The macro environment audit examines the broad range of environmental issues that may affect the organization. Macro environment refers to all major external factors and forces over which the marketing firm has no control. There are six major macro environmental forces to deal with political, economic, socio-cultural, technological, legal and environmental. Marketers should consider these factors to understand the threats and opportunities created by these factors, to develop strategic plans, to obtain and retain competitive advantage. The purpose of analyzing macro environment is to identify the critical issues in the external environment that may affect the organization. The macro environmental forces originate from outside of an organization and generally cannot be altered by actions of the organization or even the number of organizations. A firm should adjust itself to the external environment rather than influencing it. Therefore, understanding external/ macro environment is extremely important irrespective of nature and size of the business.
The political environment simply refers to the way a country is being run in terms of politics. The political environment includes all laws, government agencies and lobbying groups that influence or restrict individuals or organizations. All marketing firm may not give same degree of importance to track political trends, however marketing strategies are firmly influenced by development in the political environment. Elected political parties may have negative attitude towards a firm or its industry are more likely to create or enforce regulations that are unfavorable for the firm.
LEGAL ENVIRONMENT
This provides a framework on laws, regulations and government policies relating to legal or regulatory set up. Various regulations and law influences marketing plans. The purpose of these laws and regulations drives many marketers to abide and accept these laws as a predetermined aspect of market planning. It is not right to say legal environment limits for business operations sometimes these laws also create new opportunities for business. Example: Mandatory Helmets has increased sale of helmets, and this has led to creation of plenty of new companies.
Economic environment refers to the sum of all economic factors, policies and nature of an economy, trade cycles, economic resources, level of income, distribution of income and wealth, etc., which acts as a major determinant of the economic environment within which the business enterprise works. Economic environment has always been regarded as a broader perspective and keeps on changing from time to time on account of changes in lifestyle, government policies and regulations.
Demography is the study of population and demographic environment refers to trends in country’s population composition and its growth, levels of income, household patterns and regional characteristics and other demographic factors of the market in which an organization operates. Study of demographic environment is highly useful especially in the short run, as populations changes over time in terms of size and structure according to which organization have to also respond. The key demographic factors that need a closer examination includes size and growth rate of population in cities, regions, age distribution and ethnic mix, educational levels and household patterns. Based on these factors marketers can develop products and service accordingly.
The first thing that strikes our mind when we talk about technology is the high-tech gadgets and products such as smart phones, broadband internet, wireless technology, GPS systems, or interactive television. In this century where technological advancements are on fast track it is important to understand the basic customer needs in a new perspective. Recognizing new technology’s that can service consumer’s needs more completely or economically is the critical part of technological environment analysis. Therefore, technological environment means the advancements in the field of technology which influences business by new inventions of productions and other innovations in techniques to perform the business operations and product development.
Natural environment refers to combination of natural resources which is used by business as inputs and affects their marketing activities. This includes use of raw materials from nature for producing goods. All agricultural inputs are also used in manufacturing, not only this; machineries used in business are also made from metals of nature. A business unit needs energy in the form of gas or diesel oil or electricity for all its activities which come from nature. However, in the recent years unlimited use of natural resources has resulted in natural environment changes. In many parts of the world air and water pollution have reached alarming levels. There is a great concern about global warming, floods, famines, tsunami and earthquake. Therefore, marketers need to be aware of the threats and opportunities associated with the natural environment and it is the duty of business to protect this natural environment. Before starting marketing operations an organization has to evaluate the following aspects of natural environment.
Socio-cultural environment refers to a set of beliefs, customs, practices, norms and behavior that exists within a society which describes relationship to themselves and others. Socio-cultural factors intensely influence the way people live and help determine what, where how and when customers buy a firm’s products. Socio-cultural values and beliefs influence and change the behavior of the consumer and it becomes difficult for the marketers to predict these changes.
