Macro Environment

The macro environment consists of the societal forces that affect all the sectors in the company’s macro environment namely, the demographic, economic, natural, technological, political and cultural forces. These environment forces are beyond the control of a firm, its success will depend to a very large extend on its adaptability to the environment.

Socio-cultural Environment: The buying and consumption habits of the people, their language, beliefs and values, customs and traditions, tastes and preferences, education etc are the constituents of Socio-economic environment.

For a business to be successful, its strategies should be the one that is appropriate in the Socio-cultural environment. The marketing characteristics of the market e.g. Nestle, a Swiss multinational company brews more than forty varieties of instant coffees as per different national tastes.

Natural Environment: Difference in geographical conditions between markets may sometimes call for changes in the marketing mix, geographical and ecological factors also influence the location of certain industries, climate and weather conditions affect the location of certain industries like the cotton textile industry. Topographical factors may affect the demand pattern. For example, in hilly areas with a difficult terrain, jeeps may be in greater demand than cars.

Demographical Environment: Demographic factors like the size, age composition, sex composition etc of the population, family size, educational levels, language, religion etc are all factors which are relevant to business.

The occupational and spatial mobility of population have implications for business if labour is easily mobile between different occupations and regions, its supply will be relatively smooth and this will affect wage rate.

Technological Environment: Technological developments may increase the demand for some existing products. For example, voltage stabilizers help increase the sale of electrical appliances in market characterized by frequent voltage fluctuations in power supply. However, the introduction of TVs, refrigerators etc. with build-in-voltage stabilizers adversely affects the demand for voltage stabilizers.

Political Environment: Political and government has close relationship with the economic system and economics policy. Certain changes in government policies such as the industrial policy, traffic policy, fiscal policy etc. may have profocused impact on business. In may countries with a view to protecting consumer business. In many countries with a view to protecting consumer interests, regulations have become stronger. Regulations to protect the purity of the environment and preserve the ecological balance have assumed great importance in many counties.