The Micro Environment:
[Link] of the micro
environment:
• Is the internal environment of the business,
• It consists of the factors that influence the business from
within.
• Components are:
a) The vision, mission statement, goals, and objectives:
➢Vision is the dream the owner has for the business.
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➢Mission statement gives direction and gives an outline
of how the business will achieve the vision.
➢Long-term goals: Goals a business needs to set to reach
its vision.
➢Short-term goals are the key aims that the business
needs to meet to reach its long-term goals.
b) The organisational culture:
➢The way the business operates.
➢How management makes decisions.
➢How the staff communicate, work and dress.
➢How the company negotiates deals.
➢The morals and ethics of the business.
c) The organisational resources:
➢Physical resources – raw materials.
➢Human resources – people
➢Financial resources – capital
➢Technological resources – computers etc.
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d)The management and leadership:
➢Management creates the organisational culture.
➢The style of leadership influences how staff perform in
the workplace.
➢Manager follows a process to control and direct
operations and processes to achieve a goal or vision.
➢A leader inspires people and sets aims and goals.
➢A leader sets new visions.
➢Together they are responsible for: setting and
communicating the vision, mission statement, goals, and
objectives. Putting systems and processes in place to
achieve them.
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e) The organisational structure of the business:
➢Includes all 8 business functions.
➢The organisational structure of a business will differ
according to:
a) The hierarchy (levels of management)
b) The sizes of the business.
c) The number of departments.
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2. The eight functions and activities of
the business:
• They fulfil each of the important activities in the
business.
• A small business like might not have all the functions.
For example: A courier company will have a finance and
marketing department but not a production.
• 8 functions:
Function Responsibility Activity
a) Financing Manages the Controls costs
financial affairs of and investigates
the business. ways of
increasing
revenue.
b) Purchasing Procuring the Buying raw
right quantity at materials,
the right price. equipment, and
services.
c) Production Ensuring the Producing or
quality of the processing raw
final product materials into
final product.
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reaching the
market.
d) Marketing Assesses trends Market research,
in the market to price
ensure the determination.
business meets
the requirements
of consumers.
e) General Makes all Leading,
decisions controlling and
management
surrounding organising.
vision of
business.
f) Administration Supports all Collection,
other business sorting, and
functions. processing of
data.
g) Human resources Ensures the Manage
wellbeing of recruitment,
employees. training, and
contracts of
employment.
h) Public relations Maintain good Communicating
relationships and creating
with customers,
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suppliers, awareness of
shareholders, and achievements.
local authorities
(all stakeholders)
• The first 4 functions (a – d) has got to do with investing
money, buying raw materials, and producing and selling
goods and services.
• Functions e – h has got to do with managing and
administering the business. As well as dealing with the
people in the business and the people outside the
business.
• Management must oversee all functions to ensure that
each function adds value to the final product or service.
• Each function should assist the others in achieving
overall objectives.
3. The role of the functions within the
business:
a) Financing:
➢Accessing and utilisations of capital.
➢Control of cash flow.
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➢Preparations of financial statements and reporting to the
shareholders.
b) Purchasing:
➢Acquiring raw materials, machinery, and products from
other suppliers.
➢Sourcing suitable quality at the lowest possible prices.
Placing orders for stock items, receiving goods, sorting,
storing and dispatch.
➢Stock management.
c) Production:
➢Ensuring that quality products are manufactured.
➢Transformation of raw materials into finished
products.
d) Marketing:
➢Pricing, distribution, and marketing of the product.
➢Ensuring the correct marketing mix to boost sales.
➢Transferring of goods and services from the
producer/manufacturer to the consumer.
➢Promoting the business and product through
advertising.
➢Selling the right product, at the right price, in the right
place and at the right time.
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e) General Management:
➢Combining all the activities of the other functions into
one.
➢Setting up the vision, goals, and objectives of the
enterprise.
➢Combining the planning, organising, activating, and
controlling elements.
➢Directing and leading.
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f) Administration:
➢Structuring activities by putting process and procedures
in place.
➢Doing paperwork including filling and completing forms.
➢Processing data into useful information.
➢Creating informative reports.
➢Storing and retrieving information.
➢Communicating and distributing information to
departments, suppliers, and consumers.
g) Human Resources:
➢Recruiting and selecting suitable employees and
deciding on appropriate payment.
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➢Developing the skills of staff through training.
➢Preforming human resources processes, including
functions such as leave forms and pension payments.
h) Public Relations (PR):
➢Dealing with social, political, and environmental issues.
➢ Establishing good relations between the public and the
company.
➢Establishing good internal public relations, by ensuring
that the employees know about the services and
activities of the business.
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Activity:
1. Indicate the concept being define below:
1.1 The dream of the business owner. (2)
1.2 They can be human, physical, or financial. (2)
1.3 Used to illustrate the hierarchy in a business. (2)
1.4 They way in which the business adheres to morals and (2)
ethics.
2. Discuss the impact that management has on a (10)
business.
3. Name two types of businesses and explain why they (8)
would have different organisational structures.
4. Identify the following departments or functions:
4.1 Makes strategic decisions. (2)
4.2 Ensures costs of purchasing remain in budget. (2)
4.3 Looks after the welfare of staff. (2)
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4.4 Ensures that materials are suitable for production. (2)
4.5 Manage data. (2)
5. Imagine you are conducting a study of a major
streaming site like Netflix. Discuss a key activity
involved in each of the following functions of the
business:
5.1 Finance (4)
5.2 Production (4)
5.3 Marketing (4)
Total: [48]
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Memorandum:
1. Indicate the concept being define below:
1.1 The dream of the business owner. (2)
Vision
1.2 They can be human, physical or financial. (2)
Resources
1.3 Used to illustrate the hierarchy in a business. (2)
organogram
1.4 They way in which the business adheres to morals and (2)
ethics.
Organisational culture.
2. Discuss the impact that management has on a (10)
business.
Management decides the vision.
They create the organisational culture.
They steer the business towards achieving the
mission statement.
The style of leadership determines the behaviour of
the staff.
This will determine the overall performance of the
business.
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3. Name two types of businesses and explain why they (8)
would have different organisational structures.
Example:
IT company is dynamic, and employees are younger
people. They will have an informal structure.
A law firm will have very hard and fast rules of how
they operate due to the nature of their clients and
the work they do.
4. Identify the following departments or functions:
4.1 Makes strategic decisions. (2)
General manager
4.2 Ensures costs of purchasing remain in budget. (2)
Finance function
4.3 Looks after the welfare of staff. (2)
Human resources function
4.4 Ensures that materials are suitable for production. (2)
Purchasing function
4.5 Manage data. (2)
Administrative function
5. Imagine you are conducting a study of a major
streaming site like Netflix. Discuss a key activity
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involved in each of the following functions of the
business:
5.1 Finance (4)
Billing customers correctly. For e.g. according to
the package they signed up for.
5.2 Production (4)
Ensuring that programming is not interrupted.
Technical expertise of the engineer needs to be up
to scratch.
5.3 Marketing (4)
Prime-time advertising of new programmes to
attract new customers.
Total 48
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