BUSINESS STUDIES
Grade 11
TERM 1
Business Environments
and Business Operations
INFLUENCES ON
BUSINESS
ENVIRONMENTS
INFLUENCES ON BUSINESS ENVIRONMENTS

The business environment is not isolated.

The business environment exists within other
environments and is influenced by these
environments.

The degree of control businesses have over control
factors differ from one environment to the next.
1.1 CONTROL OF THE MICRO ENVIRONMENT
The control factors in the micro environment are
under control of an enterprise’s management.
Elements and Descriptions:
o
Vision, Mission, strategy and objectives
Written statements of what a business enterprise
hopes to achieve.
1.1 CONTROL OF THE MICRO ENVIRONMENT
o
Vision, Mission, strategy and objectives
Control:
 Management determines a business enterprise’s
vision, mission, strategy and objectives.
 Therefore management has full control over a
business enterprise’s vision, mission, strategy and
objectives.

Organisational resources
The means or resources available to a business
enterprise, including;
•
Human resources
•
Capital resources
•
Natural resources
•
Entrepreneurial resources

Organisational resources
Control:
 Management decides which resources are required
to run a business.
 Therefore, management has full control over
organizational resources.

Management
The people responsible for running a business.
Control:
 Managers and leaders are appointed by a
business.
 A business chooses the people it employs.

Business functions
8 Business functions can be identified.
These functions refer to the different departments in a
business enterprises

Business functions
Control:
 Management determines how each department is
managed, what the functions of each department
are and what each department is responsible for.
 The various business functions are therefore under
management’s control.

Organisational structure
Refers to the way employees are organised in a
business enterprises
Control:
 Management decides how the employees of an enterprise are
organized.
 Management can either choose a hierarchical management
structure or a flatter structure.

Organisational culture
Refers to “the way things are done” in a business
enterprise.

Working environment
Refers to the atmosphere in which employees work.

Organisational culture and Working
environment
Control:
 The business enterprise’s culture and atmosphere
are created by management.
 Management has full control over a business’
organizational culture and structure.
1.2 CONTROL IN THE MARKET ENVIRONMENT

The control factors from the market environment
give rise to opportunities and threats

The business enterprise has no control over these
factors.

The business enterprise is however able to
influence some of the control factors from the
market environment.
Elements and Descriptions:

Market (Consumers / customers)
Buyers of the goods and services a business enterprise
offers.
Control:
 A business enterprise cannot force consumers to buy its goods or
services
 Businesses can however influence consumers to buy goods and
services through advertising, sales promotions and fair prices.

Competitors
Other businesses who offer consumers the same or similar
goods and services.
Control:
 Business enterprises cannot control their competitors’ behavior
 They can however influence its competitors’ behavior by offering
excellent services and low prices.

Suppliers
Business enterprises and people who provide resources to
other enterprises to produce good s or services.
Control:
 Business enterprises depend on prompt delivery of good
quality goods by suppliers.
 Sometimes, suppliers experience problems which result in
goods being late.
 It also happens that suppliers deliver sub-standard goods.
 Business enterprises cannot control problems experienced
by suppliers.
 However, if a business is not satisfied with a supplier, it
can change suppliers.

Intermediaries
Also known as agents who help promote, sell and
distribute products to consumers.
Control:
 Business enterprises acquire the services of intermediaries to sell goods
and services on their behalf.
 They usually work for commission.
 This means that the more products they sell, the more money they earn.
 Businesses cannot control the actions of intermediaries.
 Businesses can influence intermediaries to a great extent because
intermediaries depend on selling a business’ goods and service to earn
commission.

Other organisations (civil society)
Civil society consists of organisations at local,
provincial and national level. Most civil society
organisations focus on welfare.
Civil society includes: CBOs and NGOs, Regulators,
Strategic allies, Unions








Other organisations (civil society)
Control:
Business enterprises form part of civil society.
Business enterprises can play an active role in civil society
by getting involved in the fight against corruption, poverty
and unemployment.
Regulators make rules for enterprises in different
industries.
Businesses can however influence regulators by getting
involved in the law-making process.
Business enterprises cannot control the decisions or
actions taken by its allies because strategic allies are
separate business and are managed independently.
Strategic allies word together so they do influence one
another in order to obtain the maximum benefit from their
relationship.
Businesses cannot control the actions or decisions of
trade unions, however, businesses can work together with
trade unions to establish good working conditions and fair
workplace policies.

