BUSINESS ENVIRONMENTS
MACRO ENVIRONMENT
• Forms part of the external environment
• The business has no control over what happens in the external environment
- They must design strategies to adapt to situations in the external environment.
• Competitive Advantage: Describes how the business has the edge in the market or over competitors.
An Environmental Scan
• Done to identify factors that may have an impact on the business
- The business will then adjust existing plans or develop new plans to deal with these factors.
• Only OPPORTUNITIES and THREATS are considered in when scanning the macro environment.
- PESTLE Analysis is good to use when identifying O & T in the macro environment.
SWOT Analysis (O & T)
Eg. If the exchange rate deteriorates (macro environment) and raw material are imported, this could threaten
the profitability of the business.
PE2STLE Analysis
• Each letter represents a factor from the macro environment that could potentially the business
- This could also be used as an opportunity to create the strengthen the competitive advantage.
1. Political Factors:
- Local political situation of the country in which the business operates.
- Political situation of the country/countries that the business may operate in.
- Political ties with other countries ?
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, 2. Economic Factors
- Economic growth
- Inflation rates: The continuous and significant increase in the general price level of goods and
services.
- Interest rates: The rate at which people or businesses borrow money from the bank or the
percentage ROI when saving money.
- High interest rates make it difficult for businesses to borrow money or to expand
- Exchange rates: The strength of the local currency vs. the currencies of other countries.
- High unemployment rates = people having less money = less profit to be made
- Taxes
3. Ethical factors
- The principles or values that will determine if decisions and actions are acceptable.
- What is the difference between ethical and legal?
- Fair trade: respect & transparency in business dealings
- Corporate social responsibility (CSR): responsibility towards shareholders to make a profit vs. the
responsibility towards giving back to the community.
4. Social/Socio-economic Factors
- The impact that social trends have on the economy & the role players in the economy.
- The business has to adapt to changes in the social trends.
- Businesses must consider:
- The average age population, life expectancy and health consciousness
- Number of single parents providing for their family
- HIV/Aids infections & diseases such as TB
- Levels of education
- Unemployment rates
- Personal safety & crime
5. Technological Factors
- The equipment that the businesses uses to buy (or make), advertise or sell their products.
- Automation of different processes
- Advances in online money transfers
- Online shopping
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MACRO ENVIRONMENT
• Forms part of the external environment
• The business has no control over what happens in the external environment
- They must design strategies to adapt to situations in the external environment.
• Competitive Advantage: Describes how the business has the edge in the market or over competitors.
An Environmental Scan
• Done to identify factors that may have an impact on the business
- The business will then adjust existing plans or develop new plans to deal with these factors.
• Only OPPORTUNITIES and THREATS are considered in when scanning the macro environment.
- PESTLE Analysis is good to use when identifying O & T in the macro environment.
SWOT Analysis (O & T)
Eg. If the exchange rate deteriorates (macro environment) and raw material are imported, this could threaten
the profitability of the business.
PE2STLE Analysis
• Each letter represents a factor from the macro environment that could potentially the business
- This could also be used as an opportunity to create the strengthen the competitive advantage.
1. Political Factors:
- Local political situation of the country in which the business operates.
- Political situation of the country/countries that the business may operate in.
- Political ties with other countries ?
Page 1 of 10
, 2. Economic Factors
- Economic growth
- Inflation rates: The continuous and significant increase in the general price level of goods and
services.
- Interest rates: The rate at which people or businesses borrow money from the bank or the
percentage ROI when saving money.
- High interest rates make it difficult for businesses to borrow money or to expand
- Exchange rates: The strength of the local currency vs. the currencies of other countries.
- High unemployment rates = people having less money = less profit to be made
- Taxes
3. Ethical factors
- The principles or values that will determine if decisions and actions are acceptable.
- What is the difference between ethical and legal?
- Fair trade: respect & transparency in business dealings
- Corporate social responsibility (CSR): responsibility towards shareholders to make a profit vs. the
responsibility towards giving back to the community.
4. Social/Socio-economic Factors
- The impact that social trends have on the economy & the role players in the economy.
- The business has to adapt to changes in the social trends.
- Businesses must consider:
- The average age population, life expectancy and health consciousness
- Number of single parents providing for their family
- HIV/Aids infections & diseases such as TB
- Levels of education
- Unemployment rates
- Personal safety & crime
5. Technological Factors
- The equipment that the businesses uses to buy (or make), advertise or sell their products.
- Automation of different processes
- Advances in online money transfers
- Online shopping
Page 2 of 10
