Analysis of Macro and Micro Environmental Factors in Global Business

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ASSESSMENT 1
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Table of Contents
Introduction......................................................................................................................................3
Discussing the macro and micro environmental factors changed the modern business in the
global environment..........................................................................................................................3
Reasons providing the importance behind the managing of sustainably and behave ethically in
the cultural, social, environmental and economic issue..................................................................5
Conclusion.......................................................................................................................................6
Reference list...................................................................................................................................7
Appendices......................................................................................................................................8
Appendix 1...................................................................................................................................8
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Introduction
In modern days different advancements and availability of scientific-technological support are
playing a huge role in the enormous change in businesses. Ethics in business is one of the main
subjects required in the whole global business environment. Not only ethics but micro and macro
factors are also needed to be studied. Different organizations and individuals can be responsible,
sustainable and be ethical to social, cultural, economic and environmental issues. A business
environment means the aspects of the surroundings and circumstances of the business unit that
affect its activities and decides its effectiveness. The micro environment consists of competitors,
suppliers, and customers whereas the macro environment means which directly influences the
whole business. The aim of the study is to understand the macro and micro environmental factors
for developing a business strategy.
Discussing the macro and micro environmental factors changed the modern business in the
global environment
Micro Environmental Factors
Competitors
Competitors in businesses play very important roles and business needs analyzation of its global
competitors’ strategies for developing its counter strategies and competes in a better way in the
international market. Competitors tried to grab market share by developing effectiveness, low
pricing by forming new products or developing new ones.
Laborers
Laborers play a major role in the production of quality goods to compete internationally. In
addition to this, many lockouts and strikes the reputation of any international company goes
down and the number of customers around the world decreases massively (Bowie et al. 2016).
Thus, good quality laborers can simply help for managing the business internationally with their
training.
Regulating Agencies
Regulating agencies that implement the rules and laws related to businesses hampers the global
environment of business. Regulating agencies ensures if the business is secured with the laws of
the state. Any company with global business must be secured and certified with international
business authorization.
Suppliers
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Suppliers are responsible for business demands and a delay by the supplier would result in the
loss of the business and lead to losing so many customers from all around the world (Dyllick and
Muff, 2016). Moreover, suppliers hamper a lot in the global environment by simply providing
good quality products.
Investors and Stakeholders
Investors and stakeholders monitor each activity of the business to make sure it works well in a
global perspective. For a global business, it needs its investors to carefully monitor the activities
and influence its decisions for gaining profit out of their investments.
Figure 1: Micro Environmental Factors
(Source: Dyllick and Muff, 2016)
Macro Environmental Factors
Political Environment
The political environment of a country in international business affects firstly on its overall
economic growth. The affected economic growth then affects business performances.
Government actions affect the whole operations of any kind of global business.
Natural Environment
Natural environment includes climatic conditions, soil condition, weather condition, and other
natural phenomenons. Environment means all external forces which have a very important effect
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on business in the modern global business market (Akhtar et al. 2018). A business needs to know
about the natural environment very well for correctly utilizing the surrounding natural resources.
Forests, rivers, mines, ocean serve as the basis of the production function of the business.
International Environment
The international environment includes export and import of commodities, various international
policies, and special exchanges between countries. It is very important for any international
import and export business to study the international environment to grow in the market.
Socio-Cultural Environment
Social-Cultural Environment includes social caste and class system, religious beliefs, linguistic
base, racial diversity. A business needs to be well versed with the socio-cultural environment for
deciding the preferences of the people and creating opportunities for threats for the business
(Akhtar et al. 2018). The social values and culture of an environment play a huge role in the
functioning of any global company. Hence, the changes in the socio-cultural environment
proportionally effect on the company.
Demographic Environment
Demographic Environment consists of the population of the country, literacy rate, birth, and
death rate, the standard of living and age classes. Demographic environmentmainly stands for a
group of demographic factors such as ethnicity or gender. Organisations recognize target markets
based on some specific products by using the demographic environment. Using data such as age,
gender, family status, race a company can compute ideal customers groups. Once a company has
this data the company can come up with strategies for reaching each population (Petrenko et al.
