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Content Page2 Introduction

3-5 The Primary Sector- Micro Environment

6 The Primary Sector- Market Environment

7-8 The Primary Sector- Macro Environment

9-10 The Secondary Sector- Micro Environment

11 The Secondary Sector- Market Environment

12-13 The Secondary Sector- Macro Environment

14 The Tertiary Sector - Micro Environment

16 The Tertiary Sector - Market Environment

17 The Tertiary Sector - Macro Environment

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IntroductionThe three economic sectors (The Primary, Secondary and Tertiary) all make up the production process of goods and services. These sectors are all interrelated with the three business environments (The micro, market and macro). The businesses in the different sectors may have control and influence over certain aspects of these environments. This will be discussed throughout the assignment under the various environments.

The product that will be researched in this assignment is ‘Furniture’.

The Primary sector will compose of the lumberjack company which is concerned with obtaining raw materials. This would be the lumber for the production of the furniture.

The Secondary sector will compose of the factory that purchases the raw material and converts it into useful products such as the furniture in households today.

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The Tertiary sector will compose of the wholesalers, retailers or agents who make the final product easily available to the ordinary consumers. This is done by means of Storage, transport, financing and insurance of products.

Wood Furniture Furniture Store

The Primary Sector- (The lumberjack) Trees will be planted and cut by this sector The preparation of the forests & purchase of

equipment, seeds etc. will be performed by this sector.

The Micro EnvironmentThis environment involves the internal operations of the business and therefore the variables are completely controllable. This is known as the decision-making environment which implies management may improve its strengths or rectify its weaknesses.

-The business Mission, Objectives and vision Statement.

“We aim to plant and cut down trees for timber to be used in furniture manufacturing maintaining the highest code of business ethics and conserving a sustainable environment. The high quality of the

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timber produced will meet international standards. Our objectives are to supply manufactures with excellent quality timber. Marketing will be performed both nationally and internationally to arrive at a significant income. Our duty will incorporate the upbringing of society through social programs as well as sustainable development ”

Functions of the Enterprise

1. Production Function

This function involves utilising physical resources such as machines to cut down trees, physical labour, preparing the soil and irrigation for the trees. The degree of influence this function can have on the business relies on the productivity of the materials. The higher productivity, the lower the cost of production per unit is and hence higher profit margins are reachable.

2. Purchasing Function

This business function incorporates more than just buying raw materials. It includes research, planning, strategising and policy development. The business will need to research the type, variety and nutritional information of the seeds used. This will enable the business be maximise the timber output and minimise the cost. Genetically modified seeds may be purchased or a seeds that grows quicker. All these different options will help indirectly to increase turnover. The purchase of seeds, fertiliser, pesticides, tools and machinery will fall under this function.

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3. Marketing Function

This function is concerned with satisfying customer needs, developing products of superior value, setting competitive prices and distributing and promoting products effectively. The business (lumberjack) should increase its market share and should advertise more aggressively. It should ensure a decent but profitable selling price is reached and also that raw material is distributed in a professional manner.

4. General Management

The general management function ensures that all other functions operate properly. It ensures that that the timber of the right quality and quantity are produced as profitably as possible.

5. Financing Function

This function guarantees that the lumberjack business has enough capital in order to stay active in the business world. It deals with securing loans from banks and other financial institutions as well as contributing own or share capital. It also ensures producing and analysing financial information to ensure sensible and accurate financial decisions are made.

6. Human Resources

This involves all decisions affecting workers in the business. For example in the lumberjack company

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many workers would do hard and strenuous labour. Therefore the business should ensure adequate working conditions are provided. They should all comply with the relevant labour law. The business should also ensure a good relationship with the workers is made and should provide training and education to improve the work conditions and efficiency.

7. Administration and Information Function

Recording of all information should be accurate and timeously recorded. Records of costs, information from customers and other financial information should all be needed and documented for good financial decisions to be made. This should include record keeping of all on-going operations in the business. This in the lumberjack business would be the technical, theoretical and financial information.

8. Public Relations Function

The business should maintain a good relationship with the public.

The market EnvironmentThe conditions in this environment can rarely be influenced and therefore the business needs to be adaptable.

1. Suppliers

Suppliers provide the business with a resource to produce products. In this case this would be the

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fertiliser for the trees, the pesticides, equipment, machinery and seeds needed.

