Transcript Business Environments 1

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IN THIS ENVIRONMENT, MANAGEMENT IS IN FULL CONTROL
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All companies must have some sort of VISION, MISSION & STRATEGY.
This simply means that any business must WANT to achieve something and this can only be
done by having a strategy.
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MANAGEMENT
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BUSINESS FUNCTIONS
A company must have a manager due to the fact that they must provide some sort of
leadership. Managers must decide how to use organisational resources and how to
accomplish goals.
Managers are therefore responsible for : Organising, Leading, Controlling the business which
leads to the accomplishment of goals.
There are a few functions that enable the business to deliver goods/services of a high
quality. Such as :
PRODUCING the best quality products. PURCHASING the best products at the best price
so that you always have sufficient stock on hand. Developing PUBLIC RELATIONS which
will give the business a good name. Effective MANAGEMENT. The way in which products
are MARKETED (ie. Advertising). HUMAN RESOURCES, which is sourcing the best quality
workers whose skills can be developed (eg. Enhance their technological skills). Finally the
business must also funtion FINANCIALLY (ie. Budgets, increasing profitability etc.)
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ORGANISATIONAL STRUCTURE
This simlpy means that a company has different
entities or levels within itself. The type of
structure that a company has depends on the
business itself and its size.
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WORKING ENVIRONMENT
This is actually the way in which the company
chooses to work. Therefore you can have strict
or relaxed environments depending on the
business and its owner. A good comparison is
between Google(relaxed) & an accounting firm
(more strict).
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IN THIS ENVIRONMENT MANAGEMENT HAS NO
CONTROL OVER THE MARKET BUT MANAGEMENT
CAN INFLUENCE CERTAIN FACTORS RELATING TO
IT.
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CONSUMERS
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COMPETITORS
Consumers are a businesses customers. They provide
most of the income but are also very important, not only
to the company but the economy, because without their
demand for goods there is no income therefore the
economy collapses! It is always good to develop customer
relations, this improves business. 
Competitiors are the other businesses that sell similar
products or provide similar services as you. These
businesses are your opposition and therefore your
management of your company as well as the marketing of
your products is very important. This will influence how
well your company does and will therefore draw more
customers.
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SUPPLIERS
A business will always have a/many suppliers(s) in order to purchase stock. This
therefore relates to how the business PURCHASES goods which means a highly
skilled manager is needed in order to source the right suppliers and good.
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INTERMEDIARIES
Simply put, an intermediary is the ‘middle-man’. An example would be Adidas,
them being the manufacturer of clothes etc. , a wholesale/retail store buying
from Adidas to RESELL would be the intermediary and the customers are the
consumers.
According to Outsurance we should “CUT OUT THE MIDDLE MAN”
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STRATEGIC ALLIES
A strategic alliance is a relationship between two or
more parties to pursue a set of agreed upon goals
or to meet a critical business need while remaining
independent organisations. In such an alliance,
partners can provide resources such as, products,
distribution channels, manufacturing capability,
project funding, capital equipment and even expert
skills.
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REGULATORS
Regulation is administrative legislation that
constitutes or constrains rights and allocates
responsibilities. Therefore one can consider
regulation as actions of conduct imposing
sanctions, such as a fine, to the extent permitted
by the law of the country.
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IN THIS ENVIRONMENT, MANAGEMENT HAS NO CONTROL OVER THE
ENVIRONMENT
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There is an abbreviation that summarises the MOST important factors in the macro
environment:
PESTEL
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POLITICAL FACTORS
ECONOMIC FACTORS
SOCIAL FACTORS
TECHNOLOGICAL FACTORS
ENVIRONMENTAL FACTORS
LEGAL FACTORS
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POLITICAL FACTORS
These factors refer to government policy such as the degree of intervention in the
economy. What goods and services does the government want to provide? To what
extent does it believe in subsidising firms? And what are its priorities in terms of
business support? Political decisions can impact on many vital areas for business such
as the education of the workforce, the health services provided to the public and the
quality of infrastructure of the economy such as road and rail transport systems.
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ECONOMIC FACTORS
These include interest rates, taxation changes, economic growth, inflation and
exchange rates. What does this mean ???
Higher interest rates may deter investment because it costs more to borrow.
A strong currency may make exporting more difficult because it raises the price in
terms of the foreign currency.
Inflation may provoke higher wage demands (which we all know leads to strikes etc.)
from employees and may therefore raise costs.
Higher national income growth may boost the demand for a cpmpanies products.
• Due to inflation, we see the value of some currencies
decrease dramatically. In todays time, money is losing its
value but the cost of living increases.
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SOCIAL FACTORS
Changes in social trends can impact on the demand for a busineses products, the
availability and willingness of individuals to work. E.g In the UK, the population has
been ageing. This has increased costs for firms who are committed to pension
paymentsfor their employees because their staff are living longer. Therefore the
ageing population has an impact on demand. For the above situation, the demand for
medicine will increase but the demand for toys falls.
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TECHNOLOGICAL FACTORS
New technologies create new products and new processes. MP3 players, computer
games and high definition TV’s are all new markets created by technological
advances. Online shopping,bar coding and computer aided design are all
improvements to the way we do businessas a result of better technology. Technology
can reduce costs, improve quality and lead to innovation. These developments can
benefit consumers as well as the organisations providing the products.
In the pictures below it is evident that the advance in technology
has improved the way we live even though it may come at a bit of a
price. People also use smartphones and internet for information
which means books are slowly falling away
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ENVIRONMENTAL FACTORS
These factors include the weather and climate change. Changes in temperature can
impact on industries such as farming and tourism. With the effects of global warming
becoming more evident, the growinng desire to protect the environment is having an
impact on travel and transportation industries. More money is being spent/invested
into hybrid technology in order to save te environment. The general move towards
environmentally friendly products and processes is affecting demand patterns and
creating business opportunities.
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LEGAL FACTORS
These are related to the legal environment in which businesses operate. In recent
years in the UK there have been many significant legal changes that have affected
businesses behaviour. The introduction of age discrimination, increase in the
minimum wage and greater requirements for firms to recycle are examples of
relatively new laws that affect an organisations actions. Some new laws passed in the
UK : Consumer Laws, Competition Laws, Employment Laws and Health and Safety
Legislation.