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THE BUSINESS ENVIRONMENT

Explore the components of the business environment, including internal and external factors. Learn about SWOT analysis, market types, and environmental scanning for effective business strategy formulation.

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THE BUSINESS ENVIRONMENT

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  1. THE BUSINESS ENVIRONMENT Study Unit 2

  2. LECTURE OUTLINE • INTRODUCTION • COMPONENTS OF THE BUSINESS ENVIRONMENT • INTERNAL (MICRO) BUSINESS ENVIRONMENT • EXTERNAL MARKET (TASK) ENVIRONMENT • MACRO (MEGA) BUSINESS ENVIRONMENT • BUSINESS ENVIRONMENTS OF FIRMS – OPEN SYSTEMS • TYPES OF MARKETS IN THE MARKET ENVIRONMENT • ENVIRONMENTAL SCANNING • ANALYSIS OF THE BUSINESS ENVIRONMENT (SWOTs) • VARIABLES IN THE BUSINESS ENVIRONMENT • REVIEW OF THE STUDY UNIT • APPLICATION EXERCISES

  3. 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

  4. 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

  5. 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

  6. 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

  7. ANALYSIS OF THE BUSINESS ENVIRONMENT • SWOTs • Threat Represents unfavourable (negative) conditions in micro, market, macro environments Detrimental to firm

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