Macro Environment
An environment where the company cannot act but affect its operation.
What is a Macro Environment?
The companies in the world are surrounded by an environment classified into two different types: the macro-environment and the micro-environment.
The macro environment is where the company cannot act but affect its operation. Instead, the microenvironment is everything that depends on the company's decisions. It can be your staff or strategies to follow.
A good macro-environment allows the organization to enjoy stability to carry out its activity, but it does not guarantee any achievement. In addition, it should also be noted that the macro environment is a source of opportunities.
Depending on the trend of the different factors of the macro environment, future market needs can be identified and covered before the market becomes saturated. For this reason, conducting an in-depth analysis of the macro environment is important when setting up a company and updating it over the years.
Factors of the Macro Environment
Next, we will explain each factor that affects the macro environment of a company:
1. Politics
The country's political situation or the environment of surrounding countries is a key factor in carrying out the company's activity with normality and stability.
In addition, the fiscal pressure and other payments made to the State must also be accounted for when calculating the margins.
2. Environment
It is one of the factors to be considered increasingly. Locating a company in the right place can greatly optimize your costs and increase your profit margin.
When discussing scarce natural resources, such as water or other raw materials, the decision must be made carefully.
3. Culture
This factor can be decisive for the company. Creating a socially unaccepted company will prevent it from growing and having the necessary clients to stay on time.
Example
Creating a pork butcher shop in those countries that do not consume this type of meat or setting up an edible insect store in Europe, where it is still rare to consume them.
4. Demographics
To carry out a demographic analysis, it is important to study the public to whom the product will be offered. When launching products for young people, the potential customers must be enough to be profitable.
Let's take the example of a company that sells walkers for the elderly with age over 80 years. If in the geographical area where they are going to be sold, there are hardly any people who reach this age, it would be illogical to start the activity because it will not generate enough income.
5. Economy
The functioning of the economy where the company will carry out its economic activity is a very important factor. Those economies with the highest poverty rate are not the most favorable for offering certain products.
Example
The Ferrari brand wishes to sell luxury vehicles in a European city. So it will think of setting up a dealership in Monaco or Marbella, but not in a rural area with low industrialization and technological progress.
6. Technology
Certain products require a minimum technological development to be useful.
In addition, if the product that the company is going to offer is related to technology, it must analyze how long it can take to become obsolete and what level of innovation is required to avoid being left behind.
For example, a smartphone company will not sell them to a country with no good data coverage or Wi-Fi network.
All these factors affect, to a greater or lesser extent, the companies of a country. To know how they will affect a certain company, it is necessary to know their product and who it is aimed at.
macro environment Example
In this example, we will study the macro environment for some internet service companies. An internet server company manages internet servers which are nothing more than a large number of computers that are working permanently.
These servers must not be in a specific place; they must be working. But, besides this, there are various needs of these companies.
Among them is the large amount of electricity used for the constant cooling of the equipment stands out. The goal is to maintain a stable temperature and extract their highest possible yield.
Many such companies have gone to Iceland for these reasons:
1- It is a country where electricity is free since it is produced in abundance, thanks to geothermal energy, so companies do not have to pay anything for the operation of the equipment.
2- It is close to Greenland, so the cold weather also reduces the costs of having large refrigeration equipment.
technological factors And Macro environment
Technological trends in the economic environment affect companies at different levels. Productivity and the quality of customer service are examples of two areas where technological advances help drive business performance.
For this reason, strategic leaders are constantly looking for development and updates within the technological environment since betting on innovation allows them to optimize their operations and accelerate the business transformation process.
The Internet, big data, automation, and innovations in the field of artificial intelligence are just a few examples of the possibilities offered by these innovations.
Note
Innovation and creativity are some formulas for success for many companies today.
When analyzing the economic environment, one must not forget to assess the negative impact of technology on business. Although most of its effects are positive, some of the consequences of new developments in this field pose problems for companies like
- Aspects related to security
- Difficulties in complying with data protection regulations
- The lack of physical proximity in communications
- The need to adapt the business model to new needs
- The complexity of the organization's system architectures.
