Topic 4 Macro Environment Flashcards
The meaning of the macro environment
The macro environment, also known as the external environment, refers to the overall economic conditions and external forces that affect all businesses, presenting both opportunities and threats, and is constantly changing; the business has no control over this environment.
Components of the macro
environment
PESTLE
(6)
PESTLE stands for the following:
- Political environment (which includes the institutional environment)
- Economic environment
- Social (which includes the cultural and demographic environment)
- Technological environment
- Legal environment
- Environmental (which includes the physical/natural environment or the international/global environment)
Macro Environment Component 1 PESTLE
**Political environment **
(including the institutional environment)
**Political environment: **the government and its institutions, and the public and private stakeholders that influence businesses.
The institutional environment refers to the three levels of government in South Africa, that puts in place laws and rules that regulate how businesses operate.
All influences that a government has on businesses could be classified under this environment.
Macro Environment Component 1 PESTLE
**Reasons why Political environment poses a challenge to businesses **
Macro Environment Component 2 PESTLE
**Economic environment **
Economic environment: refers to all the external economic factors that influence buying habits of consumers and businesses.
Macro Environment Component 2 PESTLE
**Reasons why Economic environment poses a challenge to businesses **
Macro Environment Component 3 PESTLE
**Social environment **
(including cultural and demographic
environment)
■** Social environment:** refers to the immediate physical and social setting in which people live and the society in which businesses operate.
■** Cultural environment:** the cultural environment affecting businesses includes religion, customs, and traditions, which infl uence actions and decisions.
■** Demographic environment:** refers to the socio-economic characteristics of a population, which businesses use to identify the product preferences
and purchasing behaviours of customers.
Macro Environment Component 3 PESTLE
**Reasons why Social environment poses a challenge to businesses **
Macro Environment Component 4 PESTLE
Technological environment**
■ Technological environment: refers to development in the field of technology with new and innovative knowledge, new inventions, and other improvements in techniques that affect businesses.
Changes in technology affect how businesses operate.
The technological environment shows the fastest changes in the macro-environment.
Such new technologies have started the Fourth Industrial Revolution (4IR).
Macro Environment Component 4 PESTLE
**Reasons why Technological environment poses a challenge to businesses **
Macro Environment Component 5 PESTLE
Legal environment
■ Legal environment: the laws passed by the government in which businesses operate.
Macro Environment Component 5 PESTLE
**Reasons why Legal environment poses a challenge to businesses **
Macro Environment Component 6 PESTLE
**Environmental
(including physical/natural and international/global environment) **
Environmental refers to the physical/natural and the international/ global environment.
**The physical/natural environment **
The physical environment refers to natural and
man-made variables that surround businesses. It also
refers to the availability of natural resources and
sustainability of mineral resources.
It includes the physical location, space, and any other
thing that physically impacts businesses.
**The international/global environment **
The global environment refers to the uncontrollable local and international interactions that infl uence how businesses operate. International businesses also increase competition in domestic markets and introduce new opportunities to foreign markets. The global competition encourages businesses to become more innovative and effi cient in their use of resources.
Macro Environment Component 6 PESTLE
**Reasons why Environmental environment poses a challenge to businesses **
