Micro Environment Analysis Report for Business Operations and Strategy

This report provides an in-depth analysis of the micro environment within a business context. It examines key elements such as competitors, customers, suppliers, distributors, and partners. The report highlights the significance of understanding these factors in formulating effective business strate...Read More

Running head: MICRO ENVIRONMENT
Micro Environment
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Micro Environmental Factors
Micro environmental factors of any organization is comprised of the elements that are
under the control of the management. These factors do not possess the capacity to influence the
companies in any industry equally, due to the differing size, capability, strategies and capacity.
The most important micro environmental factors of any business are its suppliers, distributors,
competitors, customers, and partners (Belniak, 2015).
Competitors: Competitive environment contains many fundamental elements that is
needed to be given importance by every organization. In no way does any company enjoy
monopoly in the market. There are many forms of competition that a company faces in the
business world. The most common competition that the product of any company encounters is
from the different differentiated products of other companies. Kotler (2012) has the opinion that
taking the viewpoint of the buyer is the right way for any company for grasping the complete
range of its competition.
Customers: As mentioned by Drucker, Hesselbein and Kuhl (2015), it is considered that
there exists just a single definition of business purpose - creating a customer. It is the aim of all
business enterprises to earn profit by means of serving and fulfilling their customer demands.
Nowadays, the marketing aspects of any firm starts and even ends with the customers. Today, if
a business wishes to be successful then they need to find suitable customers for their products.
Suppliers: In any organization, availing of the necessary material or labor force can be
carried out through their manufacturing program. This kind of a purchase policy can be adopted
by them to acquire bargaining power for the organization. Porter and Tanner (2012) says the

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association between a business and its suppliers embodies a power equation among them. This
equation is founded on the industry situation and the degree to which they are interdependent.
Distributors: Firms often face issues in getting their products across to the end customers.
They face challenges like stocking products in stores. In such scenarios, distributors help these
firms in fixing the final price and presenting to the customers. The firms also get the opportunity
to acquire competitive advantage by making use of altering distribution channels. Distributors
have full control over the way products are displayed, priced and promoted in the stores
(Belniak, 2015).
Partners: As organizations require investment for growing, they might decide upon
raising capital with the help of stock floating in the market. The introduction of partners adds
new pressures for organizations as they also look for returns on their investments. Partners put
pressure on firms for increasing the profits, which ultimately affects the organizational strategy.
Relationships with partners need careful attention and management fast short term rises in profit
can negatively impact the long term success of the business (Kotler, 2012).
Therefore, it could be understood from this discussion that micro environmental factors
are those factors close to a business and directly influence the business operations and success.
Prior to deciding corporate strategies, businesses must first completely analyze their micro
environment.

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References
Belniak, M. (2015). Factors stimulating internationalisation of firms: An attempted holistic
synthesis. Entrepreneurial Business and Economics Review, 3(2), 125.
Drucker, P. F., Hesselbein, F., & Kuhl, J. S. (2015). Peter Drucker's Five Most Important
Questions: Enduring Wisdom for Today's Leaders. John Wiley & Sons.
Kotler, P. (2012). Kotler on marketing. Simon and Schuster.
Porter, L., & Tanner, S. (Eds.). (2012). Assessing business excellence. Routledge.