Explore everything that contributes to Business Environment THE BUSINESS ENVIRONMENT

INTRODUCTION 2 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

COMPONENTS OF THE BUSINESS ENVIRONMENT 3 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

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 4

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 5

6 The Business and Society Relationship The Environment of society is a key concept of understanding Business and Society relationships!

7 Business and Society Business The collection of private,commercially oriented organizations Society A broad group of people and otherorganizations, interest groups,a community, a nation.

8 Business and Stakeholder Relationships

9 Business Criticism: Use & Abuse of Power Business Power The ability or capacity to producean effect or to bring influence Iron Law of Responsibility In the long run, those who do not usepower in a manner society considersresponsible will tend to lose it

10 Business Ethics: Ethics Refers to issues of right, wrong,fairness, and justice. Business Ethics Focuses on ethical issues that arisein the commercial realm.