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MACRO ENVIRONMENT
Sadhana.M MANOHAR SAI KIRAN
5/4/12

Introduction..
The conditions that exist in the economy as a

whole, rather than in a particular sector or region.

In general, the macro environment will include

trends in gross domestic product (GDP), inflation, employment, spending, and monetary and fiscal policy.
The macro environment is closely linked to the 5/4/12

Cont..
Macro environment is further classified as following:

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TECHNOLOGICAL FACTORS
New technologies create new products and
new processes. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances.
Online shopping, bar coding and computer

aided design are all improvements to the way we do business as a result of better technology.

Technology can reduce costs, improve quality

5/4/12 and lead to innovation. These developments

SOCIAL FACTORS
Changes in social trends can impact on the

demand for a firm's products and the availability and willingness of individuals to work.

This has increased the costs for firms who are

committed to pension payments for their employees because their staff are living longer.

It also means some firms such as Asia have 5/4/12

Cont..
The ageing population also has impact on

demand: for example, demand for sheltered accommodation and medicines has increased whereas demand for toys is falling.

The fact that thesocial environment

encompasses such a large number of different overlapping topics means that there is a similarly large number of different data sets relevant to its measurement and understanding 5/4/12

POLITICAL FACTORS
These refer to government policy such as the

degree of intervention in the economy.

What goods and services does a government

want to provide? To what extent does it believe in subsidising firms?

Political decisions can impact on many vital

areas for business such as the education of the workforce, the health of the nation5/4/12 the and

ECONOMIC FACTORS
Economic factors which have their affect on the

working of the business is known as economic environment. It includes system, policies and nature of an economy, trade cycles, economic resources, level of income, distribution of income and wealth etc.

As you will see throughout the "Foundations of

Economics" book economic change can have a major impact on a firm's behaviour
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Cont....
For example: - higher interest rates may deter investment because it costs more to borrow - a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency - inflation may provoke higher wage demands from employees and raise costs 5/4/12

ENVIRONMENTAL FACTORS

Environmental factors include the weather and

climate change. Changes in temperature can impact on many industries including farming, tourism and insurance
With major climate changes occurring due to

global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider.
The growing desire to protect the environment

is having an impact on many industries such as 5/4/12 the travel and transportation industries and the

LEGAL FACTORS
These are related to the legal environment

in which firms operate. In recent years in the UK there have been many significant legal changes that have affected firms' behaviour.

The introduction of age discrimination and

disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are 5/4/12

How the factors differ...

FACTORS LOCAL NATIONAL GLOBAL

POLITICAL

Provision of services by local council Local income Local population growth

ECONOMIC SOCIAL

UK government policy on World trade agreements subsidies e.g. further expansion of the EU UK interest rates Overseas economic growth Demographic change (e.g. ageing population) Migration flows

TECHNOLOGICAL

Improvements in local UK wide technology e.g. International technological technologies e.g. availability UK online services breakthroughs e.g. internet of Digital TV Local waste issues Local licences/planning permission UK weather UK law Global climate change International agreements on human rights or environmental policy

ENVIRONMENTAL LEGAL

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CONCLUSION..
The macro environment consists of anything

and everything from the world outside of a business, which could have an effect on it.

Being aware of these factors and being ready

to adapt and change with them is crucial for a business to stay relevant over a prolonged period of time.
examining trends in the wider (macro)

environment it is possible to identify product and market opportunities. The need for sustainable construction presents many 5/4/12 opportunities for Corus to add value, and

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