistakes from happening again.

Business sectors
FORMAL INFORMAL

Legally registered for taxation Not registered for taxation

Not easy to enter this sector as business must be Easy to enter this sector
legally registered

Employees are protected in many ways in uif and Employees are not protected and can be exploited
injured in duty funds

SECTOR MEANING EXAMPLES

Primary Businesses extract/ • Agriculture

collect/cultivate raw materials
and natural resources such as • Fishing
livestock, fish, timber, coal and
gold. • Forestry

• Mining

Secondary The secondary sector is often • Construction

referred to as manufacturing
industries because valuable • Factories
products are created/
manufactured/ produced so that • manufacturing
these products can serve a
meaningful function/purpose to • Electricity
customers/consumers.

Tertiary Distribute goods and render • Financing

services
• Hospitality

• Retailers and wholesalers

 • Storage

• Tourism

• Transportation

Essay

Macro environment
Introduction

 Components of macro environment pose challenges for businesses in various ways.

 Business environments are interlinked and influence one another.

Body
Meaning of macro environment

 It is always changing and developing

 Businesses have no control over this macro environment.
 The external environment presents both opportunities and threats.

Components of macro environment

Social and demographic environment

 Deals specifically with the people of the community, country and target market
 Composition of the consumer force e.g., buyers and their tastes and preferences

Economic environment

 Economic factors that influence consumer buying and spending.

 Changes in interest rates, exchange rates, inflation, income levels and taxes

Technological environment

 Is a fast-changing environment and has forced businesses to keep- up-to-date with new trends
 e.g., internet, cellphones.

Natural and physical environment

 Forces that are present in the natural environment e.g., pollution, natural resources
 Any other relevant answer related to the natural and physical environment

International/global environment
  Refers to all happenings in the rest of the world that influence local business enterprises e.g.,
technological innovations/international trade

Legal and political environment

 Policie and rules that businesses must obey and consider, laws that impact the functioning of the
business e.g., Labour relations Act, NCA, CPA.

Institutional environment

 Refers to the three sections of government in South Africa, local, provincial and national
government e.g., local municipalities, district municipalities.

Interrelationship between environments

 Market environment has a direct influence on micro environment

 This can cause an increase in prices which will affect consumers and suppliers
 Micro environment has a direct influence on market environment
 Business environments work independently, no business environment can work in isolation

Reasons why macro environment can be a challenge to the business

 Business enterprises should come up with strategies to deal with the external forces
 This is the largest environment with big challenges, e.g., like politics, technology, etc.
 The forces always increase the business's threats and decreases the business's opportunities

Reasons why the following components poses a challenge to businesses

Technological environment

 Businesses may not be able to afford new technology.

 Businesses may not keep up with/be aware of the latest technology.

Social environment

 Businesses may not be conversant with the language of their customers

 High crime rate may affect the trading hours of businesses resulting in decreased profit.

Economic environment

 Loans may be expensive due to high interest rates

 Inflation/interest rates may negatively impact on business

Physical environment

 Measures to dispose of business waste may be expensive

 Chemicals/Ingredients in business' products may be harmful to customers

Conclusion
All three business environments have an interrelationship to each other and businesses must know when
to use each
The success of a business depends on the strategies developed and implemented.

Micro environments
Introduction
The micro environment consists of the business it self
Management has complete control over it

Body
The meaning of the micro environment
It’s a decision-making environment
Management is responsible for the business actions
The differences between management and leadership

LEADERSHIP MANAGEMENT
Encourages new ideas to increase productivity Administers plans/programs/tasks/ to reach targets
Inspires staff to trust and support each other Controls systems and procedures✓ to get the job
done

Components of the micro environment

Vision
The dream of the business. what it wants to become wants to become in the future

Mission statement

the purpose and basic activities of the business. explains how it aims to achieve its vision.

Goals

Goals are long term aims that the business expects to achieve. It gives the business a sense of direction

Objectives

Objectives explain how a goal will be reached. Short-term steps of how a goal will be reached.

Organizational resources

Humen resources - people with a knowledge or skill

Physical resources – raw materials, office equipment

Financial resources – cash, loans and over drafts

Technology resources – computers and emails

Conclusion
All three business environments have an interrelationship to each other and businesses must know when
to use each
The success of a business depends on the strategies developed and implemented.

Market environment
Sits outside the business this means that it is external it surrounds the micro environment

Body

Meaning

This environment exists immediately outside the business

• It is the environment immediately outside the business. • Market environment surrounds the micro-
environment. • All powers that have a direct impact on the business • Management has no control, but
can influence the environment

Consumers
A consumer who buys products or services from a business

Suppliers
suppliers of goods / services with whom businesses acquire / buy goods to run their businesses.

Intermediaries
The intermediaries of a business are all those businesses that play a role in distributing and promoting the
goods and services to customers.

Competitors
Competitors are all the businesses that provide a similar product or service and compete for the support of
the same customers.

• Community-based organization (CBO’s)

These organizations are non-profit bodies, and their sole purpose is to render a service to society.

• Non-governmental organization (NGO’s)

NGOs are non-profit organizations that do not operate under the control of government

• Regulators

A regulator is an official power to control an activity and makes sure it is done satisfactorily / makes rules
that businesses in the various industries must adhere to.

Strategic allies
Strategic allies refer to two or more businesses working together to enable them to acquire the expertise
they have from another business.

• Unions

Unions are the employee organizations that aim to improve the working conditions of the workforce. E.g.,
COSATU, SADTU

opportunities
• Decrease in taxes, closing of a competitor’s business, decline in interest rate and favorable legislation
by the government.

Threats
• Increase in taxes, new businesses entering the market, increase in interest rate, and changes in
government legislation.

BUSINESS ENVIRONMENT POSSIBLE CHALLENGES

Micro • Difficult employees

• Lack of vision and mission

• Lack of adequate management

skills

Market • Competition

• Shortages of supply

• Socio-cultural factors

Macro • Change in income levels

• Labor restrictions
• Political changes