Effect of Micro Environmental Factors on Business Growth

This report discusses the effect of external and internal environment on business growth, focusing on micro environmental factors such as competitors, customers, suppliers, public, marketing intermediaries, and worker unions.

Running head: ENVIRONMENT OF BUSINESS
ENVIRONMENT OF BUSINESS
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Table of Contents
Introduction to the business:......................................................................................................2
Identification and analysis of micro environmental factors:......................................................2
Challenges and solutions:...........................................................................................................4
Conclusion:................................................................................................................................5
References:.................................................................................................................................6

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Introduction to the business:
The aim of this report is to discuss the effect of external and internal environment in
the smooth growth of business in this era of competitiveness. In this Global context the
business which operate locally as well as internationally are affected by the demand of the
customers, availability of raw materials support of the suppliers skills and capabilities of the
employees and most importantly the economic support provided by the shareholders. These
determine the performance, structure, policies, growth and market share of the business. The
micro and macro environment directly connects with the strategies of business based on
which the international companies like Google can operate successfully in every part of the
world.
Identification and analysis of micro environmental factors:
The micro environment of business organizations consist of the elements which the
management of the organization can effectively control. Usually the micro environment can
not affect all companies in an industry in a similar way. This is due to the fact that the size,
capabilities, Strategies and capacities of these organizations operating in one industry are
completely different from one another. The micro environment factors include competitors,
customers, suppliers, public, marketing intermediaries and workers' union (Testa et al., 2016).
Competitors: the competitors are not the rival companies but those with which the
original business like that of Google Encounters inevitably. The most common competition
relates to the product and services which may be similar of the companies operating in a
market in case of Google the competition is much less but include, Baidu., Naver and
Yandex.
Customers it is one of the most important part of business because it is the customers
who determine what kind of product the company will offer. Now-a-days the companies first

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understand the demand of the customers in a market then strategize their product or service
lines. The marketing of the firms begins and ends with the customers and the product sales
highly depend upon the degree of consumer satisfaction.
Suppliers: suppliers can be the individuals or some business houses. They provide the
resources which the companies need for producing there outcomes. The companies now a
days while entering a market search for potential suppliers, identify and analyse their
capabilities and develop some specifications so that they can find the suppliers who will offer
the best mix of quality, reliability, warranties, credit and low cost.
Public: this is a group which has potential interest on the company’s capability for
achieving its objectives. These public groups can include the consumer protection authority,
the environmentalist, local communities and media persons (Alomari & Azzam, 2017). First
the companies manage their relationship with their customers then distributors and then
suppliers. Therefore the ultimate success of the business will be highly dependent upon their
ability to fulfil social responsibilities.
Market intermediaries: the wholesaler, retailer, distribution agencies, financial
institutions and markets service agencies are the marketing intermediaries who come for
adding the company to promote, sell and distribute the company’s goods to their ultimate
customers. This is due to the fact that the companies may not reach the targeted customers
directly the take help from these intermediaries who will promote and sell the products or
services to the ultimate consumers on behalf of the companies (Lohith et al., 2018).
Worker Union: in this Global context the employees have become the asset for the
business. Therefore the organized labors are highly secured in their position which can
collectively bargain with the companies and make the workers less vulnerable to the
exploitation (Cherkos et al., 2018). The trade unions have become Amazon component in this

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modern business scenario as they help the workers to protect their interests and improve their
working conditions.
Challenges and solutions:
In operating in the local or International market the business faces various challenges
relating to this micro environment factors. In case of the competition the business may face
tremendous pressure for sustaining in market (Gherhes et al., 2016). It may not provide
quality or price like other companies in a same market. In such case the company must go for
innovation which can grab the attention of the customers and give it a competitive edge. In
the aspects of suppliers, the company may not always get to choose the proper suppliers who
can give it all the essential materials in a low cost (Khan & Quaddus, 2015). In that case the
company may face the issues of increasing the price of their product. In such case the
company may negotiatewith their existing suppliers and mitigate such issues.
The customers as play a vital role in the growth of the business may create issues
from time to time. In this era of globalization the demands of the customers are constantly
changing therefore the companies are finding it difficult to enjoy customer satisfaction. In
order to mitigate this issue the company can involve itself in an extensive survey to
understand what exactly the customers want from them. The public sector can also create
problems for the smooth running of the business. In most of the cases the companies face
problems regarding their inability to perform CSR activities. In addition to this the
environmental factors also create difficulties for the business organizations (Maak, Pless &
Voegtlin, 2016). In order to manage this type of issues, the companies can maintain a good
relation with public and try to fulfil their demand in terms of supporting the environmental
and social factors.
The trade unions manipulate the employees of the organization and as they are the
Asset of the companies they need to be satisfied. The company for solving such issues can

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make new policies and provide all type of supports to the employees (Virglerová, Dobeš &
Vojtovič, 2016). Business intermediaries at the partners of the business hence they often
create issues when their demands and not properly fulfilled. All these stakeholders are
integral part of business hence the company needs to negotiate with them.
Conclusion:
Therefore, it can be concluded that there are different factors to manipulate the
business. These can create challenges as the business organizations have the duty to satisfy
their stakeholders along with the other people associated with their business hence need to
find solution to mitigate such situation.

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References:
Alomari, M. W., & Azzam, I. (2017). Effect of the micro and macro factors on the
performance of the listed jordanian insurance companies. International Journal of
Business and Social Science, 8(2), 66-73. Retrieved from
https://www.researchgate.net/publication/277240750_Factors_Affecting_the_Financi
al_Performance_of_Jordanian_Insurance_Companies_Listed_at_Amman_Stock_Exc
hange
Cherkos, T., Zegeye, M., Tilahun, S., & Avvari, M. (2018). Examining significant factors in
micro and small enterprises performance: case study in Amhara region,
Ethiopia. Journal of Industrial Engineering International, 14(2), 227-239. Retrieved
from https://link.springer.com/article/10.1007/s40092-017-0221-y
Gherhes, C., Williams, N., Vorley, T., & Vasconcelos, A. C. (2016). Distinguishing micro-
businesses from SMEs: a systematic review of growth constraints. Journal of Small
Business and Enterprise Development, 23(4), 939-963. Retrieved from
https://www.emeraldinsight.com/doi/abs/10.1108/JSBED-05-2016-0075
Khan, E. A., & Quaddus, M. (2015). Examining the influence of business environment on
socio-economic performance of informal microenterprises: content analysis and
partial least square approach. International Journal of Sociology and Social
Policy, 35(3/4), 273-288. Retrieved from
https://www.emeraldinsight.com/doi/abs/10.1108/IJSSP-02-2014-0016
Lohith, C. P., Srinivasan, R., Kadadevaramath, R. S., & Shrisha, S. (2018). Innovation and
strategic marketing-the key factors: a literature review on Indian micro small medium
enterprises. International Journal of Business and Systems Research, 12(1), 53-68.
Retrieved from
https://www.inderscienceonline.com/doi/abs/10.1504/IJBSR.2018.088478

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Maak, T., Pless, N. M., & Voegtlin, C. (2016). Business statesman or shareholder advocate?
CEO responsible leadership styles and the micro‐foundations of political
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Testa, F., Gusmerottia, N. M., Corsini, F., Passetti, E., & Iraldo, F. (2016). Factors affecting
environmental management by small and micro firms: The importance of
entrepreneurs’ attitudes and environmental investment. Corporate Social
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Virglerová, Z., Dobeš, K., & Vojtovič, S. (2016). The perception of the state’s influence on
its business environment in the SMEs from Czech Republic. Administratie si
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id=426884