BUSINESS MANAGEMENT
,Business world & Business management
The business environment refers to the internal and external elements and the
external environment of the enterprises that influence its operation. The
success of a business is based on understanding the environmental variability
and adapting its business policies so that the business can grow and survive
Business environments:
Internal environment External environment
MARKET ENVIRONMENT MACRO ENVIRONMENT
MICRO ENVIRONMENT
⇨Operational ⇨General
[full control by the
[limited control by the [no control by the
company]
company] company]
• Vision, mission, strategy, • consumers • political
and goals of the • competitors • economic
business enterprise • suppliers • social
• Production • civil society • technological
Elements
Elements
factors/resources • intermediaries • legal
• Business functions • customers/clients • environment
• Management structure • physical/natural
• Work environment • sociocultural &
• Culture demography
• Image of the business • international/global
• institutional
• difficult employees • competition • changes in income
• lack of vision and mission • demographics levels
• lack of adequate • stock shortage • globalization
management skills • change in consumers' • political changes
Challenges
• trade unions preferences and • recent legislation Challenges
• strikes habits • work restrictions
• psychography • socio-economic
issues
• inflation and
interest rates
Business has complete Business has no control, but management can
control influence control factors
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,Business world q complex system (market economy) that involves transforming
resources into products and services[meet needs of people in exchange for profit]
Important characteristic of the business world:
=FREEDOM of individuals to establish any business of their choice [called a market
economy / market system]
Role of Business world = transforming resources into products and services [offered to
market in exchange for profit] in order to meet people’s needs / MEET THE NEEDS OF
SOCIETY
ELEMENTS OF BUSINESS WORLD:
q Human activities [operated/managed by people]
q Production [transformation of certain resources into products]
q Exchange
q Profit [dependent on ability to efficiently deliver goods and services]
Profit q reward for meeting people’s needs = enables businesses to pay for resources ;
a financial gain, the difference between the amount earned and the amount spent
[buying, operating, or producing]
TYPES OF PRODUCTIONS:
Predominantly tangible products = bread, cars, houses etc.
Predominantly services = entertainment, communication, insurance etc.
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, ROLE BUSINESS PLAYS IN SOCIETY
= business is how society endeavours to satisfy needs and improve living standard [& at
the heart of each business = entrepreneur wanting to start new ventures]
= business creates wealth, ensures economic grow = bringing high living standard in
developed countries
= serves community indirectly by technological innovation, research and development,
improvements to the infrastructure [sustainability]
=critical role in supporting education, human resources, conservation and other activities
that improve quality of life.
MARKET ECONOMY (MARKET SYSTEM) = individuals decide what to produce, how to produce
and at which price to sell their product [PREVAILING ECONOMIC SYSTEM IN SOUTH-
AFRICA]
= complex system comprising various types of small and large organisations [collectively
grouping = industries]
Purpose of business in free-market : to make a profit while satisfying the needs of
people
Industries q various types of small and large business organisations that collectively
mobilise the resources of a country.
Formal sector = large businesses who are responsible for most economic activity; a
sector which encompasses all jobs with normal hours, regular wages, and is recognised as
income sources on which income taxes must be paid.
Informal sector = micro enterprises [SMMEs], not registered; system of employment
that does not abide by any form of legal requirements
FORMAL SECTOR INFORMAL SECTOR
OPERATIONS • Involves large businesses that are • Activities by people who are unable
legally registered to find work (survival sector)
• Fall within the mainstream of the • Falling out of the mainstream
economy economy
• Comply with all regulations and • People are self-employed, labor-
laws that apply to them sensitive with adapted technology
CHARACTERISTICS • Contribute to GDP because they • Contributes little to GDP and falls
are legally registered outside economic activities
• Consists of highly skilled, semi- • Consists of large numbers of poor
skilled and unskilled labor people in rural or urban areas
• Not easy to enter as it is legal • It's easy to enter the sector
• Resources are obtained through • Rely on indigenous resources
proper plans and policies and are • Small-scale operations
budgeted for
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