2. Different Business Environments
0 Economic systems- pg 7
0 “ the way in which a state or a nation allocates its
resources and apportions goods and services in the
national community”.
0 An ‘economy’ is the system of production, distribution
and consumption
0 There are four economic systems
0 Traditional, market, command and mixed economic
systems
3. Different Business Environments
0 Traditional
0 People use resources available to produce what they
need
0 People plant and harvest food on their own land
0 They follow what their parents did and what their
parents’ parents did back in the day
0 Tradition decides what they do for a living
0 Typically they produce only as much as they need for
themselves
4. Different Business Environments
0 Market system – capitalism
0 Country’s economic decisions are the result of
individual buyers and sellers in the market
0 Anybody is free to enter the business market
0 No restrictions on who may run a business, sell goods,
deliver services, who may trade or where they may
trade
0 This allows entrepreneurs to start businesses that
satisfy needs and wants
0 Essential principle is competition
5. Different Business Environments
0 Market system – capitalism
0 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
6. Different Business Environments
0 Command system- communism
0 Main decision maker about how resources are used is
the government
0 No individual may independently decide to start and
run any type of business
0 The government decides how the economy will operate
and which resources are used
0 Eg, North Korea, Cuba
7. Different Business Environments
0 Mixed System- socialism
0 Mix the elements of several systems
0 Government controls major sectors such as
roads, electricity, even some major manufacturing plans
0 Smaller services such as consumer products are left for
the entrepreneurs to provide
0 State still provides infrastructure and social welfare
benefits
0 Table 1.1 on page 9- compares the economic systems
8. Different Business Environments
0 How economic systems affect businesses
0 Level of development of the country
0 SA has a combination of economies
0 Government passes laws to protect local industries and
businesses from stronger foreign competition
0 Government needs to provide investors with security of
a stable environment
0 Political upheaval causes much insecurity
9. Business Environments
0 Business is reliant on the community to purchase
their good/services and visa versa
0 Therefore a business operates within an environment
which can cause the business to either lose or make
money
0 The environment changes continually so the
manager/owner needs to be on track with the trends
and changes
10. Business Environments
0 If people do not buy from a business it will suffer
0 Competition can also kill a business
0 Labour strikes and natural disasters can also impact a
business
0 In addition, happenings from around the world can
affect business, eg, Tsunami, US greed, Whitney
Houston
0 Internal environment- micro environment
0 External environment- market, macro environments
12. Micro Environment
0 It’s the business itself, everything that occurs internally in
the business
0 Eight interdependent tasks
0 General management
0 Purchasing
0 Operations and logistics
0 Marketing
0 Finances
0 Human resources
0 Public relations
0 administration
13. Market Environment
0 Part of the business’s external environment and
includes consumers, competitors, regulatory
bodies, labour market and special interest groups
0 These factors can influence a business positively or
negatively
0 Managers are unable to control these variables but
may have an impact on them
14. Macro Environment
0 All variables outside of the business
0 Economic, social-
cultural, political, technological, physical and
international environments
0 The macro environment can influence the business
but the business cannot affect the macro environment
0 However the business can influence a sub-
environment within the macro-environment
15. Exercises and Activities
0 Revision exercise in your manual on page 38
0 Questions 1-3
0 Briefly describe the four (4) economic systems and
state in which of these SA operates and motivate your
answer