2. Competition

Competition would include other businesses that produce timber locally and internationally.

3. Intermediaries

These may be agents who may assist in the outsourcing of transporting, delivering and handling. This may be agents who transport the timber to the manufactures or the agents who package the wood etc.

4. Trade Unions

Trade Unions protect the interest of the workers in the business.

The Macro EnvironmentThese are uncontrollable variables that the business can have no or minimal influence on. The business will have to adapt to this environment if order to reach its desired goals.

1. Physical Environment

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The climate, effect of climate change, humidity and carbon emission will all affect the growth of the trees and forms part of the physical environment.

2. Technological Environment

This will include innovative and new machinery to improve the cutting down and packaging of the trees into logs. Genetically modified trees could also be used that grow faster and use less physical resources.

3. Legislative Environment

This includes the various labour laws especially those affecting the workers. The implementation of The basic Conditions of Employment Act, Employment Equity Act , BBBEE all fall under this environment. Also there are various Import and Export laws, quotas and incentives.

4. Economic Environment

Economic forces such as interest rates, inflation, exchange rates and economic growth all have effects for management which are out of control by the business. This would be For Example: if the lumberjack business loses out as the dollar-rand currency decreases.

5. International Environment

This environment would include the export taxes for exporting the timber overseas as well as many other regulations.

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6. Institutional Environment

The government plays an important role in the functioning of the country and the business sector. Therefore subsidiaries to these lumberjacks could be accomplished if needed to compete in the over-seas market.

7. Social Environment

A business stands in the centre of the community and therefore plays a major role in the well-being of society. This lumberjack business could venture out into social responsibility programs.

The Secondary Sector- (The Furniture Factory)The secondary sector will involve the actual manufacturing on the furniture. This business would

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buy the raw material (The timber) from the suppliers and turn them into finished products.

The Micro EnvironmentFunctions of the Enterprise

1. Production Function

This function involves utilising physical resources such as machines to process raw material into furniture. The degree of influence this function can have on the business relies on the productivity of the materials. The higher productivity, the lower the cost of production per unit is and hence higher profit margins are reachable. This function is concerned with producing furniture that is not only for the local markets but also for the international markets.

2. Purchasing Function

This business function incorporates more than just buying raw materials. It includes research, planning, strategising and policy development. The business will need to research the type and quality of the timber purchased. This will enable the business be maximise the furniture output and minimise the cost. This function also includes purchasing of equipment, machinery and other item needed in order to operate the factory.


This function is concerned with satisfying customer needs, developing products of superior value, setting competitive prices and distributing and promoting

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products effectively. The factory should identify the target market, advertise the furniture produced, determine the right pricing strategies to capture the identified target market and ensure that the furniture produced reaches the retailers and other distributers.


This ensures the efficient operation of the entire business. The general management function ensures that all other functions operate properly. It ensures that that the furniture of the right quality and quantity are produced as profitably as possible.

5. Financing Function

This function guarantees that the factory has enough capital in order to stay active in the business world. It deals with securing loans from banks and other financial institutions as well as contributing own or share capital. It also ensures producing and analysing financial information to ensure sensible and accurate financial decisions are made. Large amounts of funds may be necessary as manufacturing is a capital-intensive business.

6. Human Resources

This involves all decisions affecting workers in the business. For example in the factory many workers would do hard and strenuous labour. Therefore the business should ensure adequate working conditions are provided. They should all comply with the relevant labour law. The business should also ensure a good relationship with the workers is made. The labour

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force may not be largely unskilled but rather semi-skilled as manufacturing of the furniture is highly mechanised.


Recording of all information should be accurate and timeously recorded. Records of costs, information from customers, suppliers and other financial information should all be needed and documented for good financial decisions to be made. This should include record keeping of all on-going operations in the business.

8. Public Relations

This will include promoting a good image of the business in the community, liaising with local and international customers and maintaining favourable relations with government and shareholders. This business should maintain a good relationship with the relevant role-players.

As this is the internal business environment, these variables are controllable.


1. Suppliers

Suppliers provide the business with a resource to produce the products (The furniture). In this case this

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would be the equipment, machinery and raw material needed. The raw material would include timber, nails, glue etc.

2. Competition

Competition would include other factories that produce furniture locally and internationally.

3. Intermediaries

These may be agents who may assist in the outsourcing of transporting, delivering and handling. This may be agents who transport the furniture to the retailers or the agents who package the furniture etc.

