INTRODUCTION TO BUSINESS MANAGEMENT AND GENERAL

MANAGEMENT

CHAPTER ONE: THE BUSINESS ENVIROMENT

THE SYSTEMS APPROACH
• The idea is based on all organizations being made up of interdependent parts.
• This can only be understood by looking at the whole part
• Any system consists of 3 components:
1. Inputs
2. Processes
3. Outputs
The organization as a system:
Inputs Processes Outputs

The environment

The organisation: Business Functions

• Operations function
• Logistics function
Human resources
• HR management function Goods
Natural resources • Financial function
Services
• Marketing + public relations
Capital

Entrepreneurship Management functions:

• Planning
• Organizing
• Leading
• Motivating
• Controlling

Inputs are all things brought together in an organization. The inputs are processed by
different management functions. The result is outputs in the form of good service or
goods. If any part of the system is not functioning properly, it will affect the functioning
of the whole organization.

Organisational environment:
• A business’s organisational environment is the world outside the business as well
as what goes on inside the business.
• These work together in affecting the success of the business.

Micro – environment Market environment Macro – environment

• Environment inside the • Environment • Includes factors that
business immediately outside the affects the business.
• Consists of different business
business functions and • This is where the
how they are managed. business gets its
resources from and
trades its products.

• Controls the business • Influences the business • Victim

THE MICRO – ENVIRONMENT

•
• Everything involved in running the business.
• The effectiveness of managers has a direct impact on the functioning of the
business.
• The operations function is responsible for producing the products that the business
sells.
• When the operations function does not preform effectively, the business will not be
able to supply customers with quality and required quantity of products.
• The logistics function is responsible for the right quantity, quality and distributing of
products.
If this function is not working well products will
• The financial function must operate to ensure that the business has enough capital.
Without proper financial planning the business will fail
• Human resources management (HRM) is functioning to ensure the right quality of
employees are recruited.
• The marketing function ensures that customers want to buy the product/service.
• The public relations function is there to make sure the business keeps a positive
image among its customers and society.

Micro - environment

Management processes
planning , organising , leading , motivating ,
controlling

Operations Logistics Function Financial

Function Function

HR management Marketing and Public Relations

Function Function

THE MARKET ENVIROMENT

• This is where the organisation conducts its business.
• Suppliers are other businesses that supply goods, raw materials to the business if
there goes something wrong with the suppliers the business might suffer due to inferior
quality, not the right quantity, not the right place, too expensive.
• Intermediates are the wholesalers and other businesses that act as the ‘middleman’
between the consumer and the manufacturer
• Competitors are other businesses that sell the same or comparable products or
services this can lead to reduced sales, reduced prices to stay competitive and
increase in advertising costs.
• Customers are patrons who want to buy the businesses' goods or services

THE MACRO – ENVIRONMENT

• All factors on national and international levels that affect the success of a business,
The management of the business have little control over these factors
• Sub environments: natural, technological, social, political, economic, and
international

1. Natural Environment:
• Availability of natural resources
• Climate
• Weather patterns
• Natural disasters

2. Technological Environment:
• A business that fails to keep up with technological environment cannot remain
competitive and will be overtaken by competitors
• Growing technology will have a negative effect on the South African Labour market
• This technology will create new product opportunities and enhance the productivity
of businesses and consumers
3. Social Environment:
• The characteristics of society in which the business is located
• The statistical characteristics of the society is referred to as society’s
demographics
Age, religion, culture, language, educational levels, degree of urbanisation
4. Political Environment:
• The competition of power within a society
• The political environment influences how society functions in general
 • The laws made by the government are used to determine how the business
conducts its business

5. Economic Environment:
• Economics is the science that describes and analyses the production, distribution
and the use of goods and services, and the role played by money or the lack of
money
• The higher the average income the more money people will be able to spend on
goods and services however, higher salaries push up the cost of goods, which
results in more products becoming less affordable
• Interest rates vary from time to time, and this affects a business because it affects
how much it costs for the business to borrow money and therefor affects how much
profits the business makes
• Inflation is used to describe the decrease in the value of money in relation to the
more money people must buy goods and services
• The business cycle refers to increases and decreases in the levels of production
and employment in a country over time
• The exchange rate is the principal rate at which two countries can be traded

6. The International Environment:

• The events that happen in other countries that affects the business
• Globalisation is the development of business activities on an international level,
which includes competition, markets, and the increasing interdependence of global
economies
• Factors include policy decisions, natural disasters, wars, and terrorist attacks

CONDUCTING A SWOT ANALYSIS OF A BUSINESS’S ENVIRONMENT:

• For a business to stay competitive the business should conduct an analysis in the
internal (micro) environment and the external (market/macro) environment

S: strengths
W: weaknesses
O: opportunities
T: threats
ETHICS IN DATA COLLECTION:
• In conducting a SWOT analysis, information needs to be collected from a wide
range of role players like customers, competitors, suppliers, and bodies in the
macro – environment of the business
• Ethical issues that need to be considered:
1. Accessibility: does the business have access to the required information?
2. Privacy: the privacy of information and how it can be shared
3. Property: ownership and the relative value of the information that the business
collects
4. Accuracy: is the information being collected accurate and authentic?