business

Macroenvironment of the company: what it is and what factors constitute it

Let’s see what the company’s macroenvironment is and why it must be taken into account in business.

Companies are not isolated entities from the world, but rather they are immersed in a system full of very different variables.

Therefore, it is important to take into account the particularities of the environment in which a company is operating, as it will be essential to be able to determine which are the most efficient operations in each case. We are going to analyze this fact through the concept of the company’s macroenvironment.

What is the company’s macroenvironment?

When we speak of the company’s macroenvironment, we are referring to the set of all the factors that make up the environment of the same and that in some way is connected with its processes, directly or indirectly. Therefore, this grouping of elements will contain some that benefit the company and others that hinder its operation.

And it is that within the macroenvironment of the company we are going to find factors of all kinds, such as those of a political nature, social ones, those referring to the population with which the company operates, those referring to the technologies used, of course, the aforementioned to the economic context, and more. We will discuss all of them in more detail later.

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The common characteristic of all these elements is that they are alien to the company itself in the sense that its conditions are given and cannot be modified by it. On the contrary, what you must do is adapt, take advantage of those beneficial factors, and adopt policies that allow you to cushion or even avoid the effects of those potentially harmful.

We, therefore, observe the delicate relationship that exists between the company’s macroenvironment and its own operation and viability. Therefore, it is essential that managers know in depth their business environment and thus can benefit from it or avoid its possible dangers, as far as possible, designing strategies for this purpose in the corresponding departments.

Parts of the company’s macroenvironment

We have already pointed out that the company’s macroenvironment is made up of very different types of elements, and for each one of them, the company will have to establish the appropriate procedures that allow it to make the most of the situation or reduce the risk as much as possible. Possible, depending on whether the factor is beneficial or unfavorable.

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Next, we will break down the main types in which all the elements that make up the company environment can be grouped, or what is the same, the company’s macro environment.

1. Demographics

One of the first considerations that must be made even before creating a business is to analyze everything related to the population to which the product or service offered is going to be directed. That is, we must know in depth the demographic characteristics of the group of potential consumers.

Therefore, the viability of a company will depend on a correct interpretation of the correct identification of the people’s demands in a certain place. In this sense, the company must analyze which is the appropriate population segment on which it should focus and if the demographic characteristics of a region are appropriate to said prediction.

Therefore, the first factor to take into account regarding the company’s macroenvironment will be demographic. Some examples are the different population groups that we can find in a city, on its periphery, in a rural area, on the coast, in one or another autonomous community, or any other condition that may alter the population’s distribution.

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If the product marketed by the company is intended for people of a very specific age or characteristics, the logical thing is that all efforts are aimed at bringing this product closer to the areas where individuals in that particular circle are most abundant.

2. Technology

Continuing with the second of the company’s macroenvironment factors, we now find everything related to technology and possible innovations that may occur in this area. In this sense, the company must be constantly informed of these changes in order to adapt to them and benefit whenever possible.

The launch of a new device or of a new program can suppose a competitive advantage for the company that is faster in implementing said improvement, being able to get to increase its market share, to the detriment of other companies that have not been so fast to the Time to improve your procedures by making use of new technological opportunities.

Some of the contributions of technology may lead to slight improvements. Still, others may involve the same question of viability if they change the paradigm of companies’ ways of proceeding in a given sector. In this case, it is not only a matter of being quick to assume the change but of doing so so as not to seriously compromise the competitive capacity of the business due to the procedures being totally obsolete.

An extreme case and therefore very evident may be the one that led to the generalization of the use of the Internet in all areas, including business. In that case, companies that took a little longer to adapt, or did not adapt, and lost the advantages of something as basic as sending emails instantly, could even disappear in front of their competitors.

3. Society

Another group of factors that occupy an important position within the company’s macroenvironment is social. In contrast to the demographic characteristics we saw earlier, social factors are more changeable and fickle. A company can take advantage of a certain society’s characteristics in its favor, but it can also try to influence to modify these characteristics.

Obviously, being able to achieve such a powerful effect is only available to renowned brands that have a powerful position in the market and have a large share of consumers with a high degree of loyalty.

Today, social networks are an indispensable tool for any company, both to establish a presence at a social level and to interact directly with consumers and to be able to listen to them and know what they think and what they need. Therefore, they are the perfect way to discover the potential of the company’s macroenvironment’s social factors and to be able to use them in its favor.

The networks favor that everything happens and is discussed in a fleeting way. For this reason, it is essential that those responsible for managing the profiles of the company in question are quick and astute to know what movements or themes may be a way to advertise products, increase reputation, or generate content that can become viral among potential consumers.

4. Economy

The fourth group of factors of the company’s macro environment refers to the economy. It is obvious that the economic situation of the environment in which a certain corporation is located will have a direct influence on its performance. Situations such as a general crisis or even a recession can be absolutely harmful to a company.

In these cases, companies must take measures that allow them to overcome the difficult moment, taking advantage of their resources in the most efficient way possible. Likewise, if the economic context is favorable and the region or country experiences growth, it may also have an impact on the policies of the companies, which will be able to make more investments, knowing that the situation allows it since the risks are lower.

5. Politics

Political factors would close the list that makes up the company’s macroenvironment. Although many companies operate in a free market system, the truth is that there are many laws and regulations that they must comply with, so these will be essential conditions when making business decisions, in one sense or another.

In addition, these policies do not have to be fixed since the different administrations constantly legislate. Therefore, every organization must pay attention to legislative changes that occur in the regional, national, and even international context in order to anticipate the possible introduction of new laws that may affect the company.

Political factors are closely linked to the economic ones that we saw in the previous point. Therefore, in the face of a certain economic situation, it is very likely that the day’s government decides to adopt certain policies to take advantage of or mitigate the effects caused. That is why this is a group of vitally relevant factors when we talk about the company’s macroenvironment.

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Notes

    • Novoa, PAH, Macías, HDV (2016). Demographic change and consumption. The importance of the macro environment in marketing strategies. Youth in Science.
    • Van Tuyckom, C. (2011). Macro-environmental factors associated with leisure-time physical activity: a cross-national analysis of EU countries. Scandinavian journal of public health.
    • Wibowo, A., Alfen, HW (2014). Identifying macro-environmental critical success factors and key areas for improvement to promote public-private partnerships in infrastructure. Engineering, Construction, and Architectural Management.
    • Yánez, JFT, Pazmiño, JF (2015). Consideration of the external and internal factors or forces to be taken into account for a company’s situational analysis. Publishing Magazine.

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