Fiche de révision : Introduction to Business Environments

📋 Course Outline

1. Business Environment Definition
2. Environment Classification
3. SWOT Analysis
4. Porter’s Five Forces
5. Threats and Entry Barriers
6. Buyer Supplier and Rivalry Power
7. PESTEL Macro Analysis

📖 1. Business Environment Definition

🔑 Key Concepts & Definitions

• Business environment : Comprises all internal and external forces that potentially affect an organization’s performance.

📝 Essential Points

• Internal environmental factors originate within the company, while external environmental factors originate outside the organization but affect it to a smaller or greater extent.

💡 Memory Hook

Internal forces inside; external forces outside

📖 2. Environment Classification

★ Must-know

• The internal environment includes owners, the board of directors, employees, and financial resources.

• The micro external environment consists of direct external forces, especially customers, suppliers, and competitors.

Further detail

• The macro external environment consists of broader forces such as government jurisdiction and technological advancements, over which businesses typically have no control.

💡 Memory Hook

Internal → micro external → macro external

📖 3. SWOT Analysis

🔑 Key Concepts & Definitions

• SWOT analysis : Evaluates both the internal and external business environments.

📝 Essential Points

• Strengths are internal characteristics that give a business an advantage over competitors, including a well-known brand name, lower costs, superior management talent, and better marketing skills.

• Weaknesses are internal characteristics that disadvantage a business, including limited financial resources, limited distribution, higher costs, outdated products or technology, and poor marketing skills.

• Opportunities are external attractive factors that create chances for greater profits and growth, including rapid market growth, changing customer needs, new technologies, and an economic boom.

• Threats are external factors beyond an organization’s control that put its mission or operations at risk, including foreign competitors, rival firms, increased government regulation, and economic downturns.

📖 4. Porter’s Five Forces

🔑 Key Concepts & Definitions

• Porter’s Five Forces : Analysis evaluates a business’s micro external environment through the threat of new entrants, bargaining power of suppliers, competitive rivalry, threat of substitutes, and bargaining power of buyers.
• Threat of substitutes : The ease with which customers can switch to a competitor’s product or an entirely different solution.
• Threat of new entry : The pressure created when new competitors enter a market and weaken existing businesses’ market positions.

📖 5. Threats and Entry Barriers

★ Must-know

📌 The threat of new entry is high when capital requirements are low, few economies of scale exist, and customers already have a diverse range of choices.

📌 The threat of substitutes is high when many substitutes are available, customers can find them at the same or lower price, and competing products have equal or better quality.

Further detail

• Examples of substitutes include tea versus coffee, streaming versus traditional television, and electric versus petrol vehicles.

📖 6. Buyer Supplier and Rivalry Power

🔑 Key Concepts & Definitions

• Bargaining power of buyers : The influence customers have to lower prices or negotiate better terms, especially through bulk orders.
• Bargaining power of suppliers : The strength of suppliers and their ability to raise input prices or reduce input quality.
• Competitive rivalry : The intensity of competition among existing competitors in a market, depending on their number and capabilities.

📝 Essential Points

📌 Buyer power is high when few buyers pursue too many goods, buyers purchase in bulk, and products are undifferentiated and easily switched.

📌 Supplier power is high when suppliers are concentrated and organized, few substitutes exist for their inputs, and the supplied product is unique or most effective.

📌 Competitive rivalry is high when an industry grows rapidly, exit barriers are high, and no clear market leader exists.

📖 7. PESTEL Macro Analysis

🔑 Key Concepts & Definitions

• PESTEL analysis : Evaluates the macro external environment through political, economic, socio-cultural, technological, ecological, and legal factors.

★ Must-know

• Economic factors include inflation rates, interest rates, unemployment, and exchange rates that affect business decisions and economic performance.

Further detail

• Political factors include tax policies, fiscal and monetary policies, and trade tariffs that reflect government influence on the economy or an industry.

• Socio-cultural factors include demographics, population growth, changes in thinking patterns, and cultural trends and behaviours that influence consumers and business opportunities.

• Technological factors include automation, artificial intelligence and big data, and blockchain, which can affect industry operations and markets favorably or unfavorably.

• Ecological factors include farming, ecolodges, carbon-footprint reduction, climate change, sustainability concerns, natural conditions, and environmental regulations.

• Legal factors include corporate law, employment law, consumer protection law, intellectual property law, and internal company policies.

📊 Synthesis Tables

SWOT Categories