GRADE 11 BUSINESS STUDIES - Brebner High School

2013/05/24GRADE 11BUSINESS STUDIESCHALLENGES IN THE BUSINESSENVIRONMENT AND ADAPTING TOTHEMCHALLENGES IN THEMICRO ENVIRONMENT• Difficult employees:– Employees that have a negative attitudes.– Is a challenge because employees tend tocomplain, have a negative effect on positiveemployees, not passionate about their job, needsa lot of supervision, can do harm to theenterprise’s image.• Lack of vision and mission:– Business without a mission/vision are aimless andwithout direction. Without guidance managerswill not know where the enterprise is headed.1

2013/05/24CHALLENGES IN THEMICRO ENVIRONMENT• Lack of adequate management skills:– This will result in the business not achieving itsgoals, uninspired subordinates, poorlymanagement, unhappy and frustrated employees,high employee turnover rate.• Trade unions:– Unions might make demands that are impossibleand creates tension between managers andemployees.CHALLENGES IN THEMICRO ENVIRONMENT• Strikes and go-slows:– Because of strikes and go-slows employees workso slow that it cannot meet its expected units ofproduction. Enterprise can therefore lost manyhours of production.• Skills shortage among employees:– Unqualified employees can result in accidents inthe workplace, bad decision-making, inadequatemanagement planning, embarrassment for thebusiness, etc.2

2013/05/24CHALLENGES IN THEMICRO ENVIRONMENT• Employee absenteeism:– Can be a huge challenge for an enterprise as itaffects productivity. Can be and indication ofemployees abusing drugs/ alcohol.• High employee turnover:– Means employees resign from business frequentlyand new employees must be recruited. Thisshows that employees are not happy at thatparticular enterprise. It effects productivity,continuity and the recruitment process.• Competition:CHALLENGES IN THEMARKET ENVIRONMENT– Consumers will buy from the enterprise wherethey get the most value for their money.• Shortage of supply:– For example there can be a fuel crises thatcomplicates delivery. Or the supplier’s employeescan strike. Business can lose consumers.3

2013/05/24CHALLENGES IN THEMARKET ENVIRONMENT• Change in consumer tastes and habits:– Factors such as economic conditions or fashioncan cause changes in the target market’s tastesand habits.• Demographics:– Changes in population influence the business.Demographic changes in SA is like people tend tolive longer, emigration of people, people dying ofHIV/Aids.CHALLENGES IN THEMARKET ENVIRONMENT• Psychographics:– Determining consumers attitudes, interests andlifestyle. Difficult for a business to determinepsychographics because they change frequently.• Socio-cultural factors:– Factors like language, ethnicity, customs, incomelevels etc. Care must be taken to ensure that themarketing campaign is not offensive to anycultural group.4

2013/05/24CHALLENGES IN THEMACRO ENVIRONMENT• Changes in income levels:– Unemployment, high interest rates, etc. leavingcustomers with less income.– Less income will result in lower profits forenterprise.• Political changes:– New government means business have to adapt tonew laws.– Political instability will scare away investors andpotential tourists.CHALLENGES IN THEMACRO ENVIRONMENT• Contemporary legal legislation:– Failure to comply with legislation can result inbusiness facing harsh fines/ sentenced to go to prison.– Business have to meet to legal requirements and thatis not always easy.• Labour restrictions:– Labour is regulated by: the number of hours theywork, employer/employee relationships, number ofdays leave they take.– SA labour market is over regulated.– Other challenges is shortage of skilled labour, BBBEE,affirmative action.5

2013/05/24• HIV/Aids:CHALLENGES IN THEMACRO ENVIRONMENT– Reduce the number of employees, impactproductivity.– Places a financial burden on business.– Increase in recruitment cost.• Micro-lending:– People use micro-lending because they cannot meetminimum requirements for credit from banks.– Little protection for people using micro-lending.– Unethical micro-lending lend money to people whothey knew cannot afford to repay money back.CHALLENGES IN THEMACRO ENVIRONMENT• Globalisation and international challenges:– Local businesses are competing with internationalbusinesses.– Easy to pursue career opportunities aboard andcan result in skills shortages.• Social values:– People’s values influence their buying habits.– Business cannot control customers’ social values(brand loyalty, attitude towards saving)6

2013/05/24• Demographics:CHALLENGES IN THEMACRO ENVIRONMENT– Demographical challenges influence the businessinclude: emigration, illegal immigration, shrinkageof the labour force.• Socio-economical issues:– For example crime, poverty and corruption.– Many business suffered losses due to crime andcorruption.Strategies to adapt to challenges• Information management:– Getting the right info to the right persons at theright time.– Enables the business to be pro-active.• Strategic response:– Knowing which problem-solving process to use forwhich circumstances.– Managing the challenges in most effective way.7

2013/05/24Strategies to adapt to challenges• Merger:– Two enterprises joining one another.– Businesses combine their strengths.• Takeover or acquisition:– One company purchases another company.– Refers to purchase of a smaller business by alarger one.– Can be a friendly/ hostile takeover.– Advantages include: taxation advantages,eliminating of competition, new managersreplacing inefficient managers.Strategies to adapt to challenges• Alliance:– Agreement between businesses.– Enables business to be more competitive andbetter able to respond to challenges.• Organisation design and flexibility:– Refers to the process of organising the employees.– Improves efficiency and increases the ability torespond to challenges.8

2013/05/24Strategies to adapt to challenges• Social responsibility:– Taking responsibility for the impact of thebusinesses activities on customers, employees andthe community.– Making a corporate social responsibility.– Helps to form the public’s opinion of theenterprise.Forming business relationships• Three important types of businessrelationships:– Lobbying– Networking– Power relationships9

2013/05/241.) Lobbying• Process of trying to influence legislation.• Two types of lobbying:– Grassroots lobbying: Appealing to public toinfluence government, exc. Government want toban some sort of medicine. Manufactures appealto patients to protest against this law.– Direct lobbying: Contacting government to try toinfluence legislation, exc. Manufactures appealdirectly to government by asking them to ban themedicine.Following can be achieved throughlobbying, power relationships andnetworking• Hedging against inflation.• Finding new customers.• Influencing supervisory bodies and regulators.• Influencing unions through collectivebargaining.• Influencing investors.• Forming strategic alliance agreements.10

2013/05/242) Networking• Process of meeting new people.• Aims to build alliances with other people.• Networking can help us to:– Meet new clients– Discover new business opportunities– Find new job opportunities– Advertise our business• Networking can also be done through via theinternet3) Power relationships• Person’s ability to influence other people’sthoughts.• Examples of relationships in the business:– Relationships between employer and employee.– Relationships between an enterprise andmembers of a union.– Relationships between an business and itssuppliers.11

2013/05/24Examples of power relationships• Strategic alliances:– Agreement between 2 businesses.– Don’t want to lose mutual benefits.– Will consider suggestions made by otherbusinesses.• Persuasion of large investors:– People invest large amounts of money have thepower to influence that business.– Will listen to suggestions made by investors.Examples of power relationships• Influence from company representatives:– Representative acts on behalf of the company.– Company representatives influence customers byhanding out free samples.12