THE LOCAL AND
GLOBAL BUSINESS
ENVIRONMENT
Presented by Odell Jueanville, MSc, EdD(Cand.)
This PowerPoint may
contain portions of the
textbook used for the
course Business Essentials
by Ebert and Griffin,
(2019).
Bible Scripture
■ Deuteronomy 8:18 “You shall remember the Lord your God,
for it is he who gives you power to get wealth, that he may
confirm his covenant that he swore to your fathers, as it is
this day” (ESV).
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What is a business?
How is it different from an organisation?
■ _______________________________________
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What is a business?
■ Any organisation that provides goods or
services to earn profits.
What is a profit?
■ A profit is the difference between a business’s
revenues and its expenses.
(Ebert & Griffin, 2019), pg 7.
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Consumer Choice and Demand
■ For a business to survive, there must be a demand for its
products because consumers have freedom to choose
whether they want the product or not.
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Benefits of Business to Society
■ Businesses produce most goods and services
■ Businesses employ a great percentage of the population
■ Businesses create innovations
■ Businesses pay taxes which helps support the country
■ Businesses support charities and provide community
leadership.
(Ebert & Griffin, 2019).
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External Environments of Business
■ “All businesses, regardless of their size, location, or mission,
operate within a larger external environment. This external
environment consists of everything outside an
organisation’s boundaries that might affect it” (Ebert &
Griffin, 2019), Pg 8.
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How do you Analyse the external environment?
■ Watch video available at
https://www.youtube.com/watch?v=bYn4CyL3r5w
Mr. O. Jueanville
(Ebert & Griffin,
2019).
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■ Domestic Business Environment: the environment in which a firm
conducts its operations and derives its revenues.
■ Global Business Environment: the international forces that affect a
business.
■ Technological Environment: the various ways firms create value for
their constituents.
■ The political-legal Environment reflects the relationship between
business and government, usually in the form of government
regulation of business.
■ Sociocultural Environment: the customs, mores, values, and
demographic characteristics of the society in which an organisation
functions.
■ Economic Environment: Relevant conditions that exist in the economic
system in which the business operates.
(Ebert & Griffin, 2019), Pgs 9 - 10.
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Factors of Production
These are resources necessary for the production of goods
and services, example:
■ Labour or Human Resources
■ Capital
■ Entrepreneurs
■ Physical Resources
■ Information Resources
What are these? Pgs. 11-13.
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Types of Economic Systems
■ Planned Economy
■ Market Economy
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■ Planned Economy: “An economy that relies on a centralised
government to control all or most factors of production and to
make all or most production and allocation decisions” (Ebert &
Griffin, 2019), Pg 13.
Planned
Economy
Communism is political
system in which the
government owns and
operates all factors of
production.
Socialism is where the
government owns and
operates only selected
major sources of
production.
Communism
Socialism
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Market Economies
■ “A market is a mechanism for exchange between the buyers
and sellers of a particular good or service ” (Ebert & Griffin,
2019), Pg 13
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Mixed Market Economies
■ Mixed Market Economy is an economic system featuring
characteristics of both planned and market economies
■ Privatisation is the process of converting government
enterprises into privately owned companies which can occur
when converting from a planned economy to a mixed market
economy.
(Ebert & Griffin, 2019), Pg 15
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Demand and Supply
■ Demand: the willingness and ability of buyers to purchase a good
or service.
■ Supply: the willingness and ability of producers to offer a good or
service for sale.
■ Law of Demand: principle that buyers will purchase (demand)
more of a product as its price drops and less as its price increases.
■ Law of Supply principle that producers will offer (supply) more of a
product for sale as its price rises and less as its price drops.
(Ebert & Griffin, 2019), Pg 16. Further read in detail pages 16-18.
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Private Enterprise
■ What is a private enterprise?
■ An economic system which allows individuals to pursue their
own interests with _________ government restriction (Ebert
& Griffin, 2019).
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Competition
■ This occurs when two or more businesses vie for the
same resources or customers (Ebert & Griffin, 2019).
■ Is competition good?
Pages 18-19
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Monopoly
■ What is a monopoly in relation to competition in
business?
■ Share examples of local monopolies in your home
country.
Page 20
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Types of Competition
■ Perfect Competition
■ Oligopoly
■ Monopolistic Competition
■ Monopoly
Read Pages 19-20
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Degrees of Competition
Pages 19 - 20
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Gross Domestic Product (GDP)
■ GDP is the “total value of all goods and services produced
within a given period by a national economy through
domestic factors of production” (Ebert & Griffin, 2019), pg.
21.
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Recession versus Depression
■ A Recession is a period during which the total output, as
measured by GDP, declines (Ebert & Griffin, 2019), pg. 27.
■ Depression a prolonged and deep recession (Ebert &
Griffin, 2019), pg. 27.
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Other Key Economic Terms to Research.
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Business Cycle
Aggregate Output
Standard of Living
Gross National Product (GNP)
GDP per Capita
Real GDP
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Purchasing Power Parity
Productivity
Balance of Trade
Inflation
Unemployment
Consumer Price Index (CPI)
Read the entire chapter and play close attention to the above
key words for your knowledge and your upcoming quiz.
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