Macro Environment Essay

883 Words4 Pages
Macro environment consists of external factors that affect a business and that are uncontrollable and influence business-making decisions. The macro environment consists of different factors that pose opportunities and threats to the company. There are six factors that macro environment consists of; demographic environment, economic environment, natural forces, technological forces, political forces and social & cultural forces. It’s crucial to identify, understand and analyze the factors so that the company can reach its optimum performance. It’s important for companies to study the macro environment so that they can divide the population into different target markets and plan which market segment to go into. One of the most crucial steps in forming a business is planning and a macro environmental analysis helps them to do that. Often businesses conduct a so-called PEST-analysis that helps them to understand market growth and decline, direction for possible actions and the current business position. Macro environmental analysis is the first step to a strategic analysis in business management. The purpose of macro environment analysis is to point out opportunities and threats that will impact the industry and business uncontrollably. It’s important for a business to study…show more content…
An example of a megatrend is the aging population. This means that some countries will soon have a population where there are more older people than there are young. People over 60 will outnumber the people under 15 years of age. Another megatrend is the middle class cometh, where the middle class is getting larger by quantity each year. Middle class is defined as households with a daily expenditure of 10-100$ per person at a purchasing power parity (PPP). This means that for some, higher earnings income means greater spending power and higher
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