The Importance Of Macroenvironment And Competitive Environment

Planning within a business consists of many elements. Macroenvironment and competitive environment are part of these elements. They can cause a business to loss profitability and its competitive edge. It needs to have an understanding of its macroenvironment to be able to operate proficiently and effectively. This is performed by considering everything that affects the business externally (Bethel University, 2011). The competitive environment should be considered regularly because new businesses are introduced daily. Planning is the event that determines the direction in which the company will go and it includes consideration of these two environments, as well as other ideas that are needed to achieve certain goals. Ultimately, this stage is crucial for a business to be successful. There are certain things outside of an organization that can affect it either positively or negatively. This is where the macroenvironment needs to be considered so that it can cope with these external issues. Laws and the economy are part of this environment. Some of

Competitors are all looking for the same customer base (Bethel University, 2011). Sometimes it is difficult to identify the competitor. According to Kotabe and Murray (2004) , “History has shown repeatedly that in a highly competitive environment many manufacturers begin to either produce in lower-cost locations or outsource components and finished products from lower-cost producers on a contractual original equipment manufacture (OEM) basis” (p.7). Understanding the competitor, gives a manager the ability to make a plan to gain the market advantage (Bethel University, 2011). New entrants join the list of competitors within the given market. Depending on which market an organization is in, can determine how complicated it is for a new entrant to enter that market (Bethel University,