Business
What factors does this relate to?
The wider conditions of the whole environment, not just a particular industry.
A business has no control over these factors, but can impact on operations, decision-making and business performance.
Success is dependent on managing the effects of these factors.
External Macro Environment
What am I?
§Distinguishes between what is ‘right’ and ‘wrong’, often through a code of ethics which is based on what is acceptable in society
External Macro Environment
Ethical
What am I?
§Include all regulations and laws to protect consumers and provide a level playing field for businesses to operate in
Legal
What am I?
§relate to government policy at a local, state or federal level that imposes regulations that businesses must comply with
§ Alignment is critical to avoid fines and damage to reputation
§ Includes tax rates, trade regulations (tariffs, embargo’s, quotas etc.) or industry regulations (health inspections etc.)
External Macro Environment
Political
What am I?
§Businesses must establish a positive relationship with its customers as they provide revenue and certainty.
§ Are essential to the success of a business, whose needs regularly change
§A strong, loyal customer base with good relationships (including strong customer service), improves reputation and profits
External Operating Environment
Customers
What am I?
§Are businesses that offer similar or the same products and services in the same industry
§ Businesses must constantly monitor competition and respond to changes, particularly in products and pricing
§ Has a significant impact on how a business operates and its ongoing success
External Operating Environment
Competitors
What am I?
§Provide the resources a business needs to operate
§ Must be reliable, timely and cost-effective
§ To remain competitive, numerous suppliers are usually required, to negotiate and get the best deal
§ Important to have positive relationships to ensure the business is up-to-date with new offers
Suppliers
What am I?
§Share a common interest and a desire to work with the business to protect and promote a specific industry.
§ Includes professional associations (e.g Qld Law Society), trade unions (e.g ACTU, CFMEU) and public interest groups (e.g RSPCA, The Lions Club etc.)
External Operating Environment
Interest Groups
What am I?
Their role is critical and has a direct influence on business operations
Need to be effective for business success – strategic planning, its communication and implementation
Require specific skills and knowledge (communication, expertise etc.)
Need to adapt their leadership style to the business and its situation
Foster a positive work environment
Internal Environmental Factor
Owners/Management
What am I?
§Are essential and often the most important asset
§ Business success is often linked directly to employee performance
§ It is crucial to select, recruit and maintain the most appropriate employees
§ Working environment must allow for maximum performance, satisfaction, job satisfaction and output
Internal Environmental Factor
Employees
What am I?
§Outlines the roles, responsibilities and lines of communication within an organisation
§ It shows the way that business activities are divided, organised and co-ordinated.
§ The correct structure can maximise efficiencies, influence performance and productivity
Internal Environmental Factor
Organisational Structure
What am I?
§ Is based on shared attitudes, beliefs, expectations, attitudes, and behaviours of people within a business
§ Usually set-up in seed/start up stage, but evolves over time
§ Culture determines how employees and management interact, how the business functions and deals with situations.
Internal Environmental Factor
Organisational Culture
What am I?
§Are the people that influence a business – consumers.
§ Their needs and wants are continually changing and businesses need to recognise this and respond to keep them satisfied
§ Influences products, services, price, place and promotion strategies
§ Can also include changes in population, family structures and education levels
External Macro Environment
Socio-Cultural Trends
What am I?
§ Changes fast and needs to be reacted to quickly to beat competitors
§ Used to develop and deliver products and services to customers and run a business efficiently
§ Automation his improved operations and productivity
§ Advances in communication make businesses more accessible to customers
§ New technology is developed through research and development – this improves operations can decrease costs and increase productivity
External Macro Environmental Factor
Technological
What am I?
§Impacts the business, its operations and its customers
§ High levels of consumer confidence, leads to higher consumer spending
§ High inflation raises product prices and reduces value of the dollar and decreases consumer buying power
§ High interest rates make it more expensive for businesses and households to operate, raising prices and reducing consumer spending
External Macro Environment
Economic
What am I?
§Refers to the physical environment and ranges from the weather to the availability of natural resources
§ Impacts a business's processes due to the need to conserve resources for the future while focussing on efficiencies
External Macro Environment
Environment