Ways in which businesses can adapt to challenges of the macro environment Business Studies Grade 11 Notes: The challenges of the macro environment of a business are always there and cannot be all illiminated. The only way is for businesses to adapt to these challenges and learn how to manage them better. Ways in which businesses can adapt to challenges of the macro environment (that you need to know for Grade 11 Business Studies) are:
- Information management
- Strategic responses
- Mergers, takeovers, acquisitions and alliances
- Organisational design and flexibility
- Direct influence of the environment and social responsibility
These adapting methods and strategies will be discussed in details below:
Explaining Five ways in which businesses can adapt to challenges of the macro environment
1. Information management
- Information must be found/recorded/stored/easily retrieved and effectively used.
- Businesses need to implement an effective information management system which is accessible and useful to all staff.
- They should invest large capital into information technology (IT) system to update business operations.
- Modern IT solutions enable businesses to satisfy customer needs faster and better.
- Business may benefit from an increase in market share and profitability.
2. Strategic responses
- Management needs to design strategic responses to various challenges by analysing all information, identifying stakeholders’ involved.
- Get a clear picture of each stakeholder’s viewpoints and requirements
- Businesses need to be aware of new competitors in the market and they must be able to strategically respond to threats.
- They must make strategic plans to remain sustainable in a competitive market.
- Correct strategic responses assist businesses to identify the most important features of their products.
3. Mergers, takeovers, acquisitions and alliances
Business sometimes have to make quick decisions to survive as a result of challenges from the business environments.
They may implement mergers, takeovers, acquisitions and alliance as solutions to respond to the challenges of the environments.
Mergers
- This occurs when two companies join together and form one new business.
- When two businesses, usually by agreement become one.
- If it is a public company, then the shareholders will swop their shares in one company for the equivalent value of shares in the new merged company.
Takeovers
- The purchasing of a company (target) by another company (bidder) usually against the will of their targets.
- Businesses that take over existing companies by buying out its shares until the business has controlling interests.
Acquisitions
- A business buys another business at an agreed price.
- It usually occurs to private companies that are not listed.
Alliances
- These are agreements when two or more businesses work together to achieve their objectives.
- Organisations with similar interest/nature/qualities choose to work together for the mutual benefit of both organisations.
- They remain separate and merely co-operate with one another.
NOTE: You must be able to give practical examples of mergers, takeovers, acquisitions and alliances.
4. Organisational design and flexibility
- Organisational design describes how a business sis structured and how it communicates its culture.
- It is a process to integrate people/information/technology of an organisation so that improves the profitability of the business.
- Businesses need to be flexible in their organisational design and strategies so that they can compete in a changing market.
- They need to change the organisational design to adapt to a specific challenge.
5. Direct influence on the environment and social responsibility
- Direct influences on businesses usually results from legislation/trade agreements and competitor strategies.
- Successful businesses and their environment