These are just some of the problems brought about by the digitization that characterizes the current economic environment.
What is a Micro environment
The environment's economic forces influence how consumers react to a company's marketing decisions. In other words, the conditions of the economy are a significant force that affects any company's marketing system, whether commercial or non-profit.
Marketing programs are strongly affected by economic factors such as interest rates, money supply, price inflation, and credit availability. In addition, exchange rates, monetary policies, and evaluation affect imports and exports in international marketing.
The level of personal disposable income, particularly concerning price levels and inflation, greatly affects marketing systems.
For example, a person may have an adequate income to buy an item, but having a low income makes him keep his money in the bank, or he may decide to spend his money, fearing that inflation will damage his savings or that the product’s price will rise the following year.
The organisms of the economic environment face complex situations that require the use of techniques and tools typical of marketing administration. In this way, they can overcome these situations and achieve the basic objective of these organisms.
Note
The economic environment is thought to be of interest only to businesses whose socially approved mission is to produce and distribute goods and services that people need and can afford.
Here is an example:
- Government agencies that obtain resources, almost always from taxpayers, and require good channeling of funds themselves toward services that the public desires.
- Some churches elicit contributions from their members and attend to their religious and moral needs.
- The universities obtain resources from student taxpayers and other types of contributions and transform them into educational and research services.
Natural Environment of the Macro environment
The natural environment includes the natural resources marketers need as inputs or are affected by marketing activities.
During the 1960s, public concern grew about the damage caused to the natural environment by the industrial activities of modern nations. As a result, marketers must consider three trends in the natural environment.
1. Shortage of Raw Materials
Air and water seem like infinite resources, but some groups see long-term risks. For example, environmental groups have lobbied to ban a certain propellant used in aerosol sprays because of potential damage to the ozone.
Water scarcity is already a problem in some parts of the world. Therefore, renewable resources, such as forests and food, must be used wisely. For example, logging companies must reforest forests to protect the soil and ensure a future wood supply.
Food supply can be a major problem because the amount of arable land is limited and because of the increasing development of urban areas. In addition, non-renewable resources, such as oil, coal, and minerals, pose a serious problem.
It would seem that, at present, the quantity of platinum, gold, zinc, and lead is not sufficient to satisfy demand. Silver, tin, and uranium could become scarce, even if prices rise, by the end of the century.
Note
By 2050, other minerals could be depleted if they continue to be consumed at the same rate.
The implications for marketing are many. Companies that use scarce minerals face large increases in costs, even if materials are still available.
Those engaged in research, development, and exploration can help by discovering new sources and materials.
2. Increase in Energy Costs
A non-renewable resource, such as oil, creates the most serious problem for future economic growth. Major industrial economies rely heavily on it, and until economic substitutes have been developed, it will continue to dominate world politics and the economic landscape.
Note
Hundreds of companies are already putting products on the market that use solar energy for home heating and other uses.
3. Increases in Pollution Levels
The industrial system almost always deteriorates the natural environment. Consider:
- The disposal of chemical and nuclear waste.
- The dangerous levels of mercury in the sea.
- The amount of DDT and other chemical contaminants in soil and food.
- Contamination because of bottles, plastics, and other non-biodegradable packaging.
Government And Natural Resources
The Environmental Protection Agency (EPA) was created in 1970 to deal with pollution. It establishes and enforces regulations and coordinates investigations on the causes and effects of the same.
Companies can be affected by demanding government measures and pressure groups. However, instead of opposing regulations, they will have to cooperate to solve the country's material and energy problems.
Ecology’s major challenge of finding ecological balance depends on a constant interpellation of all organisms in a given environment.
Changing the environmental conditions conducive to the life of an organism or a species can start a chain reaction that even ends its chances of life.
An organized person modifies the environment and must adapt to it through the process of change in their continuous interaction with the surrounding medium.
This interaction's main difficulty is controlling change to reach an equilibrium in the social organization and the individual's relations with his specific environment.
The environment is a set of conditions surrounding an organism, such as temperature, water, food, air, and light. In other words, everything that makes it possible for said entities to live and develop.
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