Macro Environment

Question 1

Components and features of the macro environment

Answer 1

• Also known as external environment
• It consists of the physical, the economic, the social, cultural and demographic environment, the technological, the legal and political, the institutional and International / global environment

Question 2

(Macro)The relationship between the environments

Answer 2

The different environments in the macro environment are all closely related meaning a change in one environment will lead to changes in the other environments

Question 3

Physical/natural environment

Answer 3

• Consist of physical location, natural resources and infrastructure
• Entrepreneurs need natural resources and infrastructure for their Businesses
• The scarcity of natural resources has an impact on the production costs and results in higher prices of goods and services
• Infrastructure includes communication, transport, energy and service systems
• Businesses need to use resources sparingly and prevent unnecessary wastage

Question 4

Economic environment

Answer 4

• Includes all financial factors that affect business

- It largely affects the cost of inputs (raw materials and labour) and prices of goods and services

Question 5

Social, cultural and demographic environment

Answer 5

• Social, cultural and demographic environments effect business
• The influence consumer behavior and the work force
• Marketing should promote desirable cultural values
• Many businesses have corporate social responsibility programs that support society

Question 6

Technological environment

Answer 6

• Includes all changes and development in products, methods, systems, markets and resources
• Communication, innovation and product development, production, marketing and advertising, skills development and access to knowledge and administration have all been affected by technological developments
• Made business practice more efficient, reliable and more cost and time effective

Question 7

International/global environment

Answer 7

• Businesses has changed much in recent years due to globalization and International communication
• The International environment provides opportunities and threats for businesses
• It affects businesses through communication, trade, policy and regulations, regulations, prices and exchange rates, Travel and Transport and global trends

Question 8

Institutional environment

Answer 8

• This includes national government departments, local government departments and municipalities
• The government acts as a consumer, an employer, an employer, a supplier and a regulator
• The government affects business practice
• It regulates economic trends

Question 9

Legal and political environment

Answer 9

• The legal environment has many laws and regulations in place to control business operations
• Influences investor confidence, consumer confidence and business processes and policy