FACTORS INFLUENCING THE MICRO ENVIRONMENT:

 

Size and nature of the business

 

In a small business the owner is responsible for all activities of the business.

Larger businesses may need separate departments to carry out the various activities of the business.

 

Type of product or service produced

 

Service businesses, such as transport carriers, rely heavily on maintenance and human resources.

 

Style of management

 

A small business may have an informal culture, with a more personal style of management, whereas, large enterprises may require a more formal approach.

 

Business vision, mission and goal

Vision refers to how you see the future or long term goals of the business. Managers and workers who lack vision and mission are not aware of, or do not understand, the aims of the business and contributions to the communities that they serve.

 

Business functions

 

Business functions are various tasks that must be performed and co-ordinated for a business. In a small business, the owner or manager is responsible for most of these functions. However, as enterprises grow in size, businesses require greater specialisation.

 

Administration, general management, financial management, HR management, marketing management, public relations, purchasing, production, risk management and ICT management.

 

Definitions of Business Functions:   Administration – Acquiring, collecting, processing, making and safekeeping information. Decisions are based on information. General management – Develops strategic plans. Consists of: planning, organising, leading and control. Finance – Determine the need for funds. Acquire the funds from suitable sources. Human Resources – To find the suitable person for the right job. To appoint a person to the position where his capabilities can be used to the advantage of the business. Marketing – Making the public aware of what is available through advertising, etc. Bring the goods within easy reach of the consumer through storage, distribution and advertising. Public relations – promote a positive image by liaising with the relevant stakeholders. Purchasing – Involved in all the purchasing of raw materials & capital goods of the correct quality, quantity, price, time and place. Production – Acquiring the raw materials from the various sources. Converting raw material into finished products of a pre-determined standard. Information & communication technology – Managing information and making decisions based on historical ideas. Risk management – Deals with issues on how to avoid, reduce, eliminate or prevent risk exposure.

 

 

Employees

 

·         Employers need workers to achieve their business objectives and workers need jobs to provide them with an income on which to live.

·         There must be clear instructions and a good understanding between employers, managers and workers.

 

Legislation to control employer/employee relationships includes:

Labour Relations Act, the Basic Conditions of Employment Act, the Skills Development Act, the Skills Development Levies Act, the Employment Equity Act, the Occupational Health and Safety Act, the Compensation for Occupational Injuries and Diseases Act and the Unemployment Insurance Act.

 

EMPLOYEE SKILL LEVELS

 

·         In the recruitment process, management must employ an employee with the required knowledge and technical skills level. If the employee does not meet the skills requirement, the employer must train the employee. The same applies when a business upgrades machinery or uses more sophisticated technology.

·         Employers must also send employees to interpersonal skills training to try to improve their communication and assertive skills.

·         Management has therefore the ability to control the possible consequences of poor worker skills.

 

EMPLOYEE RETENTION

 

When a business is experiencing high employee turnover, management needs to find out why employees leave on such a regular basis and to correct the problem.

 

 

 

 CHALLENGES FACED BY THE MICRO ENVIRONMENT

 

DIFFICULT EMPLOYEES

 

·         Some workers find it difficult to cooperate and work together in a team

·         Some employees do not react well to pressure to increase production and productivity

·         As inflation increases, there are demands for higher wages and these can result in strikes

·         Some employees may not identify with the goals of the business

·         Negative attitude by unhappy workers may soon extend to other workers

·         Workers may fear losing jobs during recession

If workers are not pulling their weight, someone else must carry some of their load or the overall performance of the business will suffer. Poor work ethics and attitudes result in loss of profits which will ultimately mean that the business ceases to operate.

Managers can control poor attitude or work ethic through discussion with the individual involved.

The challenge is to manage the difficult workers well so that the problems can be solved before the dissatisfaction becomes worse and spreads throughout the workforce.

 

LACK OF VISION AND MISSION

Some companies have a vision which thy sometimes fail to put in practice. Those that do not have a clear vision of where they are heading are not as motivated and focussed as they should be.

The challenge is to train managers to inspire the workforce to accept and act on the business’s mission statement.

 

LACK OF ADEQUATE MANAGEMENT SKILLS

A business cannot operate efficiently if management cannot plan, lead, direct and control the business. Without these skills managers would fail to respond to challenges that confront the business and this results in productivity and lower profit margins.

The challenge is to employ and develop managers with the following skills:

·         Technical skills to direct the process of production

·         Good interpersonal skills to manage workers

·         Conflict-resolution skills to keep harmonious relations in the workforce

·         Problem-solving skills to carry out the vision of the company.

 

Skills shortages among employees

·         Businesses sometimes find it difficult to find suitable employees with skills and experience.

·         Some businesses end up employing workers who are not qualified to do the job.

·         Unqualified employees may contribute to bad decision making.

 

High employee turnover

·         Employee turnover means that employees resign from the frequently.

·         High employee turnover affects productivity, continuity and the recruitment process.

 

Employee absenteeism

·         Employees’ absenteeism reduces productivity and affects profitability negatively.

 

Impact of TRADE UNIONS

 

Define the term trade union   A trade union is an association of workers that: Protects the rights and interests of workers Negotiates with management of businesses about conditions of employment and wages

 

The challenge in dealing with unions is that they tend to stress the rights of workers without considering the responsibility of management to maintain production levels. Management must maintain good relations with unions and prevent negotiation failure.

 

·         Trade unions may create tension between management and employees.

·         Businesses may not be able to meet the demands of the trade unions.

·         Once employees have a grievance against their employers relating to remuneration, workers’ rights/working conditions, they will declare an industrial dispute.

Strikes and go-slows

·         Strikes and go-slows may affect the business negatively as it cannot meet its expected units of production.

·         Employees may not report to work due to a complete shutdown strike.

·         Employees may report to work but work slowly so that the business cannot meet its targets due to go slows.

 

When negotiations break down, unions may decide to take industrial action. Industrial action consists of strikes and go-slows. These actions have a negative effect on production, profits and relations between workers and management.

 

 

Differences between a strike and a go slow

Strike	Go-slow
Temporary collective refusal of employees to work.	The employees still carry on with their work, but at a much slower pace than normal.
A collective, organised cessation of work by employees to force the employers to accept their demands.	The employees aim to disrupt workplace production.
Workers will not be fired if they participated in a protected strike.	Workers participating on a go-slow are often punished, sometimes fired.

 

Last Edited by: Ms Kheswa