MACRO AND

MICRO
ENVIRONMENT

SUBMITTED BY:
ANGELINE CAYABYAB
SUBMITTED TO:
SIR FLAGRISO
 DIAGRAM OF MACRO ENVIRONMENT

What is a ‘Macro Environment’

A macro environment is the condition that exists in
the economy as a whole, rather than in a particular
sector or region. In general, the macro environment
includes trends in gross domestic product (GDP),
inflation, employment, spending, and monetary and
fiscal policy. The macro environment is closely
linked to the general business cycle as opposed to
the performance of an individual business sector.
 DIAGRAM OF MICRO ENVIRONMENT

What is a ‘Micro Environment’

Company aspect of micro-environment refers to the internal environment

of the company. This includes all Departmentalization departments such as
management, finance, research and development, purchasing, Business
operations and accounting. Each of these departments influences
marketing decisions. For example, research and development have input as
to the features a product can perform and accounting approves the
financial side of marketing plans and budget in customer dissatisfaction.
Marketing managers must watch supply availability and other trends
dealing with suppliers to ensure that product will be delivered to customers
in the time frame required in order to maintain a strong customer
relationship.
How Micro Environment Affects Business?

Customers

Customers have the most direct microeconomic impact on a business. The simple fact is
that you can't successfully operate a for-profit company without attracting targeted
customers. Knowing your ideal customer types and developing and presenting effective
marketing campaigns are integral to building a customer base and generating revenue
streams.
Employees

Your workers produce, sell or service the goods and service that drive your business. The
availability of qualified, motivated employees for your business type is vital to economic
success. If you operate a highly technical business, for instance, you might have to pay
more in salary to attract a limited number of available, specialized workers.
Distribution Channels and Suppliers

Sourcing goods used in production or resale and distributing your inventory to

customers are important as well. Manufacturers rely on materials suppliers and resale
companies rely on manufacturers or wholesalers to transport goods. To operate
profitably, you need to get good value on products and supplies and, in turn, offer good
value to your customers with accessible solutions.
Competitors

The level of competition also impacts your economic livelihood. In theory, more
competitors means your share of dollars customers spend diminishes. However, a large
number of competitors in an industry usually signifies lots of demand for the products
or services provided. If an industry lacks competition, you might not find enough
demand to succeed in the long run.
Investors

Shareholders and investors may help fund your company at start-up or as you look to
grow. Without funds to build and expand, you likely can't operate a business. You could
look to creditors, but you have to repay loans with interest. By taking on investors, you
share the risks of operating and often gain support and expertise. You do give up some
control, though.
How Macro Environment Affects Business?

Demographics

Businesses need to be aware of changes in the general population. Is the age distribution changing? Are
household patterns changing? Major changes in ethnicity are critical to identify. Watch population shifts
to see if the populations in cities, suburbs or rural area are changing to determine if segments of the
population are leaving one area for another. The same holds true for geographic areas. Are people leaving
one region of the country for another? Past demographic trends would include the shift from cities to
suburbs in the 50s and 60s, the aging of the Baby Boomer generation currently, the growth of the
Hispanic population over the last 20 years and the growing acceptance of the gay community recently.

Economics

In a recession, people lose jobs, or worry about that happening to them. This makes consumers less
willing to spend their disposable income. However, in an economic expansion, job security makes people
more willing to spend their disposable income. If your customers use disposable income to buy your
product, knowing where you are in the economic cycle helps you plan production. Look at income
distribution to see if certain segments of the population are growing wealthier and acquiring new needs.
For example, a major reason that China is seen as an attractive market is a rapidly growing Chinese
middle class that desires an increasing range of consumer goods.

Social and Cultural

Every nation has a set of core cultural beliefs that are passed from generation to generation. Changes in
these core beliefs affect consumer purchases. Once taboo, single-parent families are now considered
mainstream and are growing, creating a whole new set of product needs. Preferences for music,
entertainment, exercise, eating habits or leisure time activities change with time, creating new needs or
lessening past needs.

Technological

The development of new technology can dramatically affect needs and wants. For example, the Internet
completely changed the way people communicate. If you walk into any electronics retailer or department
store, you will literally see hundreds of new products that were directly tied to the growth of the Internet.
That shift to the Internet resulted in new consumer needs and wants, opening the door for smart
companies to take advantage of that opportunity. Today, the pace of technological change constantly
provides opportunities for new products.