Opportunities and threats
Opportunities are trends or events than can be utilised
to the advantage of a business enterprise.
Threats are trends or events or events that affect a
business enterprise negatively.
Control:
 Businesses cannot control opportunities or threats
which may appear suddenly in the business
environment.
 But, a business must position itself in a way that it
can react to opportunities and threats
1.3 CONTROL IN THE MACRO-ENVIRONMENT

Management cannot influence or control the control
factors from the macro environment.
Elements and Description:

Social / Cultural / demographic
People and factors that influence consumer
behaviour.
Includes the personal values, perceptions, behavior
and preferences that influence consumers’ buying
decisions.
Social / Cultural / demographic
Control:
 Challenges relating to this environment include the
HIV/Aids pandemic, skills shortages and crime.
 These problems influence both business operations
and consumer spending.
 Business enterprises cannot exercise control over
these problems.


Institutional environment
Refers to institutions that provide a series of services to
business enterprises, for example the SABS, JSE and
the CSIR (Council for Scientific and Industrial
Research).
Control:
 Business enterprises must meet the standards set by
the institutions they deal with.
 For example, the SABS will not approve a product if
the product does not meet the standard set by the
SABS.

Legal and political environment
The laws and legislation that businesses have to
comply with. Also refers to the political situation in a
country.
Control:
 Business enterprises must comply with legislation.
 New laws can influence the way business enterprises
operate.
 If business enterprises do not obey laws, they are fined or
punished.
 Business enterprises cannot control new legislation.
 Politics influence business enterprises because investors
do not invest their money in businesses operating in
countries which are politically unstable.
 Business enterprises cannot control the election of the
government, or the decisions made by them.

Economic environment
Refers to global and local economic forces that
influence business enterprises, including exchange
rates, interest rates and labour action.
Control:
 The economic environment has a big influence on
both business operations and consumer spending
because it includes control factors such as inflation,
interest rates and exchange rates.
 Business enterprises cannot control any of these
factors.

Global / international environment
Global and international forces that influence business
operations, for example international competition.
Control:
 Local business enterprises operate in the global
environment.
 In order for local business enterprises to compete
internationally, the goods and services of local
businesses must meet international standards.
 Local business enterprises are influenced by the
global environment and do not have any control over
factors influencing the global market.

Physical / natural environment
Refers to forces that are present in the natural
environment, including natural resources, infrastructure,
pollution and finding alternative sources of generation
energy.
Control:
 The world is facing major crises regarding the
availability of natural resources such as oil, coal and
food.
 Business enterprises should get involved in finding
solutions to these problems but cannot control the
availability of natural resources.

Technological environment
New technology creates new business opportunities
and influences the way business in conducted. The
internet has, for example, enable businesses to market
their products globally.
Control:
 New technology does not only influence business
enterprises that sell technological products, technology
also influences the way in which business operations are
conducted.
 Upgrading to new technology is usually very expensive
and often employees need to be trained to use these new
technology.
 Access to new technology does however benefit
enterprises in the long run.
 Business enterprises do not have control over the
development of new technology that have an impact on
business operationd
1.4 GETTING INVOLVED IN THE MACRO-ENVIRONMENT

Management cannot influence or control any of the
challenges that occur in the macro-environment.

Management must still react to these challenges
before they develop into dangerous threats.

One way in which business enterprises can deal with
the challenging macro-environment, is by getting
involved in the macro-environment.

Business enterprises can get involved in the macroenvironment in the following ways:
•
Investing money to train employees to keep up to date with
the latest technological inventions.
•
Investing money in research to develop new technologies.
•
Fighting inflation by offering products at reasonable prices.
•
Applying for government tenders. If a tender is granted to
an enterprise, it creates the opportunity to interact and
influence government.
•
Making use of lobbying to influence parliamentary decision
making.
•
Getting involved in the fight against HIV / Aids.
•
Getting involved in the fight against HIV / Aids, by:
providing counselling to HIV/Aids positive employees
and their families.
 providing HIV/Aids education to all employees.
 providing anti-retroviral medicine to HIV/Aids positive
employees.

ADVANTAGES OF GETTING INVOLVED IN THE MACRO
ENVIRONOMENT:

Potential employees will recognise the business
enterprise as a good employer.

Consumers will recognise the enterprise as an entity
that promotes the interests of consumers.

Involvement in the macro-environment gives an
enterprise a platform form which to influence the
business environment.

Involvement in the macro-environment will help the
business keep informed about challenges and
developments in the macro-environment.

A business’s involvement in the macro-environment
can help a business anticipate challenges and deal
with these challenges quickly.