4. Trade Unions




Fluctuating economic forces such as interest rates, inflation, exchange rates and economic growth all have effects for management which are out of control by the business. This would be For Example: if the factory loses out as the dollar-rand currency decreases. This will affect the prices of the furniture produced,

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profitability of the goods and international competitiveness of the furniture producer.

2. Political Environment

The political environment involves the policies of the government and establishments of trade agreements with other countries. It concerns government subsidiaries to the factory which may help to produce cheaper goods. It also involves taxation policies.


Factors such as poverty and crime will negatively affect the factory. The factory will have to strategise and plan in order to minimise the effects of poverty and crime. The community make up the social environment.


The government plays an important role in the functioning of the country and the business sector. Subsidiaries can be award to business in order to help them compete with the international market.




A business stands in the centre of the community and therefore plays a major role in the well-being of

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society. This business could venture out into social responsibility programs.


This environment would include the export taxes for exporting the furniture overseas as well as many other regulations.

The Tertiary Sector- (The Furniture Store)The Tertiary sector will compose of the wholesalers, retailers or agents who make the final product easily available to the ordinary consumers. This is done by means of Storage, transport, financing and insurance of products.

The Micro Environment1. Purchasing Function

This business function incorporates more than just buying raw materials. It includes research, planning, strategising and policy development. The business will need to research the quality and quantity of furniture purchased. This will enable the business to maximise the sales. This function also includes purchasing of equipment, storage space, premises, cupboards etc. It would also include the purchase of advertising space in newspapers etc.


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This environment includes promoting the sales of the product (The furniture). The business should increase the market share for South African produced furniture. Aggressive advertising techniques should also be implemented. Competitive pricing to meet the requirements of the target market should also be adhered to.

3. Financing Environment

This function guarantees that the furniture store has enough capital in order to stay active in the business world. It deals with securing loans from banks and other financial institutions as well as contributing own or share capital. It also ensures producing and analysing financial information to ensure sensible and accurate financial decisions are made.

4. Human Resources

This involves all decisions affecting workers in the business. The business should ensure adequate working conditions are provided for the workers. They should all comply with the relevant labour law. The business should also ensure that good relationships with the workers are kept. Usually the furniture store will have fewer workers than the Furniture manufacture.


The general management function ensures that all other functions operate properly. It ensures that that the furniture of the right quality and quantity are produced as profitably as possible.

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6. Public Relations Function

The business should maintain a good relationship with the public.


Recording of all information should be accurate and timeously recorded. Records of costs, information from customers and other financial information should all be needed and documented for good financial decisions to be made. This should include record keeping of all on-going operations in the business.


1. Suppliers

Suppliers provide the business with goods in order to sell and distribute to the general public. In this case this would be the Furniture that is bought from the manufacturer or wholesaler.

2. Competition

Competition would include other businesses that sell furniture locally and internationally.

3. Intermediaries

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These may be agents who may assist in the outsourcing of transporting, delivering and handling. This may be agents who transport the furniture to the customers or the agents who package the furniture etc.

4. Trade Unions


5. Consumers

Consumers purchase goods from the retailers. Therefore they form a very important position to the supply and demand which all affects the businesses profits. Consumer’s likes and dislikes are always changing and therefore needs to be known by the manufactures through the retailers.



Factors such as poverty and crime will negatively affect the furniture store business. The store will have to strategise and plan in order to minimise the effects of poverty and crime. The community make up the social environment.

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The government plays an important role in the functioning of the country and the business sector. The establishment of furniture regulatory authorities would influence the quality and quantity of furniture sold to consumers.


Globalisation has made the task of local furniture retailers more competitive as there are international counterparts that take the advantage in trading in first world countries.

4. Technological Environment

This will include new developed technology which may aid the sales of furniture to the consumers.




Economic forces such as interest rates, inflation, exchange rates and economic growth all have effects for management which are out of control by the business.

Conclusion

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Across all three sectors of industry (Primary, Secondary, Tertiary) the 3 business environments exist and need to be adapted to by the relevant businesses. These sectors are crucial to ensure that the product reaches the general public. From cutting down of trees, manufacturing of furniture and distribution and sales of products all sectors need to perform as efficiently as possible. Hence this is possible by adhering and adapting to the conditions and terms of the business environments.

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