Business Environment Analysis: Micro, Macro Factors and Sustainability

This report provides a comprehensive analysis of the business environment, focusing on both micro and macro factors. It delves into the significance of suppliers, customers, and competitors within the micro-environment, and examines the impact of political, legal, economic, social, technological, and environmental factors in the macro-environment. The report further emphasizes the importance of sustainable, responsible, and ethical management practices for the benefit of social, economic, and environmental aspects of business. It explores how ethical behavior fosters customer satisfaction, builds brand image, and contributes to sound financial positions. Additionally, it highlights the role of resource optimization, waste reduction, and pollution control in environmental protection. The report concludes by underscoring the interconnectedness of these factors and their collective impact on business growth and development.

Context of Business

Table of Contents
INTRODUCTION...........................................................................................................................3
Task 1 ..............................................................................................................................................3
a) Micro and Macro Environmental factors of business-............................................................3
Task 2...............................................................................................................................................5
b) Importance for individuals and organization to manage sustainably, responsibly and
behave ethically for the benefits of social, economical and environmental factors of business.
.....................................................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................6

INTRODUCTION
Business environment comprises all those elements that have direct or indirect impact on
working of business and its activities. These elements are classified into Internal factors and
External factors. Internal factors consists of company's organizational structure, Human resource,
Financial assets and other strengths and weaknesses of company. External factors can be further
classified as Micro and Macro environmental factors(Dibrell and et.al., 2015).
They are described below-
Task 1
a) Micro and Macro Environmental factors of business-
Micro factors consists of the factors that have direct impact on Business activities. They
are-
 Suppliers- Every business needs raw materials and resources for the production.
Suppliers are the person that supply these raw materials and inputs to the business. Thus
there is a direct relation of business with suppliers as delay or shortage in supply of inputs
can lead to low inputs being produced and also the high prices being charged by these
suppliers can increase the cost of production for the company. Hence, every business
needs to keep contacts with several suppliers to overcome such problems.

 Customers- Trading of goods is directly dependent on customers as they are the ones
who consumes the goods produced by a firm. Change in demand, taste and preference of
customers may directly affect the company's profitability and market value. Thus every
business needs to create more customer base and satisfy them fully.
 Competitors- These are the persons competing in the market for their business. Rise in
the number of competitors may further lead to decline in sale of goods and will reduce
the market share of company. Also, this will create shifting of customers due to
availability of many product substitutes and reduce the customer base of the company.
Thus business must function after considering the competitors strategy in market and
implementing its own tactics to deal them (Asia and Hetherington, 2017).
Macro factors consists of those factors that have indirect impact on business activities.
They are some economic and non economic factors as described below-
 Political and Legal factors- This factors include government rules and regulations,
taxation policies, various laws such as labour laws, consumer protection laws, changing
policies of government and all the activities of government that affects the working of
business. Various changes and instability among these factors may affect the business
activities.
 Economic factors- These are the factors that affect the financial stability and various
economic elements of business. They include inflation rates, currency exchange rates,
return on investment and all those activities that affects the profits of the company.
 Social Factors- These factors are related to interests, habits, taste and preferences of
people, their lifestyle which affect the demand for products to be sold by the business
firms in markets. Change in these components will affect then functioning of business
activities in that particular market.
 Technological Factors- These factors include various modern and traditional techniques
for performing the functions of business. More advancement of technology will serve as

greater output to business and use of traditional techniques will lead to less productivity.
Thus technology creates more impact over the growth of an organization.
 Environmental factors- Environmental factors consists of availability of raw materials,
various environmental protection acts, company's pollution and carbon emission rates etc.
These factors also impact the business activities as the business can function with
fulfilment of conditions by these factors.
Task 2
b) Importance for individuals and organization to manage sustainably, responsibly and behave
ethically for the benefits of social, economical and environmental factors of business.
Business needs to be ethical in doing right things according to the law and standards of
the government. This will benefit them and all the members of society as well as customers.
Managing resources sustainably means optimum utilization of resources so that they will be
available in future use. The further needs in relation to the factors are as follows-
Social and cultural factors- Society is the important component of business as it is dependent
on society and culture of particular market or area. Business ethical behaviour will satisfy
customers and create a faith in them about the company. This will further lead to create goodwill
and bran image in the eyes of society. Business posses some responsibilities such as employment
generation, donations to NGOs, medical facilities to employees , educational facilities in rural
areas and other activities such as organising cultural programs, designing products according to
consumer's interests(Hamilton and Webster, 2018).
Economic factors- Ethical business activities will establish sound financial position of business.
It will include timely tax payments and return filing, payment of debts and creditors,
shareholder's payments etc. This will make new investors get attracted and invest in business and
thus create a good credit facility for then firm. Also, the company will be able to perform
efficiently in all economic stages and instability.
Environmental factors- All the resources which serves as raw materials inputs plays an
important role in organization production process. These inputs turns out into processed outputs
of the firms and are father sold in market with exchange of monetary value. So its important for
an organization to make optimum utilisation of these resources and avoid wastages so that these

resources can be utilized in same quantity in future. Also, the contribution towards environment
and nature includes creating less pollutants and reducing carbon emission. Company can adopt
various recycling methods so as to solve the problem of scarcity of resources. All these ethical
practices will contribute to protection of environment and its components.
CONCLUSION
From the above observation and study, it is noted that Business consists of several factors
through which it is affected and also its dependency on these factors. It is also noted that internal
factors serves as strengths and weaknesses for an organization whereas external factors turn out
to be opportunities and threats to business at global level. The study comprises of the need and
importance of business ethics, sustainable and responsible management in relation to Social and
cultural, economical and environmental factors and the benefits attained by these factors,
resulting in growth and development of business.
REFERENCES
Books and Journal
Dibrell, C and et.al., 2015. The impact of external and internal entrainment on firm
innovativeness: A test of moderation. Journal of Business Research, 68(1).pp.19-26.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford
University Press.
Asia, S. and Hetherington, D., 2017. Business Environment Reform Fa.