6.3 The Macro Environment
The macro-environment contains elements that can impact a business but are generally beyond its control. These elements are characteristics of the world at large and are factors that all businesses must contend with, regardless of their industry or the type of business they are. A firm must confront, adapt to, take advantage of, and defend itself against what is happening in the world to succeed. To make gathering and interpreting information about the external environment easier, strategic analysts have defined several general categories of activities and groups that managers should examine and understand:
- Demographic factors include population, education, gender, ethnicity, income, age, and family formation and structure.
- Economic factors include the amount of money people spend and the financial environment, such as loans, mortgages, interest rates, etc.
- Political and Legal factors include government laws and regulations, building codes, municipal, provincial and federal laws, labour climate, taxes, health care, and war.
- Cultural & Social factors include things such as drinking and driving, racism, smoking, senior affluence, wine for good health, and healthy food and diets.
- Natural factors include global warming, urban sprawl, weather, drought, water, flooding, wildfires, and energy.
- Technological factors include computers, smartphones, apps, and advances in all types of technology, which are changing consumer needs and in turn, business needs
- Competitive factors include the answers to questions such as who your competitors are, what new competition may enter the market, and what other forms of competition need consideration.
Key Takeaways
- Factors that affect the state of the macro environment come from a variety of sources.
- Factors from multiple categories can combine in unforeseen ways to affect businesses in ways that may not be immediately apparent.
- Consider the ways in which the influence of these factors can combine to create environments that require navigation in unique ways to ensure success.
“8.3 A Firm’s External Macro Environment: PESTEL” from Principles of Management by Rice University, OpenStax is licensed under a Creative Commons Attribution 4.0 International license unless otherwise noted.
