What are the different aspects of external environment of business? Explain how do these influence business?
Answers
Types of External Environments
The micro environment consists of the factors that directly impact the operation of a company.
The macro environment consists of general factors that a business typically has no control over. The success of the company depends on its ability to adapt.
Each type of environment has factors, or influences, to take into account. We will review factors for both micro and macro environments, as well as how they relate to our gas station example.
The Micro Environment
There are five factors that affect the micro environment: suppliers, customers, marketing intermediaries, financiers, and public perceptions.
Suppliers: At your gas station, what happens if your suppliers don't show up with food, beverages, gas and other products? You'll have nothing to sell, which will have a direct impact on your operation.
Customers: Customers are a requirement to run a business. If no one is buying, your gas station will have to close its doors.
Marketing Intermediaries: Middlemen have a direct impact on your business operation. They could be your distributors, wholesalers, and other related people.
Financiers: Typically, business owners take out a loan to get started, and the growth of the business depends upon their ability to obtain additional loans. Let's say you've decided to add a large kitchen to your gas station and offer fresh foods to your customers. This is a big investment. If the bank tells you no, it may directly impact the way you want your business to operate in the future.
Public Perceptions: Does your gas station have a good reputation with the general public? You may have to work on this as you revitalize the business.
The Macro Environment
There are six factors that affect the macro environment, and these include economic, sociocultural, political, legal, technical, and environmental considerations.
Economic: Economic factors include supply and demand, exchange and interest rates, taxes, and government spending. The way your company reacts to economic changes is key, and this is where creativity comes into play.
Sociocultural: This includes how consumers behave. For example, are consumers choosing to improve their health by walking or biking to work, which could impact the sale of gas?
Political: Changes in government policies and spending can affect your business. For instance, does your gas station accept electronic benefits transfer (EBT)? Are there government projects in your area that will increase traffic? If so, the projects might have a positive effect