The Business Environment

Business organisations do not operate in isolation Business organisations do not operate in isolation. The modern view is that they operate as open systems interacting with a range of forces. The term environments is used to describe the context in which business is undertaken.

The Business Environment Internal Environment External Environment

Internal Environment Culture, Values and Ethics of the business Group Activity: Read the case studies on p. 37 & discuss Q. Does ethics play a role in the internal business environment?

Corporate Culture and Values All organisations have a culture (whether they are aware of it or not) Corporate culture is a term used to describe the shared values and beliefs of the people in the organisation It is their idea of what is important and how things work in their particular organisation

Continued… Corporate culture is especially significant in large and complex organisations with many separate divisions The corporate culture connects the organisation’s objectives to the values of each member and each section of the organisation

Indicators of ‘real’ corporate culture Management style in the organisation Attitudes of management to staff and staff attitude to management Relations among staff Customer relations Dress code and behaviour code within the organisation CORPORATE CULTURE WILL VARY BETWEEN DIFFERENT TYPES OF BUSINESSES

Continued… Corporate culture can be difficult to change because it is largely based on peoples’ values and beliefs Corporate culture can also be moulded to emphasis objectives and strategies Customer service Environmental awareness

Activities to test your knowledge Questions 1 to 9 p. 39 Complete question 12 on p. 41 & 42 You will need to read the extract ‘Winning over your shareholders’

Business Ethics http://www.youtube.com/watch?v=sDPsSyaZNIw Business ethics and socially responsible management are significant business issues Examples of ethical and socially responsible management: Small businesses providing support to local sporting clubs Large companies that develop policies to guide employee behaviour Businesses that give increased protection to the environment http://www.youtube.com/watch?v=sDPsSyaZNIw

Business Ethics – page 42-43 What is social responsibility? Why would a business need to be socially responsible? Why is there conflict between a shareholder and a stakeholder? What is a code of ethics? Why should a business have a code of ethics?

External Environment Four main external factors that affect businesses: Customers: Customer satisfaction is central to business success – expect high quality for competitive price (excellent customer service, after sales service) Suppliers: Organisations need reliable suppliers and financial sources to fund activities and growth Competitors: Always potential for new competitors to emerge – increase in globalization is increasing competition in many markets Special interest groups: These groups impact on the activities of an organisation (trade unions, church groups - anyone lobbying to bring social issues to the attention of the public and corporate sector

EXTERNAL environment http://www.youtube.com/watch?v=Bmy-jtlLndc

Peer teaching activity In pairs, choose a factor from the pie chart. Define what your groups role in the external business environment is Brainstorm the impact your group has on a business Create a power point to teach the class Take notes from your peers power points

Writing Activity (PRACTISE FOR EXAM) Individually write a 150 word response to the following: Select any two of the factors from the external environment and explain their relationship to large organisations. Provide examples for your response..........