Business Management

BUMA 1A 2012LU 2

Different Business Environments

0Economic systems- pg 70 “ the way in which a state or a nation allocates its

resources and apportions goods and services in the national community”.

0An ‘economy’ is the system of production, distribution and consumption

0There are four economic systems0 Traditional, market, command and mixed economic

systems

Different Business Environments

0Traditional0 People use resources available to produce what they

need0 People plant and harvest food on their own land0 They follow what their parents did and what their

parents’ parents did back in the day0 Tradition decides what they do for a living0 Typically they produce only as much as they need for

themselves

Different Business Environments

0Market system – capitalism0 Country’s economic decisions are the result of individual

buyers and sellers in the market0 Anybody is free to enter the business market0 No restrictions on who may run a business, sell goods,

deliver services, who may trade or where they may trade0 This allows entrepreneurs to start businesses that

satisfy needs and wants0 Essential principle is competition

Different Business Environments

0Market system – capitalism0 Competitions Act ensures there is free competition and

that big companies do not have an advantage over smaller companies

0 Nowhere in the world is there a perfect free-market system

0 In SA the market system has a high level of government intervention and control- we therefore have a controlled free market system

Different Business Environments

0Command system- communism0 Main decision maker about how resources are used is

the government0 No individual may independently decide to start and run

any type of business0 The government decides how the economy will operate

and which resources are used0 Eg, North Korea, Cuba

Different Business Environments

0Mixed System- socialism0 Mix the elements of several systems0 Government controls major sectors such as roads,

electricity, even some major manufacturing plans0 Smaller services such as consumer products are left for

the entrepreneurs to provide0 State still provides infrastructure and social welfare

benefits0 Table 1.1 on page 9- compares the economic systems

Different Business Environments

0How economic systems affect businesses0 Level of development of the country0 SA has a combination of economies0 Government passes laws to protect local industries and

businesses from stronger foreign competition0 Government needs to provide investors with security of

a stable environment0 Political upheaval causes much insecurity

Business Environments

0Business is reliant on the community to purchase their good/services and visa versa

0Therefore a business operates within an environment which can cause the business to either lose or make money

0The environment changes continually so the manager/owner needs to be on track with the trends and changes

Business Environments

0 If people do not buy from a business it will suffer0Competition can also kill a business0Labour strikes and natural disasters can also impact a

business0 In addition, happenings from around the world can

affect business, eg, Tsunami, US greed, Whitney Houston

0 Internal environment- micro environment0External environment- market, macro environments

Micro Environment

Market Environment

Macro Environment

Micro Environment

0 It’s the business itself, everything that occurs internally in the business

0 Eight interdependent tasks0 General management0 Purchasing0 Operations and logistics0 Marketing0 Finances0 Human resources0 Public relations0 administration

Market Environment

0Part of the business’s external environment and includes consumers, competitors, regulatory bodies, labour market and special interest groups

0These factors can influence a business positively or negatively

0Managers are unable to control these variables but may have an impact on them

Macro Environment

0All variables outside of the business0Economic, social-cultural, political, technological,

physical and international environments0The macro environment can influence the business

but the business cannot affect the macro environment0However the business can influence a sub-

environment within the macro-environment

Exercises and Activities

0Revision exercise in your manual on page 380 Questions 1-3

0Briefly describe the four (4) economic systems and state in which of these SA operates and motivate your answer