THE MACRO ENVIRONMENT

Change is the only constant in the world, and that applies to businesses as well. No
matter what kind of business one may have, it is bound to be affected by changes in the
external environment. The macro-environment comprising of economic, technological,
social, political, international and natural factors among others will undoubtedly impact
businesses, consumers as well as the country South Africa. This essay critically
discusses how such changes can affect various stakeholders by reflecting on the past,
present and future.

Natural environment

To begin with, it is crucial to understand the natural component of the macro-

environment. Natural factors refer to the environment and its elements such as climate
change, natural disasters, and other similar occurrences that happen due to the forces
of nature. In business contexts, natural factors usually relate to things like weather and
natural resources, among others. South Africa has seen its fair share of natural
disasters, such as floods and droughts, which have had severe impacts on its economy.

Looking back in time, the country has been heavily affected by extreme weather
conditions. For instance, South Africa experienced one of the worst droughts in its
history between 2015 and 2016. The drought affected a significant part of the
agricultural industry, which is a crucial sector of the country's economy. The country
experienced a significant decrease in maize production as the drought affected the crop
negatively. Maize is a staple crop that is widely consumed by the people of South
Africa, and its shortage led to an increase in prices, ultimately affecting the standard of
living of the population.

Another way that natural factors can impact businesses is through the depletion of
natural resources. In South Africa, the mining industry is a significant contributor to the
economy, and the depletion of natural resources can have severe consequences. For
example, the gold mining industry has been in decline for many years due to the
depletion of gold reserves. Declining reserves mean that the companies need to work
harder and spend more resources to extract gold, which can eventually lead to job
losses and financial difficulties.
In the present day, South Africa is still facing natural challenges that can impact the
country's businesses and consumers. One of these challenges is a change in climate
patterns, which can affect the agricultural industry and food production. In recent years,
South Africa has experienced an increase in temperatures, which has resulted in
droughts and decreased water availability. A decrease in rainfall and high temperatures
risk reducing food production and leading to higher prices for consumers. Not only does
this pose a threat to food security and public health, but it also puts pressure on
businesses that rely on the agriculture sector.

Another way that natural factors can impact businesses is through environmental
regulations that may limit their activities. Given the increasing concern over climate
change and the need to preserve the environment, governments and regulatory bodies
may impose stringent rules and regulations. For instance, companies dealing with
hazardous wastes may face stricter regulations that raise the cost of doing business,
increase compliance costs, and reduce profitability. Similarly, businesses may be
required to reduce their carbon footprint, which may necessitate upgrades to their
production processes, leading to higher costs.

Looking into the future, natural factors are likely to continue impacting businesses,
consumers and the country as a whole. This is due to various factors such as climate
change, population growth and human activities. Climate change will continue to affect
agriculture, water availability and natural disasters, affecting businesses that depend on
these sectors. Population growth will lead to increased demand for resources such as
energy, food and clean water, which are already under pressure. Finally, human
activities such as pollution, deforestation and overgrazing will keep impacting the
natural environment, leading to a decline in the quality of life for people and businesses.

In conclusion, natural factors are a crucial component of the macro-environment that

can significantly impact businesses, consumers and countries. South Africa has
experienced the impact of natural factors such as extreme weather conditions and the
depletion of natural resources. With climate change, increasing population growth and
human activities, natural factors are likely to continue affecting the country's businesses
in various ways. By understanding the impact of natural factors on businesses,
companies can take appropriate measures to mitigate the potential risks while finding
opportunities for growth. Governments can also play a role in mitigating the impact of
natural factors by implementing policies and regulations that emphasize the importance
of preserving the natural environment. Ultimately, the future of businesses in South
Africa will depend on how well they can adapt to the ever-changing macro-environment,
including natural factors.

The technological environment is a component of the business external environment

that is tied to technology advancements and changes. Technology is frequently linked to
equipment and method, and as these things change, so do the companies risks and
prospects. Technology affect business enterprises both directly and indirectly through
it's effect on the environment. The success of an organization is typically attributed to
investments in technology and innovation, which have also been used to explain
disparities in the relative competitiveness of the nations.

