THE

BUSINESS ENVIRONMENT

Study Unit 2
 LECTURE OUTLINE

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

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 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

4
 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

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 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

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 ANALYSIS OF THE BUSINESS ENVIRONMENT

SWOTs

Threat

Represents unfavourable (negative) conditions in

micro, market, macro environments
Detrimental to firm