2016). Moreover, the disadvantage in the demographic environment is that in spite of using exact
data there is no guarantee what the company assumes actually will come to pass. Much of the
demographic data is based on the assumptions of the marketers. So a company needs to know its
demographic environment very well for tackling and meeting the demands and adjust it. (Refer
to appendix 1)
Reasons providing the importance behind the managing of sustainably and behave
ethically in the cultural, social, environmental and economic issue
Sustainability may be explained as completing the present generation need without any
compromisation of the future generation’s ability for meeting own needs. As per the real
sustainable environment, the ecosystem maintains population, biodiversity and entire
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functionality in respect of an extended period of time (Grayson and Hodges, 2017). Hence, the
managing of sustainably can be helpful for an international business to gain a good brand image.
According to environmental sustainability sustainability of economics means forming value of
decisions. The projects and decisions are needed to be made with keeping in mind the long term
benefits of economic sustainability. For the business world when fruitful business process are
overlapped with the environmental and social sustainability there may still be a positive outcome
for greater good of humanity (Flammer, 2015). Economic sustainability consists of some
important parts like positive financial support, and research and development along with
education programs. Social sustainability mainly is related to the thought of a project or decision
which promotes the betterment of society.
Conclusion
From the above study, it can be concluded that both the macro and micro environmental factors
hamper directly to the business in the global environment. Other than that different factors like
micro factors and macro factors are also playing big roles for changing the modern business in
the global environment. It can also conclude that sustainable development is one of the most
important parts of global businesses. The values of different sustainability and its, directly and
indirectly, effects on the business should be kept in mind by the marketers. All the requirements
for starting a global marketing business and in which way the business is influenced by the
various facts is included.
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Reference list
Akhtar, P., Khan, Z., Frynas, J.G., Tse, Y.K. and Rao‐Nicholson, R., 2018. Essential micro‐
foundations for contemporary business operations: Top management tangible competencies,
relationship‐based business networks and environmental sustainability. British Journal of
Management, 29(1), pp.43-62. Available at:
https://onlinelibrary.wiley.com/doi/pdf/10.1111/1467-8551.12233 [Accessed on: 5 March, 2019]
Bowie, D., Buttle, F., Brookes, M. and Mariussen, A., 2016. Hospitality marketing. Abingdon:
Routledge. Available at:
https://images.template.net/wp-content/uploads/2015/10/01204854/Free-Hotel-Marketing-Plan-
Template.pdf [Accessed on: 2 March, 2019]
Dyllick, T. and Muff, K., 2016. Clarifying the meaning of sustainable business: Introducing a
typology from business-as-usual to true business sustainability. Organization &
Environment, 29(2), pp.156-174. Available at:
https://www.bsl-lausanne.ch/wp-content/uploads/2015/04/Dyllick-Muff-Clarifying-Publ-
Online.full_.pdf [Accessed on: 1 March, 2019]
Flammer, C., 2015. Does corporate social responsibility lead to superior financial performance?
A regression discontinuity approach. Management Science, 61(11), pp.2549-2568. Available at:
https://pdfs.semanticscholar.org/25a9/425e8a633d527dc9125fc6995db413492268.pdf [Accessed
on: 28 February, 2019]
Grayson, D. and Hodges, A., 2017. Corporate social opportunity!: Seven steps to make
corporate social responsibility work for your business. Abingdon: Routledge. Available at:
https://www.researchgate.net/profile/Arjen_Van_Witteloostuijn/publication/
46683993_Nations_and_Firms_in_the_Global_Economy_an_introduction_into_international_ec
onomics_and_business/links/00b4952ca901531f95000000.pdf#page=114 [Accessed on: 4
March, 2019]
Petrenko, O.V., Aime, F., Ridge, J. and Hill, A., 2016. Corporate social responsibility or CEO
narcissism? CSR motivations and organizational performance. Strategic Management
Journal, 37(2), pp.262-279. Available at:
https://www.researchgate.net/profile/Aaron_Hill2/publication/268528664_Corporate_Social_Res
ponsibility_or_CEO_Narcissism_CSR_motivations_and_organizational_performance/links/
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5ae71b6da6fdcc5ca03c16b7/Corporate-Social-Responsibility-or-CEO-Narcissism-CSR-
motivations-and-organizational-performance.pdf [Accessed on: 20 February, 2019]
Appendices
Appendix 1
(Source: Akhtar et al. 2018)
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