Micro and Macro Environmental Factors in Business

This assignment explores the impact of both micro and macro environmental factors on contemporary businesses. It examines how changes in distribution channels, levels of competition, political landscapes, economic conditions, societal norms, and technological advancements shape business operations. The importance of responsible management practices to cultivate a positive brand image and ensure smooth business functioning is also discussed.

Global business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Identification of micro and macro environmental factors that have changed the nature of
business organisations working at global level ..........................................................................1
Why it is important for individuals and organisations to manage responsibly, sustainably and
behave ethically...........................................................................................................................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Global business environment can be defined as environment of all the countries where a
business carries out its operations; apart from the environment of the home country; which
affects the decision making of the company. Global business environment is very complex
because with the change in time, nature of business organisations has also changed. This
assignment will include various micro and macro environmental factors that have changed the
working of modern businesses as well as the reasons which as important in managing the
individuals and organisations responsibly, sustainably and ethically.
MAIN BODY
Few years ago businesses were carried out in a very different manner but with the change
in dynamics and modernisation, the way modern businesses carries out their operations has been
changed completely(Adekola and Sergi, 2016). These changes have occurred mainly because of
advancement in technology and to survive and glow in this competitive environment.
Identification of micro and macro environmental factors that have changed the nature of business
organisations working at global level
Micro environmental factors that have changed the nature of business organisations
working at global level are:
Distribution channel – distribution channel includes all those means or people through
which the goods or services are transferred to the end users. Since, nowadays businesses are
carrying out their operations at global level ; thus it is essential for the business firms to have a
strong distribution channel in order to run their business smoothly(Uhl and Gollenia, 2016).
Hence, modern businesses have changed the nature of carrying out its businesses at global level
by developing the distribution channel in such a way that it have an easy assess to the customers
from all over the world. For example: many business firms have come up with online distribution
channel to distribute their goods or provide services.
Level of competition – competition may be defined as the degree to which two or more
business firms compete against each other towards achievement of their objectives and use of
scarce resources(Cuervo‐Cazurra, 2011). High competition in the market means there is high
demand for their products and services and this has changed the nature of business organisations
because they have to provide quality products and services and at reasonable prices so as to beat
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its competition. Thus, the modern businesses in order to beat the competitors have to change the
nature of carrying out their business activities through adopting technological up-gradation or
achieving economies of scale.
Macro - environmental factors that have changed the nature of business organizations
operating at global level are:
Political factors – political factors consist of political stability or instability, political
rules, policies and etc. They have a major impact on the working of business organisations and
have changed the nature in which modern businesses carry out their activities. For example:
increase or decrease in tax rates on the company due to company operating at global level affects
the nature of businesses carrying out their operations(Hamilton and Webster, 2018).
Economic factors – these include inflation rate, deflation rate, interest rates, exchange
rates, etc. Since the businesses operating at global level carry out their operations in various
economies, they are affected by the economies of all the countries in which they are operating.
Hence, this has changed the nature of business organisations as now they have to take into
consideration all these factors such as exchange rate, interest rate, inflation and deflation rate
before fixing the prices of their goods or services.
Social factors – these are those factors which include lifestyle, attitude, culture,
demographics, education, etc. for example: earlier the business firms used to manufacture goods
or provide services as per the lifestyle or attitude of the people of local country but due to
globalisation business firms have to take care about the culture, attitude or lifestyle of people of
all the countries in which business carry out its business activities.
Technological factors - this is one of the most important macro-environmental factor
and include factors such as technological up-gradation, innovation in technology, etc. for
examples: earlier businesses used to carry out their operations physically at their offices or stores
but in order to achieve globalisation and to reach out the customers easily; modern businesses
have started operating on digital platform(Lasserre, 2017).
Why it is important for individuals and organisations to manage responsibly, sustainably and
behave ethically
Social – it is very important for individuals and organisations to manage responsibly,
sustainably and behave ethically towards the society or the various stakeholders of the company
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in order to build the brand image which is essential for the long term survival and growth of the
business.
Cultural – culture may be defined as social behaviours, norms, values or beliefs hold by
a particular group or society of human beings(Lindgardt and et.al., 2009). It is very important to
manage the culture efficiently and behave ethically for smooth running of the business.
Economic – it is very important to responsibly manage all the economic aspects in order
to avoid complexities in working which will make the working of the businesses very difficult. It
will further help the organisations in achieving the competitive advantage other other firms as the
company which is able to manage its economic aspects effectively would be able to beat its
competitors easily.
Environmental issues – it is very important to adopt those practices which are
sustainable or environment friendly. Managing sustainably and behaving ethically towards the
environment is not only beneficial for the company in reducing its cost but is also helpful in
smooth running of the business by avoiding unnecessary government restrictions(Shenkar, Luo
and Chi, 2014).
CONCLUSION
From the above assignment, it can be summarised that distribution channel and level of
competition are the major micro environmental factors which have changed the nature of
businesses carrying out their business operations. While on the other hand; political, economic,
social and technological factors are those macro environmental factors which had an impact on
the working of modern businesses. Further, the reasons were discussed for managing the
individuals and organisations responsibly such as for improving the brand image and smooth
running of the business.
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REFERENCES
Books and journal
Adekola, A. and Sergi, B.S., 2016. Global business management: A cross-cultural
perspective. Routledge.
Cuervo‐Cazurra, A., 2011. Global strategy and global business environment: The direct
and indirect influences of the home country on a firm's global strategy. Global Strategy
Journal. 1(3‐4). pp.382-386.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford
University Press.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher
Education.
Lindgardt, Z. and et.al., 2009. Business model innovation. When the Game Gets Tough,
Change the Game, The Boston Consulting Group, Boston, MA.
Shenkar, O., Luo, Y. and Chi, T., 2014. International business. Routledge.
Uhl, A. and Gollenia, L.A. eds., 2016. A handbook of business transformation
management methodology. Routledge.
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