Learning Unit 4 Part 1

1. Learning Unit 4Part 1 The Macro Environment

2. Learning unit Outcomes • 4 reasons why managers need to understand the macro environment. • Sub-environments of the macro environment. • Briefly explain the sub-environments. • What are ‘threats’ and ‘opportunities’ . • Major economic systems in the world

3. Learning Outcomes • Characteristics of the SA economic system. • The SA government structure. • Corporate governance principles. • Discuss 5 laws that influence management decisions. • Discuss BEE and BBBEE in SA. • Identify and discuss at least 3 sources provided by SA government to support business initiative.

5. Introduction • Macro environment: • Furthest away • AKA remote environment • Volatile, cannot control • Variables directly and indirectly impact the business • Variables = uncontrollable = AKA mega trends • Survival = monitor changes  indentify opportunities (maximise) and threats (minimise)

6. The macro environment Technological Social Economic International Political Ecological

7. The macro environment Technological Social International Economic Political Ecological Change  Opportunity or Threat! Opportunity: Variable has + impact on the business Threat: Variable has - impact on the business

8. Characteristics • Variables are interdependent • Increasingly unstable • Uncertain • Complex • Becoming increasingly unpredictable

9. Why must managers understand the macro environment? • Direct or indirect impact on all organisations • Adjust to changes in order to survive • Opportunity or threat to be managed • Knowledge and info on macro  better decision-making • Knowledge and info on macro  pro-active response to change

10. Political Environment • Influence of government on organisations such as law • Include: • Sanctions • Wars • Terrorism • Political unrest and instability • Laws

11. Political Environment • Government  Huge impact on business • Influence investors decisions • Examples: • Employment Equity act • National Credit act • Skills Development act • Decrease in subsidies • Department of Environmental Affairs and Tourism

12. Employment Equity Act 55 of 1998 • Improve employment equity • First step: Affirmative action • On the grounds of: • Race • Sex • Sexual orientation • Disability • Religion

13. Skills Development Act 97 of 1998 • Develop skills of labour • Improve quality of life • Improve productivity and competitiveness • Increase entrepreneurship • SETA: Service Sector Education • and Training Authority • Quality of education/skills training

14. National Credit Act 34 of 2005 • Protect consumers • Must be written • Greater responsibility of credit suppliers

15. Group Work: • Identify what possible impact the sub-environments (page 72) of the macro environment might have on Starbucks in South Africa

16. Economic environment • Health of the country affecting business and individuals • General factors in the economic environment: • Employment rates • Distribution of wealth • Competitive pricing in free market

17. Economic environment • Factors that affect business: • Economic growth: Increase in production • Employment levels: % people employed • Consumer income:  Income Demand for goods • Inflation: Increase in price level of G&S • Exchange rate: One currency for another • Trade balance: Exports - Imports

18. Economic environment • Characteristics: • Interdependent • Determine countries prosperity or adversity • Specific implications on business and managers

19. Social environment • Concerned with society’s attitudes and cultural values. • New trends  Continuous appearance  New type of customer. • Healthy eating • SA workforce  large % infected with HIV/Aids • How does this affect the business?

20. Social Environment • Include: • Changing fashion • Changing lifestyle • Role of women in society • Crime and prostitution • Growth in subcultures • Age and race structures • Geographic shifts in population • Family life cycles changing • Education levels increasing • Household sizes decreasing • Birth and death rates

21. Social Environment • Other social problems: • Unemployment • Poverty • Crime • Social changes not always negative!

22. Social Environment • Changes in social environment which pose a threat or opportunity: • More women in the workplace • Move to a more balanced lifestyle • More single-parent households • More single people

23. Technological Environment • Include trends such as: • Way customers purchase • Internet • Sophisticated communication channels • Changes in transport

24. Technological Environment • The knowledge of how to do something. •  Tech  Affect whole organisation. • Information technology: Combination of people and technology to support operations, management and decision-making. • Internet • E-mail • Cellular phones

25. International Environment • Operations in SA or internationally  direct or indirect impact. • Operate internationally  Exposed to more opportunities and threats • Each country has own unique macro environment

26. Ecological Environment • Conserve limited resources in the physical environment. • Corporate Governance recommend reporting on ‘triple bottom lines’ annually.

27. Responsibility of organisations toward shareholders, people and environment Ecological Environment: - Triple bottom line To show profit To benefit from investment People are better off Citizenship Go ‘GREEN’ Take responsibility for actions

28. Ecological Environment • Org to report on: • Environmental protection policies • Comply with consumer protection standards • Comply with environmental laws and regulations • Existing and planned pollution control • Protection and restoration costs • Potential liability and current and pending investigations