Impact of technology in Businesses in the past :

In the old times, businesses took a slow pace, thanks to lack of tools that would allow
for faster business transactions. Everything was done with the help of some mechanical
tools and bare hands, which made it unthinkable to do business instantly. Innovations in
technology started to rise in the nineteenth century. If you come to think about it, these
inventions are rather simple, but their impact on business caused it to transform to what
it is today. Some examples of technology impact on businesses in the past would be
that businesses would communicate with their customers and clients primarily through
face to face meetings, telephone calls or written correspondence such as letters and
faxes. Today however business can communicate with their stakeholders instantly and
from anywhere in the world via email, instant messaging, video conferencing and social
media .Technology has changed the way businesses market and advertise their
products and services. In the past businesses would primarily use print media such as
newspapers and magazines to reach their target audience. Today however businesses
can use a variety of digital marketing tools like search engine optimization pay-per-click
advertising, social media marketing and content marketing.
Technology has changed the way businesses manage data. In the past businesses
would have to rely on manual methods like paper record and spreadsheet to store and
track data. Now there are so many different database and software solutions available
that make it easier than ever to manage data.

The impact technology has on businesses nowadays :

Technology developments affect all aspects of business not only in products or

services. In production technology can increase total outputs through increased
productivity with the same input the company can make more output per unit. It also
reduces business costs, small business owners can use technology to reduce business
costs. Business technology helps automate back office functions, such as record
keeping, accounting and payroll. Improving communication technology can help small
business improve their communication process, emails, websites and personal digital
products applications known as "apps" can help companies improve communication
with consumers.

Potential business increase - Technology allows businesses to reach new economic

market. Rather than just selling consumer goods and services in the local market.
Businesses can reach regional, national and international markets.

Managing your time and resources is often the most difficult task. Every small business
has to make sure that they are properly utilizing their time and resources or not because
this is the first and foremost towards the success of any business. Technology has
provided ease to manage the business. Employees can easily share the progress and
report of their work in different software that is specifically created for business.
Technology provided a good grasp and control over the business. Excellent
communication is an important factor in doing business. It was a very slow process
before the advent of technology that required time and resources.

Small businesses and enterprises can now easily receive more growth with the latest
technologies and digital platforms. This is also one of the positive impacts of ICT in
business. Business can flourish from local to international consumers due to ease in
communication links through the internet. No need to have a big office and a big team to
broaden a business.

The impact technology will have on businesses in future :

With so many technologies emerging on so many fronts, it's a challenge to keep up.
According to the McKinsey Global institute and knowledge of plural sight’s subject
matter expert. "Not every emerging technology will alter the business or social
landscape, but some truly do have potential to disrupt the status quo, alter the way
people live and work, and rearrange value pools”.

Mobile internet, Interfaces, formats, sensors and apps will evolve as mobile computing
devices dominate the internet connectivity. By 2025 mobile connectivity could be
accessed by an additional 43 billion people. Artificial intelligence, machine learning and
user Interfaces such as speech and gesture recognition technology will advance to
increase productivity or eliminate some knowledge work altogether. Advanced robotics,
advances in Artificial intelligence, machine vision, sensors, motors, hydraulics and
materials will change the way product and services are delivered. A surge in tech talent
for building, operating and maintaining advanced robots will occur.

These technologies could have huge benefits for many companies. But they will also
create big challenges. The nature of work will continue to change, and that will require
strong education and retraining programs.

The world economic forum concurs:

"Across nearly all industries, the impact of technology and other changes is shortening
the shelf - life of employees. The talent to manage shape and lead the changes
underway will be in short supply unless we take action today to develop it. Businesses
will need to put talent development and future workforce strategy front and center to
their growth. Firms can no longer be passive consumers of ready - made human capital.
They require a new mindset to meet their talent needs. “

The threats of technology on businesses

Businesses depend on the use of computers and digital devices for operation. The
dependancy on technology has exposed businesses to security risks. The majority of
business deals and transactions are made through computers and the use of internet.
Any carelessness of employees can expose your business information to your
competitors, hackers, or online frauds.

Recommendations

I personally recommend technology for businesses because it makes things easy and
production increases as technology is fast to produce outcomes or outputs as
production increases it means profits will also increase.

Political environment

Politics impact businesses from trade control and corruption level. Politics effect
businesses including taxation, employment laws and political stability. They can impact
the business positively by influencing how companies operate. Businesses lost interest
because of political situations. In the year 2020 there was looting that made businesses
to take a decline they lost a lot of money they have to increase prices very high. There
was also lockdown which had a great impact on businesses there was no money
coming into businesses. It made other business to shutdown forever because they were
not able to pay their employees and they were not able to pay taxes to the government
in that way they had to close their businesses. Government of the day influences
businesses through the fiscal and monetary policies of the country.

