week 5 Flashcards
MICRO environment
it refers to the environment which is direct contact with the business organization and can affect the routine activities of business straight away. It is associated with a small area in which the firm functions.
MACRO environment
Macro environment refers to the external forces within an economy. Macro environment factors like inflation, fiscal policy, monetary policy, consumer spending, GDP, and employment rates considerably affect business operations. Governments and institutions strategize policies based on these factors.
Elements of Micro Environment
suppliers
competitors
marketing
costumers
The firm itself is an aggregate of several elements like owners like shareholders or investors, employees and the board of directors.
Elements of Micro Environment
Demographics
Ecological and physical factors
Political and legal factors
Economic factor
Technological factors
Socio-cultural factors
Demographic Factor
Demographics refers to age, language, lifestyle, income distribution, cultural differences, etc. Financial literacy depends on demographics.
Ecological & Physical Factor
Business performance depends on various geographical and ecological forces—availability of natural resources, climate change, weather conditions, biological balance, pollution, etc.
Political & Legal Factors
The government imposes various regulations on businesses—employment laws, import/export laws, copyright laws, labor laws, health and safety laws, and discrimination laws.
Economic Factors
Consumer buying decisions are significantly impacted by macroeconomic factors—demand-supply, inflation, interest rates, taxes, exchange rates, and recession.
Technological Factors
Technological growth and advancement within a nation greatly influence the production and sale of goods or services. Innovation, automation, and internet facilities are some examples.
Socio-cultural Factors
A business needs to be socially responsible and culturally aware. Socio-cultural factors comprise education, population growth rate, life expectancy rate, social status, buying habits, religion, etc.
PESTLE OR PESTEL ANALYSIS
is a framework or tool used to analyses and monitor the macro-environmental factors that may have a profound impact on an organization’s performance. This tool is especially useful when starting a new business or entering a foreign market. It is often used in collaboration with other analytical business tools such as the SWOT analysis and Porter’s Five Forces to give a clear understanding of a situation and related internal and external factors.
PESTLE MEANS
Political Factors
Economic Factors
Socio-cultural Factors
Technological Factors
Legal Factors
Environment Factors
ANALYSIS
The company must analyze its environment to find attractive opportunities and avoid environmental threats.
Planning
. The company decides what it wants to do with each business unit. It involves deciding marketing strategies that will help the company attain its overall strategic objectives.
Implementation
Turns strategic plans into actions that will achieve the company’s objectives.
