Business Environment and Entrepreneurship
Core concepts
A business environment is the sum of internal and external forces that shape what a firm can do. Candidates should be able to classify forces into micro (customers, suppliers, competitors, intermediaries, the public) and macro (political, economic, social, technological, legal, environmental). PESTLE is the standard scanning tool; SWOT is the diagnostic tool that follows scanning. Understand the difference between internal environment (controllable: resources, culture, structure) and external environment (largely uncontrollable).
Entrepreneurship concepts to master: the entrepreneur as risk-bearer and opportunity-spotter, the distinction between an entrepreneur and a manager, the entrepreneurial process (idea, feasibility, business plan, mobilisation of resources, launch, growth), and sources of business ideas. Know the roles of MSMEs and start-up support institutions in the local economy, and the meaning of intrapreneurship.
Traps in questions
- Confusing micro and macro: competitors are micro, not macro.
- Treating SWOT as an environment-scanning tool; it is an appraisal tool applied after scanning.
- Mixing up the entrepreneur (owns risk, seeks opportunity) with the manager (executes with delegated authority).
- Assuming all external forces are uncontrollable; some, like supplier relations, can be influenced.
Rule of thumb
Scan with PESTLE, diagnose with SWOT, then act. If a question asks what a firm should do about a force it cannot control, the answer is adapt or hedge, never eliminate.
Worked example
A new tax on imported raw materials is a political/legal macro factor. It is not controllable, so the correct strategic response is adaptation: renegotiate supplier contracts, seek local substitutes, or pass part of the cost on. Choosing 'lobby to remove the tax' is only valid if the question specifically asks about collective industry action.