The interest rates applicable to businesses also have a direct effect on it's net income
after interest and taxes. In the same way current municipal rates effect the property tax
which is paid monthly by businesses. The annual budget drawn by the government has
an impact on the individual businesses and total economy of the country. There will also
be changes in tax laws that can have a big impact on businesses as can new
regulations. Political instability can also lead to economic instability which can be bad
for businesses. In some cases, businesses may try to influence politics in order to get
favourable treatment.
There are political factors affecting business which are Bureaucracy, corruption level,
freedom of the press, tariffs and trade control. Political also impact consumers because
when they are doing strikes that effect businesses there will be inflation the general
increase in prices of goods and services. Consumers will be effected because they
won't be able to purchase their needs and wants. They have to pay more tax while in
South Africa job opportunities are still inferior. Many of consumers are jobless they cant
afford to buy good when prices are increasing with the higher percentage.

Political impact our country South Africa when there was shutdowns it affected our
country's economy because when businesses are not operating they won't be able to
contribute towards the economy of the country. When consumers are not buying
anything there is no tax that is contributed to our country. South Africa is remaining a
divided society. There is a lot of corruption that undermines the state legitimacy and
service delivery.

In the past South Africa had a lot of crisis due to political situations. There are
shutdowns and load shedding this is because South African economy was inferior.
South Africa is still recovering from Corona Virus and lock downs that happened before.
That took a lot of money. Businesses are trying to reduce prices to normal prices there
is still one problem that South Africa is facing load shedding.

In future I think there will be no such problems in political because they have learnt a lot
in the past. They might change our government maybe there will be changes that are
going to happen.

Recommendations

The government when conducting a South African budget speech should include the
record that unforseen ocurancess might arise. The businesses might try and find more
investors for them to get funding when unforseen circumstances happen. Trades only
happen with countries that are favourable with government so that it would be better
trade with the countries.
The Economic environment

The economic environment focuses in the factors that contributes to influencing

customers Income as well as their purchasing behaviour. These economic factors are
trade cycles, economic growth rates, interest and exchange rates, GDP growth and
inflation. Interest rates occur when customers purchase goods and debts, contracts,
instalments or long-term payments. For example a person purchasing a house for one
million may take a mortgage loan in which they would have to pay monthly instalments
at the interest rate of 20% per annum in simple interest. A person looking to start their
own business but who is short on capital may take a loan for R500 000 which they may
have to pay in monthly instalments with an interest rate at 30% per annum in
compounded interest.

The changes in interest rates tend to affect consumers and businesses in opposite
ways , the businesses often benefit from these increases as customers would be paying
higher amounts for their goods even though it may be negative to the very same
businesses when they have to buy raw materials or trading stock from other suppliers in
debt. On the other hand customers always benefit from decreases of interest rates as
this means that they would be paying lesser for goods bought in debt , loans or even
mortgages.

The increase and decrease in exchange rates is also a very important factor under the
economic environment. When exchange rates increase the countries with the higher
currencies benefit more than those with lower currencies as they become more and
more suppressed as businesses in these lower currency countries cannot afford to but
stock from abroad .The customers can benefit or be affected negatively by these
increase in exchange rates as this often influence inflations which means that prices of
goods like petrol or diesel increases. This could influence the customers budgets to be
lesser on expenditure on their other needs and wants. This means that customers
would be spending less on groceries, entertainment or even clothing. This affects
businesses negatively as they would be gaining less income from their customers.
People who have investments abroad benefit from higher exchange rates as they would
gain an even more interest on their investments.
During the observation period from 1960 to 2021, the avarage inflation rate was 7.9%
per year . Overall the price for something that was a R100 in 1960 was now 9,706.38%
in 2021. An item that cost 100 rands in 1960 costs 9,806.38 rands at the beginning of
2022. For match 2023, the year over year inflation rate was 7.3%. This shows that in the
past the inflation rate was bigger which led to the immense price increase in the last 6
decades , although present the inflation rates have decreased. As explained above this
is good for the countries economy even though it is negative for the people in south
Africa and most of the businesses. I believe that in the future the inflation rate would
continue to increase which would continue to affect these three parties the Country,
customers and businesses as written above.

The South Africa to Euro exchange rate was R2 to £1 in 1961 but in 2023 it is now 1£ is
the equivalent of 20.069. This shows an incredible increase in the exchange rates in the
last 6 decades and i do presume that in the future the same would continue to increase
which affects South Africa as a whole as it is a developing country therefor it’s currency
would always be lower than other countries. The same goes for the businesses and the
customers in that country.

Recommendations

I would recommend that any potential investors as focusing on customers should invest
in overseas businesses as they have higher currencies therefore they would have a
better return. Businesses should consider buying their trading stocks and raw materials
inside of South Africa to avoid high costs of products due to the exchange rates. This
would also cut shipping costs and insurance costs.

