BUSINESS AND MANAGEMENT

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BUSINESS AND MANAGEMENT

• MODULE 1
• BUSINESS ORGANIZATIONS ENVIRONMENT

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The External Environment

• In the pursuit of achieving aims and objectives,
  business face challenges from both within and
  outside of their organization
• Understanding these factors can facilitate
  effective decision making
• the reasonable man adapts himself to the world
  the unreasonable one persists in trying to adapt
  the world to himself.
• George Bernard Shaw

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Factors of an External Environment

• Those issues which either restrict or aid the
  performance of a business, but are beyond its
  control
• These factors can be classified under the PEST
  analysis
• Political
• Economic
• Social
• Technological

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Political Threats

• Intervention such as taxation and interest rate
  policies
• Government legislation define the boundaries
  within which a business can operate
• Employment law
• Consumer protection rights
• Trademark legislation

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Economic Threats

• The state of the economy in which a business
  operates is determined by four key variables
• Inflation
• Unemployment
• Economic growth
• International trade (trade surplus)
• Consumer and investor confidence
• Actions of rival firms

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Social Threats

• Social, cultural and demographic change
• Multiculturalism has lead to an increase in
  cultural exports (food, clothes, music etc)
• Pressure on businesses to be environmentally
  friendly

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Technological Threats

• Efficiency of business is greatly improving
  (computers etc)
• Efficient technological growth however can be
  overshadowed by the high cost of maintaining
  technology
• Airbus A380 is a prime example of technological
  inefficiency

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PEST or STEP

• External factors can harm business (hence the
  name PEST)
• However external factors can provide
  opportunities
• Lower taxes or interest rates
• Therefore STEP might appropriate
• Variations can include PESTLE, where the L and E
  are Legal and Environmental
• Also, STEEPLE, where the third E stands for
  Ethical

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Mini Case

• Case Rivington Foods
• Source Jones, Hall, Raffo, Business Studies 3rd
  Edition, Unit 5, page 40.

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The SWOT ANALYSIS

• This involves looking at the internal strengths
  and weaknesses of a business and the
  opportunities and threats.
• STRENGTHS These are things that the business and
  its staff do which
• They are effective at.
• They are well known for.
• Make money
• Generate business and reputation
• Lead to confidence in the market.
• Cause customers to come back for repeat business.
• Cause other businesses to try to learn from them.

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The SWOT ANALYSIS

• WEAKNESSES These are the things that the
  business does badly, that it is ineffective at or
  that it has a poor reputation for
• factors that cause losses, hardships, disputes,
  grievances and complaints for a business.
• OPPORTUNITIES These are the directions that the
  business could profitably take in the future
  because of its strengths or because of the
  elimination of its weaknesses.
• THREATS Threats to a business arise from the
  activities of competitors and from failing to
  take opportunities or to build on successes.
• complacency, a lack of rigor, and from falling
  profits.

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SWOT Analysis of A Soft Drink Manufacturer
STRENGTHS Current Products are market leaders in some countries in terms of sales and market share. Brand loyalty to product and to corporate identity. Effective promotion Excellent Distribution Network Constant RD leading to new ideas. WEAKNESSES Age of life cycle of certain products. Restricted product range could cause problems if sales suddenly fall.
OPPORTUNITIES Expansion into new geographical areas. Development of global brand and marketing. Possible growing demand for soft beverages. Legislation on drinks driving may encourage growth of soft drinks sale. Expansion into new markets. THREATS Growing competition from supermarket own brands. Increasing competition from competitors bringing out new products. Competition from alcoholic beverages and non-alcoholic beverages. Legislation on ingredients could force changes in production.
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SWOT Analysis for McDonalds Restaurant
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS