Essay on Micro and Macro Environmental Factors in Global Business

This essay examines the micro and macro environmental factors that significantly impact businesses operating in the global arena. It delves into the external factors, such as demographic shifts, environmental concerns, socio-cultural values, technological advancements, political and legal fra...Read More

INDIVIDUAL ESSAY

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Micro & Macro environmental factors that effects business in the global environment......1
P2 Need for individuals & organisations to manage responsibly, ethically & sustainably in
relation to social, cultural, economic & environmental issues....................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
An environment with in which every business operates is known as business
environment. This essay elaborate all the micro & macro factors which affects working &
operations of each company in the global environment. Further, this essay gives reason for
individuals & organizations to manage all the social, cultural, environmental & economic issues
responsibly, sustainably & ethically.
P1 Micro & Macro environmental factors that effects business in the global environment
Business environment is classified into two environments such as Micro environment &
macro environment. Macro environment include all the external factors which indirectly affects
workings & operations of all the business and this factors are not controllable by the company.
On the other hand, Micro environmental factor include all the internal factors that directly
influence business of a company and a company can control its internal factors(Micro and Macro
Environment. 2015).
Following factors affecting operation of companies the global environment-
Population & Demographic Factors- Changes in demographic factors such as age, region, life
style, culture & education affects business of each company because this factors changes from
country to country & person to person. Every company has to manufacture its products
according to expectation & needs of people of different areas, culture & region. If company does
not provide its products according to the needs & expectation of people of that area than it can
not grow in the global business environment(Hillary, 2017).
Environmental Factors- Environmental factors such as global warming, earthquake, climate
changes & topographical elements directly effects production of the companies globally. Also
demand of customers for environmental friendly products is increasing day by day which in turn
affects growth & productivity of each firm operating in global environment(Hamilton and
Webster, 2018).
Socio-cultural Factors- Beliefs, Values & attitude of the individuals of the society affects all the
business. Thus, Arcadia Group's business also affected because company includes clothing &
accessories in its portfolio and each culture have their own believes and their own traditions to
follow so, the company has to manufacture different products for different cultures & society.
Technological Factors- Technology is the most important factor which affects operations of all
the business in the global environment, every business has to change its operations according to
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changes in technology and adapt the new technology. Individuals started buying their product
through online platforms and choose they get attracted by advertisements of social media.
Companies like Tesco, Arcadia Group & Mac Donald's also start offering its products through
online websites and promote its products through social media.
Political & Legal Factors- It is compulsory for all the firms to follow all the legal rules,
regulations & provisions given by government and these policies & regulations are changes
according to change in economic conditions and government. All the UK based companies also
has to follow all the legal & political regulation given by government of UK and change its
operations according to changes made in the government policies these affects workings &
strategies of the company in the global market.
Economic Factors- Economic condition of economy of a country affects most to the business
operations of firm in the global environment. Changes in economic factors such as inflation, Tax
rate, Interest rate & GDP affects performance & profits of all the companies. If economy is at
boom than income goes up that leads to increase purchasing power of individuals which leads to
demand for the product of the company(Menendez-Baceta and et.al., 2015).
Micro environmental Factors are discussed below-
Customers- Customers are the assets of each company and their main focus is to satisfy needs &
expectations of firms customers. Customers expectation effects profitability & image of each
company in the global environment. Company has to change its strategies & offering according
to changing customer behavior and feedback.
Competitors- Every company is affected by its competitors and it affects customer base &
profitability of firm. Company has to keep an eye on its competitors and make strategies so that
its product becomes rare, valuable & affordable in the global market.
Shareholders- Shareholders are the owners of the companies So firm has to satisfy them by
giving them return on their investment. If the company does not make profits than shareholders
get dissatisfied and which in turn affects market share of the company.
Suppliers- Suppliers are the most important factor that impacts on the production of the
company and which in turn reduces profitability because they provide raw materials for
production. So, every company has to build a strong relationship with its suppliers(Wan, Shen
and Choi, 2017).
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P2 Need for individuals & organisations to manage responsibly, ethically & sustainably in
relation to social, cultural, economic & environmental issues
Individuals & Organizations has to manage all the issues related to social, cultural,
economic & environmental factors because without that an organisation cannot sustain in the
global environment. It is the responsibility of Employees and Organizations to manage all the
issues ethically because if a firm provide its products according to need & expectation of society
& culture than it will increase customer base of the company. Individuals also need to manage
economic issues sustainbly because it helps in increasing profits, market share & provide
sustainable growth for the company. Individuals & organisations are responsible for the
environment protection so that they need to manage all the environmental issues and to offer
environment friendly product to attract customers(Kennerley and Neely, 2015).
CONCLUSION
This Essay outlined impact of macro & micro environmental factors on the business
operating in the global environment. Further this report outlined reasons for managing various
issues related to social, cultural, economic, & environmental factors.
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REFERENCES
Books and Journals
Kennerley, M. and Neely, A., 2015. Measuring performance in a changing business
environment. International Journal of Operations & Production Management. 23(2).
pp.213-229.
Wan, C., Shen, G.Q. and Choi, S., 2017. A review on political factors influencing public support
for urban environmental policy. Environmental Science & Policy. 75. pp.70-80.
Menendez-Baceta, G. and et.al., 2015. The importance of cultural factors in the distribution of
medicinal plant knowledge: a case study in four Basque regions. Journal of
ethnopharmacology. 161. pp.116-127.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Online
Micro and Macro Environment, 2015. [Online]. Available
through:<https://keydifferences.com/difference-between-micro-internal-
and-macro-external-environment.html>
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