TOPIC 3 - ADAPTING TO THE CHALLENGES IN THE BUISNESS ENVIRONMENTS

Question 1

Describe the following ways in which businesses can adapt to challenges of the business environments:
1. Information management
2. Strategic responses
3. Mergers, takeovers, acquisitions and alliances
4. Organisation design and flexibility
5. Direct influence of the environment and social responsibility

Answer 1

1. Information management - Modern IT solutions enable businesses to satisfy customer needs more
   efficiently. The business may then benefit from an increase in market share and profitability.
2. Strategic responses - Businesses must have a clear understanding of each stakeholder’s viewpoints and requirements. Businesses need to be aware of new competitors in the market and be able to strategically respond to their existence.
3. Mergers, takeovers, acquisitions and alliances 1. Mergers: This occurs when two companies join together – usually by agreement – to
   form one new business. Emerged businesses share their resources which could lead to more growth and sustainability.
4. Takeovers: Takeover occurs when one business takes control of another business through
   majority ownership of its shares. It can also happen when one business buys out their shares of another one
   until the first business has controlling interests.
5. Acquisitions: This happens when a business buys another business at an agreed price. It usually occurs to companies that are not listed on the JSE.
6. Alliances: Alliances refer to an agreement between businesses with common visions and work together for the benefit of all. Organisations with similar interests/nature/goals choose to work together for mutual benefits.
7. Organisation design and flexibility - It involves the process of integrating the people/information/technology within an organisation to improve efficiency. Businesses need to be flexible in their organisational design so that they can
   adapt easily to challenges of business environments.
8. Direct influence of the environment and social responsibility - Businesses need to investigate alternative environmental friendly production
   techniques and create environmental awareness. Businesses also need to
   implement sustainable CSI programmes in order to improve the communities
   in which they operate.

Question 2

Suggest ways in which businesses can have a direct influence on the environment.

Answer 2

1. Businesses need to be flexible by getting involved in research/development
   so that they can continue to operate.
2. They can also influence their customer base by creating new uses of a
   product, taking customers away from competitors, finding new customers,
   and convincing them that they need the new product.
3. They can influence regulators through lobbying and bargaining and can influence their owners using information contained in annual reports.

Question 3

List projects that can be undertaken by businesses as part of social responsibility.

Answer 3

1. Businesses must allow employees to get involved in social development
   programmes.
2. Businesses must protect the environment and participate in community upliftment programmes.
3. Engage in environmentally friendly campaigns such as recycling or re-using
   scarce resources.

Question 4

Explain the benefits of social responsibility projects for businesses.

Answer 4

1. CSI helps to attract investors because of increased profits/income.
2. Promotes customer loyalty resulting in more sales.
3. The business enjoys the goodwill/support of communities.

Question 5

Define the meaning of lobbying.

Answer 5

1. Lobbying means persuading individuals or groups with decision-making power to support a position you believe is right.
2. Lobbying is any attempt by individuals or private interest groups to influence the decisions of government.

Question 6

Explain the reasons why businesses lobby.

Answer 6

1. Lobbying advances what the business must deliver on and builds public trust.
2. Lobbying helps to find solutions to emerging generic challenges.
3. Lobbying advances a cause and builds public trust.

Question 7

Discuss the following types of lobbying:
1. Hedging against inflation
2. Bargaining sessions between management and unions
3. Influencing supervisory body/regulators

Answer 7

1. Hedging against inflation - Businesses use hedging to protect their financial investments by spreading the
   risk. They can hedge against inflation by investing their surplus assets or money in
   investments with intrinsic value.
2. Bargaining sessions between management and unions - Businesses make sure that their representatives are trained/skilled to negotiate
   on their behalf. The purpose of bargaining sessions is to find a win-win situation for all parties.
3. Influencing supervisory body/regulators - Business managers are involved in debates and discussions that shape
   public policies. Businesses influence and negotiate with these regulators to protect their
   sustainability.

Question 8

Elaborate on the meaning of networking.

Answer 8

1. Refers to the interaction with other to exchange ideas and information, to develop professional contacts and to give and get advice from other business people.
2. Networking allows management to build new business relationship and to generate new business opportunities.

Question 9

Describe the advantages of networking.

Answer 9

1. Plays a role in the marketing and expansion of a business.
2. Assists businesses in making future business decisions.
3. Networking can be an excellent source of new perspectives and business ideas.

Question 10

Elaborate on the meaning of power relationships.

Answer 10

1. Power relations can be described as a measure of a business’ ability to control its environment and the behaviour of other businesses.
2. Power relations exist in all relationships in society.

Question 11

Discuss ways businesses can form power relationships:
1. Strategic alliance agreements
2. Persuasion of large investors
3. Company representatives’ influence

Answer 11

1. Strategic alliance agreements - Businesses form partnership agreements to benefit from each other’s involvement. These partnership alliances help parties involved to benefit in infrastructure
   development and scarce skills.
2. Persuasion of large investors - If a business has a powerful investor, it can often benefit from the relationship by gaining credit more easily and negotiating better deals from suppliers. Businesses invite powerful influential people to sit on their board of directors
   and gain valuable advice from these people.
3. Company representatives’ influence - This representative fulfills an important function in trying to persuade investors to invest in particular business practices. Businesses must invest time and energy to recruit the right person for this job.