Macro Environmental Analysis: Factors Affecting Business and Marketing

SET 2B) Macro Environmental Analysis

Demographic Environment: Factors relating to population, such as size, growth rate, age distribution, religious composition, and literacy levels, and aspects like composition of workforce, household patterns, regional characteristics, population shifts, etc., need to be studied as they are all part of the demographic environment.

Economic Environment: The economic environment determines the strength and size of the market. The purchasing power in an economy depends on current income, prices, savings, circulation of money, debt, and credit availability.

Government Environment: Business is highly guided and controlled by government policies. Hence, the type of government running a country is a powerful influence on business and marketing gets affected.

Legal Environment: Firms prefer to operate in a country where there is a sound legal system such as in the US. Marketers must have a good working knowledge of the major laws protecting consumers, competition, and organizations.

Political Environment: Political pressure groups influence and limit organizations, e.g., the case of Enron in Maharashtra and KFC in Karnataka. Special interest groups and political action committees put pressure on business organizations to pay more attention to consumer rights, minority rights, and women’s rights.

Cultural Environment: The beliefs, values, and norms of a society determine how individuals and organizations relate to each other. The core beliefs of a particular society tend to be persistent, such as the American value system of work, charity, and honesty.

Technological Environment: The most important factor, which is controlling and changing the human society and even impacting the future, is technology. Technology has changed the way people communicate with the advent of the Internet and telecommunication system, and with the revolution in communications have come new ways of doing business.