Business Environment Analysis Report: Micro and Macro Factors

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Context of Business
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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Conclusion.......................................................................................................................................7
References........................................................................................................................................8
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Introduction
The understanding of the business environment is an important factor for a business unit to run
successfully in any place. The factors of environment provide an influence on all the business
aspects like the location of the business, the distribution system, the price of the products or the
policies of the business. Thus understanding of the economical aspect, the political framework,
the aspects of socio-culture, the technological aspect and the legal aspects is important for an
organization to flourish their business. The business ethics also plays a vital role in the business
environment which provides a relationship between the society and the business activities.
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Discussion
The elements that are controllable within an organization are categorized under the micro
environment and all the different companies are not affected by the micro environment as the
capacity, size, capability and strategies are different for different organizations (Hamilton and
Webster, 2018). The general factors in the micro environment are:
Competitors: There are several basic things in competitive environment that needs to be taken
care by every firm as there are no companies which enjoys the monopoly in their business. There
are several forms of competition faced by the company and the most significant competition is
the differentiated product of another company with same service and quality (Testa et al., 2016).
For instance, the color TV from Philips has a quite competitive competition in the television
market with other competitors like Onida, Videocon and others. It is known as brand competition
and is found in almost every market that has durable products.
Customers: According to Prajogo (2016), “There is only one valid definition of business
purpose, that is to create a customer.” The profitable ratio is earned by a company by providing
quality service to the customers. In today’s world the marketing department is more oriented to
profitable sale and hence it is more customers concentric. A company can gain success by
finding accurate customers for their desired products. For instance, the cosmetic department of
Avon faces a tough competition in the outside world as there are different competitors which
provide the same product in a cheaper rate as compared to it. Hence the profitable ratio has been
constant as their target customers are more often going forward for other brands.
Suppliers: The suppliers provide the labor and the required material that is needed by the
company on the basis of their manufacturing program. The organization is given the bargaining
power of the purchase policy in order to obtain such services (Khan and Quaddus, 2015). The
suppliers can be business houses or individuals. For instance, many of the suppliers face the
competition of providing raw materials to the organization as there are several other suppliers
which provide the raw materials in a less profitable ratio.
Public: According to Döckel and Ligthelm, (2015), “A public is any group that has an actual or
potential interest in or impact on a company’s stability to achieve its objectives.”The groups of
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consumer protection, the environmentalists, the local people and the media persons are well
known instances of public. For instance, the first transgender model of L’Oreal Company has to
step down from the commercials because of its racial compliment to a media person in public.
Impacts Macro environmental factors
The macro environmental factors are largely responsible for the organization to flourish globally
as the political, economical, social, technological, legal and environmental factors changes
rapidly while moving globally. These factors change the strategies of the business firms as they
have to adopt according to the policies of the country.
Political Environment
The governmental policies, the attitude towards business community and the political systems
are responsible in changing the policies of the business firms. The business firms are also
influenced by the stability of the certain government as it enhances the confidence, strength and
interest of various investors. For instance, the coca cola company had to settle the operations in
UK in the late eighties because of the affluence of the political parties in regard to the labor
disputes.
Economical Environment
The success and the survival of each business enterprise are fully dependent on the economic
environment. The economic condition of the nation plays a vital role in the formation of the
business over the country. For instance, the economical condition of UK is quite stable than any
other states and hence the formation of the startup company named Orion Technologies was
easy.
Social environment
There are several factors like traditions, beliefs, customs, literacy, poverty, life expectancy rate
that comprises the social environment. The proper functioning of the business firms depend on
the structure of the society and the values that are being cherished by the society (Grublješič and
Jaklič, 2015). For instance, there is a high rate of demand for the clothes, flowers etc in the
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Christmas season and because of high literacy rate in UK there is a demand of good quality
products.
Technological Environment
The techniques used for production of services are categorized in the technological environment.
The design of the product varies according to the technological environment of several countries.
For instance, in UK there are electrical appliances of 110 volts whereas in several other countries
the electrical appliances are made up of 220 volts.
Ethical issues in Business environment
The past companies concentrated mostly on the ethical issues of administrative rules and
regulation in business organization. But nowadays the concept of ethical issues is changed and
the top management is more focused on the implementation of the company’s rules and
regulation (Crane and Matten, 2016). There are several ethical issues faced by an organization
which have affected the business growth of the company.
Accounting: Conduction of unethical practices of accounting is a major problem of some
companies that are being traded publicly (Trevino and Nelson, 2016). For instance, the company
named Enron faced a scandal in 2001 where Arthur Andersen signed the incorrect financial
statements despite of knowing the fact. There was o loss of $25 billion for Enron’s shareholders.
The Federal Government responded to the occasion by developing an act named Sarbanes-Oxley
Act in the year 2002.
Social Media: The social media has been involved as a factor in the employee code of conduct
due to its wide spread popularity. For instance, an employee of Yelp was fired from the company
due to the writing of an article in the social media about the dreadful working condition of the
company. The ambiguity needs to be avoided by creating a policy of the social media act.
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Conclusion
In the end, it may be concluded that the business environment is the main criterion for success of
a firm as the understanding of the environment creates a lot of impact in the business structure.
The micro environment helps the organization to assess the internal business environment in
creating innovative products and services for the customers. The macro environment delegates
the business on the path of developing the structure of the business and the ethical conditions are
necessary for developing a strong relation between the employees and the organization.
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References
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Döckel, J.A. and Ligthelm, A.A., 2015. Factors responsible for the growth of small
business. South African Journal of Economic and Management Sciences, 8(1), pp.54-62.
Grublješič, T. and Jaklič, J., 2015. Business intelligence acceptance: The prominence of
organizational factors. Information Systems Management, 32(4), pp.299-315.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
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.
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.
Testa, F., Gusmerottia, N.M., Corsini, F., Passetti, E. and Iraldo, F., 2016. Factors affecting
environmental management by small and micro firms: The importance of entrepreneurs’
attitudes and environmental investment. Corporate Social Responsibility and Environmental
Management, 23(6), pp.373-385.
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do
it right. John Wiley & Sons.
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