Today we will be talking about the Macro
Environment, specifically Politics, Economics,
Technology and Socio-Cultural influences on
business’s
INTRODUCTION
THE MACRO ENVIRONMENT
• The Macro Environment is influenced by many factors and are not
limited to the fore mentioned topics.
• The Environment itself refers to an organisations ability to grow
and develop, whilst under the influence of outside, uncontrollable
forces.
• This means most companies must be able to adapt to constantly
changing situations, whether it be new legislation or advances in
technology.
EXAMPLE OF THE MACRO
ENVIRONMENT
Economic
situation in
Ireland
The graph shows how
the economic recession
in Ireland has affected
national income and
expenditure.
HOW THIS EFFECTS BUSINESS’S
• With less expendable income, people are more inclined to save
rather than spend.
• Marketers now faced with the difficult challenge of encouraging
consumers to buy their product, must rebuild consumer
confidence
• As according to
(http://www.investopedia.com/articles/economics/08/recessionaffecting-business.asp) an economic recession will cut down
business expenditure meaning less employment and cuts on
sectors including advertising
• Smaller companies get hit the hardest by negative changes in the
economic environment with a much higher rate of bankruptcy than
that of larger firms
HOW COMPANIES ADAPT TO
ECONOMIC CHANGES
• Most companies main goal is to make profit. Ireland is a
lucrative environment in terms of its very low corporation
tax of just 12.5% on trade income, relatively low when
compared to that of Frances 40%. Companies such as
Google are taking advantage of this.
• Companies such as Samsung have in fact been growing,
this year alone according to http://www.ibtimes.com/
Samsung has outgrown Apple by bringing in profits of $5.2
billion in the second quarter of 2013 compared to Apples
$4.6 billion. As stated in http://www.ibtimes.com/ this is due
to ‘strong volumes, high wholesale prices and tight cost
controls’ this is an example of how one company has
adjusted to Economic Environmental changes.
SOCIO – CULTURAL EFFECTS
• socio – cultural effect on the macro environment deal with
things such population, age, gender, race, and value system of
a country.
• It is important that when a company sets up in a new country
that they respect the countries culture, as it could affect their
sales or worse break a law set by the country.
EXAMPLES – POPULATION
DEMOGRAPHY & AGE
• Levi’s
• Ageing population in America – improvements healthcare & low
birth rate
• Previously popular with younger generation
• Smaller target audience
• Developed Dockers label – strong with adult market
• Maintained sales
RELIGION
• Muslim countries
• Strict laws prohibiting alcohol
• Qatar and Oman have laws which allow tourists to drink & black
market exists
• This proves that there is potential for a market for alcohol, but
due to socio cultural factors present in these countries the
alcohol companies are not allowed take advantage of this with
the mass population
ZIMBABWE
•
Before 1980, one of the richest countries in Africa
•
Production in Zimbabwe was based on farming and mining
ROBERT MUGABE
•
In 1980, Zimbabwe became independent country
•
Robert Mugabe was elected for president and started his reforms
NATIONALIZATION
•
R. Mugabe's decision of forced expropriation of most commercial farms devastated
agriculture sector
•
But still he determines the law, which calls for foreign-owned businesses to sell a 51
per cent stake to a local partner
TECHNOLOGY
•
Technology improves marketing for businesses.
•
It also helps reach new customers in new places which is hugely beneficial.
THE NEGATIVE AFFECT!
•
Technology decreases business morale. For example, reduces the personal aspect of
businesses and business life.