Macro Environment: The Factors Outside of the Industry

“Outline the components of any organization’s macro environment and give an example for each component of a current major operational change or industry trend”. Macro Environment: The factors outside of the industry that influence the survival of the company; these factors are not directly controllable by the organisation. (Elliot, Rundle-Thiele, Walker, p. 48) Components of the Marco Environment: There are six (6) major components of which the macro-environment is made up of:

  • Demographic
  • Economic
  • Natural
  • Technological
  • Political
  • Cultural

Demographic Forces: variables of a population which include, age, sex, level of education, employment status, income level, home style status (ownership vs. renting & location) also ethnicity. Example: An increase in the number of caravans purchased in western countries will increase due to the trend of an aging population; the caravan/motor homes industry should see growth Economic Forces: refers to forces such as level of employment, demographic changes, rate of inflation, rate of interest which in turn affects the amount both people and organisations are willing to Spend along with how they spend it. Example: Middle East War in 1973 – ‘Oil Crisis’ created economic shock waves right through the western world leading to drastically increased oil prices which lead to increase energy costs along with the cost of oil based raw material.

This crisis contributed heavily to a world economic recession Natural Forces: consist of concerns relating to the environment, green house effect, rates of energy/petroleum, lack of natural resources, and resource management. Example: The farming industry has been affected by drought. The consequence of drought is a decline in crop production as a result of nadequate and poorly distributed rainfall. Therefore with the decline of crop production, farmers are faced with harvest that is too small to feed their families and fulfil their commitment. During drought periods there is not only a direct shortfall of food production but also relative price movements of grain versus other commodities which may drastically reduce the purchasing power of groups. Technological Forces: advanced technology and capabilities such as computers, internet, medical advancements, and communication devices such as mobile phones. Example: With the internet at the finger tips of a large majority of people worldwide, via computers, now on mobile handset devices and mobile telephones newspaper sales are affected.

People are using the internet to access the daily newspapers. News Limited is researching ways to levy a subscription fee for access to view the New York Times online. Political Forces: refers to parties, pressure groups, personalities and government agencies which have a large influence on the stability of politics and economics in a country via their actions and pronouncements.Example: The Tobacco industry recently has been targeted by government and public interest groups in reference to the tax increase enforced in late April 2010. The Australian Government states ‘it will encourage about 2 to 3 per cent of smokers, or 87 000 people, to stop’. Due to this tax increase retailers’ margins will be compressed therefore the profit in turn will be less. Cultural Forces: relates to commonly held standards; what is acceptable or unacceptable, right or wrong, ethical or unethical -based upon various groups in society.

Example Starbucks in Macau noticed that Macau people do not consume as much coffee as western people. Therefore Starbucks needed to focus on Macau taste preferences and incorporate tea based and juice based beverages rather than coffee. Also Starbucks has large outdoor seating arrangements; however Macau people rather sit indoors, in order to accommodate for Macau people standards Starbucks needed to decrease the size of the outdoor seating and focus on creating an indoor seating environment in order to meet the expected standard of its customers in Macau.

References

  1. Spark, M. , 2008, Marketing Concepts – LBM100 lecture MAR110 (SPI, 2008) notes Elliott, G. , Rundle-Thiele, S. , Waller, D., 2010, Marketing, John Wiley, Milton. http://www. consumerpsychologist. com/marketing_introduction.
  2. html http://www. news. com. au/technology/rupert-murdoch-says-news-corp-will-charge-for-online-news/story-e6frfro0-1225758661415

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