Question

a. Differentiate between the micro environment and the macro environment and list the various components. b. List and describe the 7 different publics that have an impact on an organization’s ability to achieve its objectives. Discuss and use examples to illustrate.

Answer 1

Every business organization is a part of the business environment, within which it operates. No entity can function in isolation because there are many factors that closely or distantly surrounds the business, which is known as a business environment. It is broadly classified into two categories, i.e. micro environment, and macro environment. The former affects the working of a particular business only, to which they relate to, while the latter affects the functioning of all the business entities, operating in the economy.

While microenvironment has a direct impact on the business activities, the macro environment is a general business environment, which influences all business groups at large. It is important to learn the business environment, so as to understand the effect of various forces on business. Take a read of the given article to know the difference between micro environment and macro environment.

Microenvironment refers to the environment which is in 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.

Microenvironment is a collection of all the forces that are close to the firm. These forces are very particular for the said business only. They can influence the performance and day to day operations of the company, but for a short term only. Its elements include suppliers, competitors, marketing intermediaries, customers and the firm itself.

• Suppliers are the ones who provide inputs to the business like raw material, equipment and so on.
• Competitors are the rivals, which compete with the firm in the market and resources as well.
• Marketing intermediaries may include wholesalers, distributors, and retailers that make a link between the firm and the customers.
• Customers / Consumers are the ones who purchase the goods for their own consumption. They are considered as the king of business.

The general environment within the economy that influences the working, performance, decision making and strategy of all business groups at the same time is known as Macro Environment. It is dynamic in nature. Therefore it keeps on changing.

It constitutes those outside forces that are not under the control of the firm but have a powerful impact on the firm’s functioning. It consists of individuals, groups, organizations, agencies and others with which the firm deals during the course of its business.

The study of Macro Environment is known as PESTLE Analysis. PESTLE stands for the variables that exist in the environment, i.e. Population & Demographic, Economic, Socio-Cultural, Technological, Legal & Political and Environmental. These variables, consider both economic and non-economic factors like social concerns, government policies, family structure, population size, inflation, GDP aspects, income distribution, ethnic mix, political stability, taxes, and duties, etc.

Seven types of Publics are:

a. Influence the company's ability to obtain fund, eg: banks, investment house

b. Government Public- Affects the company by passing legislation or laws that uts restriction on company's action, eg: Public municipalities, government bodies

c. Media Public- This group carries news, features, opinion that may influence customers. eg:newspapers

d. Citizen Action Public- Includes environment and minority group that can question the action of the company and put them in spotlight

e. Local Public- Neighbourhood and community organisation that will question a company's impact in the local are.

f. General Public- Can greatly affect the company due to changes in their attitude.

g. Internal Public- Consists of those employed within the organisation and deal with the organisation and construction of the product.