Business Functions Of The Macro Environment

business functions. The internal environment is known as the micro environment and the other two external environments include market and macro environment.

The Macro Environment

• The business has no control over the events happening in this environment but all events must be considered in order to implement necessary strategies to adapt to situations.

• Various tools such as Porter’s Five Forces Model or PE2STLE can be used to determine how to eliminate threats and thus capitalize on opportunities to achieve a competitive edge.

• Main factors that must be considered when analyzing the environment include:

1. Political

2. Economic

3. Ethical

4. Social

5. Technological

6. Legal

7. Environment

• Each factor affects the business on a various

• The business has semi-control to no control over the factors of the Market environment

• The business can thus use its Marketing component to maximize control by standing out in the industry and capitalizing the target market in determining a unique selling point, which will thus increase control over the brand and brand message.

• The environment is based on selling of good/ products

• Tools such as Environmental scan, SWOT-analysis and Porter’s Five Forces Model can be used to analyze and evaluate the environment.

• Using Porter’s Five Forces Model, the following aspects are investigated:

1. The threat of new entrant

2. Level of rivalry

3. Availability of substitute products

4. Power of buyer

5. Power of supplier

• These factors help eliminate threats and capitalize opportunities and thus as a result the business gains a competitive advantage over competitors and maximizes it market share.

• Furthermore, the business can thus implement effective strategies that will allow the business to grow and offer products/goods that will satisfy the high demand from the

• Various tool such can be used to evaluate and investigate the micro environment and these include:

1. An environmental scan

2. SWOT-analysis (S and W)

3. Resource –based analysis

4. Value-chain analysis

• The tools help improve how the business functions and as a result the business has full control over the components and hence can easily implement new strategies which will allow the business to grow and establish a unique selling point.

Marketing component

• Marking refers to all t eh ongoing activities which a business undertakes to reach out to its target market and the methods the business uses to engage with the target market, with the aim to convince that target market that the business’s product/service is of great value and hence also influencing the target market to purchase the product/service of the business. The business can also achieve this by establishing a unique selling