Business Environment Analysis: Macro and Micro Factors Impact

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Context of Business

Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
LO1..................................................................................................................................................4
“What is business environment”.....................................................................................................4
“Macro Environment and its impact on the business environment.”.............................................4
“Micro Environment and its impact on the business environment.”..............................................5
LO2..................................................................................................................................................7
“Ethical Issues in Business”...........................................................................................................7
“Responsibility of individuals and organizations”.........................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

Introduction
Business Environment is considered to be the collection of factors that may affect the
organization and its profit, growth and sustainability (Wang and Calvano, 2015). The factors that
can influence the business and its environment are the workforce of the organization, rules
imposed by government, trend of market and so on. Business environment consist of micro and
macro environment. Micro environment includes factors like buyers, suppliers, competition,
market and others. On the other hand macro environment consist of political, legal, economical
and other external entities that has a deep impact on the business and business environment. In
this study a detailed discussion about business environment and the factors that can affect the
business environment is done.
Discussion
“Business environment”
Business environment is changing dynamically with the changing world. In this modern
technological world the outlook of a successful organisation has changed drastically (Prajogo,
2016). The major factors that can influence the business environment of an enterprise are the
macro and micro environmental factors.
“Macro Environment and its impact on the business environment”
Macro environmental factors are the external factors or situations that threaten to hamper or
affect the functioning of the market. Different markets have different macro factors that have
various impacts on a firm. Macro environments are made of following factors:
Demography: The physical factors that can influence the business environment fall under this
category. The companies need to manufacture goods or render their services keeping in mind the
target audience that they are to serve, which changes the ways in which the business is executed
or product is manufactured (Bah and Fang, 2015). For example, when serving the elderly people,
quality comes first while serving the youth technological up-gradation and appearance of the
product plays a upper hand.

Economy: The economical scenario of a market or a region is important for an organisation to
grow. The statistics like GDP, PCI and the standard of living of consumers can help the
organisation to get the idea of their future market strategies and their approach to enhance the
profit margin. Countries in Asia and Africa are emerging economies and the companies need to
operate as per the demands (Georgescu and Popescul, 2015).
Socio-Culture: Social structure and the culture of the people of a region need to be appreciated
by a enterprise. It is important to know the communities and their beliefs so that a strong bond
between the consumers and organisation can be established. In order to meet the expectations of
different cultures, the companies require improving their working process.
Political: The policies imposed by the government restrict the operation of a company. It can
create pressure on the organisation as it is important to work under such policies. The political
forces are dynamic in this modern world and can be a barrier for the business and its smooth
business environment (Khan and Quaddus, 2015). Countries in Africa and Latin America have a
more dynamic government bodies and changes are more random when compared to rest of the
world, so it is necessary to consider the changes that has occurred, before planning for business
operations.
Technological: In this modern world this factor has been very influential for the organisation to
work properly. This can be opportunity for the companies to increase the sales and profit of their
organisation. The advancement in technology and internet can be a great advantage for firms to
expand their market and get new customers. The change in technology can help in reaching the
young consumers more if compared to elderly consumers.
“Micro Environment and its impact on the business environment”
Micro environment is more interlinked with companies as it influences the operating
environment of organisations. The factors that fall under the micro environment are as follows:
Consumers: Existence of any organisation is due to the fact of meeting the demands of the
customers. The demands of this modern world are dynamic nature and changes regularly. Also
globalisation has helped the companies to reach different cultural communities and operate
according to the needs in order to satisfy and reach more new consumers.

Competitors: It is present in every aspect of a market. Companies, in order to be ahead of its
competitors, needs to modify their functions and have a unique approach to the market. The
services or products offered must be better and economical for the market.
Employees: Another important factor is the workforce of the company. They need to keep their
employees engaged and motivated so that the companies can meet their desired goals (Georgescu
and Popescul, 2015). It is also vital to have the suitable work force in order to maintain the
supply chain. Employees need to be provided with appropriate training and development in order
to use them as an advantage.
Shareholders: The investors that need to be included in the decision making for an organisation
are shareholder of the company. They demand to return the investment made by them in the
shortest possible time. This can impact the business environment of an enterprise.
Suppliers: They can affect the supply chain and profit margin of an organisation. The relation
between suppliers and organisation needs to be strong so that it does not have a negative impact
on the business environment of an organisation.
“Ethical Issues in Business”
Organizations need to develop their operations to be ethical and responsible towards the society.
But there are various ethical issues that can arise in business environment. The ethical issues that
can occur in the businesses are numerous and exert profound impact on the ways that the
businesses are conducted:
Fundamental Issues: In the modern world the consumers are aware of the products that they are
using. They demand the organisations to be ethical with their operation or services. If consumers
realize that any organization is not using the ethical codes in order to operate may lead to the
degradation of the image of a company (Pearson, 2017).
Respect of the employees: The people working in a company need to be respected and
appreciated in their respective jobs (Wallace and Sheldon, 2015). They also need to feel safe and
engaged in their work. This can help firms to improve the productivity of their employees.

Decision making problems: Higher level employees must consider the input of the lower level
employees so that the issues related to decision making in a company does not occur. This help
as enterprise to work as a unit.
“Responsibility of individuals and organizations”
Managers and leaders need to be aware that the business operations are ethical. Leaders are the
ones who are held responsible for any ethical operations. They can take the legal policies and the
expectations of the consumers into consideration. Managers need to make sure that the
employees are well respected and rewarded for their work. The leaders of the organization must
consider the inputs of the lower level employees so that they can function as a unit.
Conclusion
In conclusion it can be said that the macro and micro environment can have deep impact on the
operations of any organisation. In order to achieve globalisation the companies need to consider
the political and economical scenarios of various countries. The internal factors such as buyers
and suppliers can also affect the profit margin and supply chain organisation. The companies
also require being ethical in their operations to serve the customers to their best. Business
environment is a major aspect for any type of organisation. The factors that business
environment is made of must be acted on by the companies properly. Business environment
helps the organization to understand the opportunities available and to improve the operations by
using the resources appropriately.

References
Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics, 114, pp.159-171.
Georgescu, M. and Popescul, D., 2015. Social Media–the new paradigm of collaboration and
communication for business environment. Procedia Economics and Finance, 20, pp.277-282.
Khan, E.A. and 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), pp.273-288.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the
idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics, 171, pp.241-
249.
Wallace, M. and Sheldon, N., 2015. Business research ethics: Participant observer
perspectives. Journal of Business Ethics, 128(2), pp.267-277.
Wang, L.C. and Calvano, L., 2015. Is business ethics education effective? An analysis of gender,
personal ethical perspectives, and moral judgment. Journal of Business Ethics, 126(4), pp.591-
602.