Social environment

Social environment can be defined as social forces like all the society beliefs, custorms,
practises, behaviours, attitudes and also social trends

Impact of external social environment on businesses

Businesses must adapt to it’s social trends if not they will not survive they are also
aware of the society’s social preferences regarding it’s needs and wants .Businesses
fail to adapt to changing of social environment and sales drop and they start generating
losses. Customs and traditions-this decides the celebration of various festivals like
Christmas, Diwali and Id this also affects the business .Social institutions and groups or
social Aspects literacy level, educational system, cultural heritage and the standard of
living of the various groups of people affect social environment of the business.

Population growth is the increase in the number of people living in the country More
people mean increase in demand for food, water and sanitation, electricity, care,
transportation, job opportunities etc. All that consumption contributes to ecological
degradation, increase conflict and also higher risks of people dying .When people
increase that results in lack of job opportunities and also shortage of goods and
services provided by government. Population increases the demand and supply for
businesses in the economy. Population changes are slow and consumption changes
are also slow, the slowness of the process of change means there is time to adjust
production and distribution in order to achieve stability in market supply. When people
increases, that could lead to lack of job opportunities as mentioned above, resulting on
people getting no salary to spend on businesses

Population growth can also be the main cause of economic bankrupt. Rise in population
causes the less resources which are provided by the government .Social values,
Cultural and social justice, national integration affects the business, beliefs also help
businesses to meet customers needs. Social trends in Nowadays people have become
health conscious and therefore there is a sale of various types of goods like organic
food , sugar free products etc. When customers move from one place to another that
could affect the business negatively. There will be less people who will come to the
market and buy goods and also rent the services in that way profit may not be
generated. Customers have different beliefs and some of their beliefs can not
compliment the existing goods of the business.

Effects of social environment in the past

Social context ,social cultural context or environment refers to the immediate physical
and social environment in which people live and develop . People in the past had no
access in many things such as schools to be educated, no water, no electricity and
culture was almost everything they had in their lives. They strongly believed in culture
and they also went to churches and that was all. Technology was not improved by that
time and they did everything following the rules. People were living poor lives and they
were getting less income and some were not working at all. This ensured that there
were less customers for businesses therefore gained less profits and this meant that
country as a whole was affected negatively.

Effects of social environment in the present

Now that the standard of living has improved this has a positive effect on businesses as
this factor has been assumed to be directly related to economic growth, energy and
increased use of other materials .The report argues that improved sustainable
development practices and changes in technological efficiency and energy production
and use will lead to adequate standard of living for all without the use of fossil fuels.

Social environment in the future

Social reach is far greater through the internet. We can communicate and
'experience' a lot more people than we did 2 years ago. I we do not like all
aspects of social networks, but the reach is much better. The social nature of the
web allows us to know more about our friends and family than ever before. We all
get richer from it. In future we will interact via many ways social will be improved
making our communities accessible anytime.

Recommendations

Social environment is all about people and their activities that affect either negatively or
positively in the business, consumers and in our country as a whole. This means that
people play a huge role in businesses and also in the country. Businesses need people
to continue functioning and people also need businesses to survive. Government must
make sure that job opportunities are created so that people can get enough income to
spend.
The international environment

The impact of international on Businesses it can create job opportunities and it

contributes positively to the economy, offers multiple paths for companies to grow and
even helps to improve relationship between countries. The benefits of the international
businesses it helps in improving profits of the organisations by selling products in the
nations where costs are high. It also helps businesses in enhancing their development
prospects. It also contribute a lot towards the economy of the country. Technology
factors are what increases the economic growth and the social change to happen.
Hence they have both positive and negative impact on the countries due to cross border
businesses. In addition, it could threaten the existence of the local businesses to level of
extinction or increase their level to global standards. The trade agreements entered
between the governments of countries are the ones that are most affected by political
stability, foreign trade regulations, change of actions of the new governments.

International environment impact on South Africa

International business Is quite an essential term for a country's economy. All of the
world's strongest as well as wisest like an, Germany, Switzerland, etc. as pek99r the
operation for economic co-operation and development (OECD) are concerned in
international trade practices and have the highest standards of living.

International trade allows countries to expand their markets and access good and
services that otherwise may not have been available domestically. As a result of
international see trade, the market is more competitive. This ultimately results in more
competitive pricing and bringing a cheaper product home to consumers. Trading
globally gives consumers and countries opportunities to be exposed to goods and
service not available in their own countries, or more expensive domestically.
International trade not only results in increased efficiency but also allows countries to
participate in global economy, encouraging the opportunities for foreign direct
investments.

It gives customers more choices and boosts competition, forcing companies to make
things that are both affordable and of great quality, which is good for the customers.
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