Challenges In Business Environments
Definitions
Competition: businesses that sell/provide similar goods or services
Strikes: workers refuse to work until employers meet their demands
Go-slows: employees go to work as they normally would, but deliberately work at a slower
pace
Socio-cultural factors: the beliefs, norms, values, and interests that are shared by a
particular society
Contemporary legislation: current laws put in place by the government to regulate the
operations of businesses in the country.
Demographics: the characteristics of the population such as age, gender, race,
educational background, income levels, and so on.
Psychographics: consumers’ attitudes, interests, opinions, and lifestyles.
High employee turnover: when the rate at which employees join and leave the business is
high.
Labour restrictions: labour laws put in place by the government to prevent the exploitation
of employees in the workplace.
Globalisation: when businesses expand their operations to other countries.
Challenges In Micro
Environment
Difficult employees
• Difficult employees = do not support the vision + goals of the business → actions lead
to conflict in workplace → could break down the team spirit
• Employees = complain about work systems + processes
• Employees = lazy + not committed to doing their work → cause delays + deadlines not
met
Shortage of skilled employees
• employees not trained → performance standards won't be met
• lead to poor customer service + negativity → impact on B image
• may lose customers to competitors
Lack of Vision And Mission Statement
• management + staff = dif ideas of goals of B
• may lead to conflict + negativity → affects productivity
• may not allocate resources efficiently → struggle to succeed
Lack of Adaquate Management Skills
• will not be able to lead, direct and control employees + resources
• business won't achieve goals and resources will be wasted
• productivity + profit will decrease + will be an unhappy workfore
Unions
• unions are groups established to protect interests + protects rights of employees
• make sure demands of employees are met by business
Strikes + Go Slows
• may be organised by trade unions
• employees usually refuse to go to work before demands are met
• lose of production hours
• Go slows → Business won't meet target for day = profit decrease
Market Enviroment
Competition
• competitor is a business that sells similar gls
• if a business cannot match quality or prices = will lose customors
• increased competition → force a business to decrease prices which means their profit
margin will decrease → lead to a business closing down
Shortage Of Suppliers
• business needs raw materials for gls → if they don't have then g/s can't be made
• if supply is disrupted → profit decrease
• if supply isn't on time + at right time + right quality → businesses will lose customers +
profit
Change in Consumer Behaviour
• economic conditions and fashions change → means the TM wants and needs will
change
• business may need to work harder in marketing
• business must adapt their g/s to meet TM requirements
• This may lead to stockpiling + reduced profit margins
• business must continuously study TM changes
Demographics
• demographics are statistics of the population (age, gender, race)
• it is a challenge because the demographics of a country changes constantly + the
business needs to constantly monitor changes
• Eg: people in TM live longer = increased long-term supply of gls
Psychographics:
• customer + lifestyle and behaviour change = their taste in products change
• business must be aware of customer lifestyle
• psychogrophics constantly change → business must analyse it
Socio -cultural Factors
• language, customs, income levels and preference of culture affect the production line
and marketing campaigns
• Businees needs to ensure marketing campaigns are not offensive to certain groups of
people
• Challenge = understanding factors that drive changes + responding to them takes
time
Overcoming Competition In Market
• B must ensure they produce unique gls for target market
• B must provide personalised services by being responsive to customers needs +
wants
• B must place goods at a competitive price + good quality
• B must create a positive image with regular engagements in develop ing
• B must offer improved credit terms and loyalty cards
• B must have good marketing campaigns to draw TM atten tion
• B must improve customer services
• B must promote positive outlook and update premises + systems
Challenges Of Macro Enviroment
Changes in income levels
• number of gls that consumers can purchase = determined by net income
• net income decreases → decrease goods bought → lowers profits
• unemployment; high interest rates, inflation rates, increased tax = lowers net income
reduced spending = lower profits for business.
Political Changer
• government decides its own objectives + ideologies
• change in gov means business must adapt to laws + policies
• when a country is politicaly unstable it means they will get less investors + tourists =
threaten business survival
Contemporary legal legislation:
• government passes laws to check activities and operations of a business if they fail to
obey the
• Business or owners will be fined or sent to prison
• B must comply with legislation (Employment Act) compels B to give preference to POC
when employing or appoining
• New laws (NCA) ((PA) (LRA)
Labour Restrictions
• gov has laws that impose restrictions on B's operations
• gov has legal framework that protects employees from exploitation
• Some restrictions are important bc protect rights of workers
Micro Lending
• refers to individuals or businesses that grant small loans to those who cannot get
credit from banks
• charges higher interest and ohorter repayment periods
• Little protection as it is not regulated by SA Banking Act
Globalisation
• refers to exchange of g/s, capital, labour across national borders
• labour=cheaper in some countries which means B can produce goods at lower price
and sell excess in other countries at lower prices
• dumping makes it difficult to operate local businesses + remain competitive
• migration of skilled labour can result in local Skills Shortage
• benefit of globalisation = easier +faster transfer of knowledye and skills
Social Values + Demographics social values
social values
↳ includes beliefs, norms + values that are shared by a group of people
↳ influences consumer buying habits
↳ influences attitudes toward saving and brand loyalty
Demographics
↳ characteristics of population (age gender ecc)
Socio -economic issues
↳ crime, poverty, HIV, corruption → influence B operations
↳ spend money on insurance against crime
↳ HIV=absenteeism and death → decreased available work force
