Macro and micro environment

Categories: Taxation

An entrepreneur can identify opportunities and threats after scanning and assessing the environment as the environment can influence business decision-making.The entrepreneur needs to plan and implement certain strategies in order to gain competitive advantage in the industry .Ventures environment has the external environment that has a great influence in the long term decision making process of a business .It can be studied by observing the exchanges that occur between the external environment and the business ,and the business’s resources ,both deeply related to the theory of organisation .

In general,this theory explains that a business organization come by input in the form of raw material,capital,labour ,and technology from its external environment,produces output(products)from the input,and sells the output back to the external environment .The external environment be made up of everything outside an organization s boundaries that might affect it .It represents oppurtunities or treats and is basically an uncontrollable factor .

The external enviroment has two division that is macro and micro environment.

Get quality help now
checked Verified writer

Proficient in: Taxation

star star star star 4.7 (348)

“ Amazing as always, gave her a week to finish a big assignment and came through way ahead of time. ”

avatar avatar avatar
+84 relevant experts are online
Hire writer

In this assignment we will be focusing in macro environment.This macro environment represents the components of the external environment which indirectly influence business activities ,such as politics and legislation ,economy ,socio-culture,and technology.The acronym PEST is used to describe these main elements of the external business environment which not only have indirect impact on businesses,but will also affect the long-term desicions of the managers of any organization.A PEST analysis is used to understand the market growth or decline,and business positioning and potential by identifying the external factors affecting an organization.

Get to Know The Price Estimate For Your Paper
Number of pages
Email Invalid email

By clicking “Check Writers’ Offers”, you agree to our terms of service and privacy policy. We’ll occasionally send you promo and account related email

"You must agree to out terms of services and privacy policy"
Write my paper

You won’t be charged yet!

.In conducting the analysis,each component of the macro environment needs to be carefully assessed to ensure that the organization’s performance is aligned positively with the changes that are affecting the overall business environment.The following describes the four components in detail and how each component is considered when making strategic decision.These factors include the polictics and legislation,social conditions,technology changes and economy.

The political -legal environment segement of the macroenvironmnet is the arena in which different interest groups compete for attention and resources .This is the environment where an entrepreneur exercises his political power .To a great extent,usually the entrepreneur has to take the given political and legislation elements of the new ventures .He has to obey and adhere to the policy ,legislation ,and regulations where the business is operating .There are many political and legislation diffrences between one country and another.Example of such legislation specifically aimed at business operations includ the Business Registration Act 1956(Amendment 1978),Procedures of Business Registration 1957 and the Companies Act 1965.All rules and regulations of business laid out by authorities must be adhered to by an entrepreneur .For instance,The Malaysian goverment has banned the commercial sale of fireworks and firecrackers ,and entrepreneurs are expected to adhere to this ruling.

The economic environment plays a vital role in the success or failure of a new venture.This environment refers to relevant conditions that exist in the economic system in which a company operates .When the economy is growing, for example, unemployment rates are low, and income levels rise. Inflation and interest rates are other areas that change according to economic activity. Through the policies it sets, such as taxes and interest rate levels, a government attempts to stimulate or curtail the level of economic activity. In addition, the forces of supply and demand determine how prices and quantities of goods and services behave in a free market. .An entrepreneur needs to analyze this environment at the global ,national and local levels where his business operates

The socio cultural environment be made up with two highly related aspects which are demographics and cultural or social trends of the society.There are business oppurtunities that exist in a society s popular culture ,for example,business oppurtunities for consumer and resistant durable goods ,retailing and services ,leisure and entertainment ,and housing and construction .Demographics changes happens when there is a change in the population ,ethnic groups ,and population structure according to age ,gender,geographical location ,and distribution of income .These elements are the contributing factors to consumers demand ,purchasing power to the creation of markets.However,the demographic trend and changes are beyond an entrepreneurs control.He needs to assess demographic changes in order to identify business oppurtunities.For example ,the increasing number of children in a society can create an oppurtunity for business activities related to the needs and wants of this particular group,for example childrens education ,food and clothes .Same as well,even when a product servers the same purpose ,the relative importance of various product attributes may differ between markets.Goodyear tyres as an illustration stress tyres safety in Britain ,durability and mileage in U.S and agile performance in Germany.

The branch of knowledge that deals with industrial arts ,applied science ,engineering ,process,invention,or methods can be defined as technology.Techonolgical analysis requires scanning monitoring from the time of basic research through product development and commercialization .Technological change takes two forms which are through pure invention and process innovation.Pure invention refers to the creation of something new that is different from existing technology or products .For this reason ,invention usually has an economic value and has no competition at the initial stage and is often monopolized by the individual who has the legal right on that invention .Process innovation refers to the small changes in design ,product formulation,manufacturing,materialsand distribution.

The national issue that an entrepreneur must be aware of are taxation,regulation,and goverment spending .All these issues are inter-related.Taxation is a major politicial factor that the entrepreneur must face at the national level .Taxtion reduces the cash available for business ventures to invest.Some taxes are favourable to only certain business and a disadvantage to others .An example of regulation on the usage of drugs .However,sometimes the effect of regulations on businesses is negative

As we know Pizza Hut has become an international organization where the business is running successfuly around the world. Lately in history of Pizza Hut , Cerebos who has become one of the owner ,who owns 29 outlets and it was sold out to KFC Holding (Malaysia)BHD. To be honest there are more than 100 outlets in Malaysia was opened .The environmental forces of this world wide organisation are the external forces that directly or directly power the organisation.There are four general environmental element of Pizza Hut such as political and legislation,economic,technological, and socio-cultural.

Political factors that have influenced Pizza Hut are in terms of verification that are allowed to open new outlets in Malaysia. If there is no such support policy there will be a lack of Pizza hut outlet in our country.. In addition, political factors of Malaysia with foreign countries will also play a role in affecting tourism in Malaysia, with more tourists coming to Malaysia; Pizza Hut will receive more face and recognition. Socio- cultural environment is additionally another issue that influences Pizza Hut s company .It refers to establishments and additionally different forces supported societys basic values ,perception ,preference and behaviour . These things can so have an effect on Pizza Hut because the factors in cultural environment influences potential customers of Pizza Hut .The range that exists in Malaysia can play a significcant role as a result of various races have different culture and their culture can influence the selection of the food they consume.As an example,if Pizza Hut were to serve pork in their dishes,then Malay individuals wont value more higly to eat in Pizza Hut because it is against their culture to consume pork.Besides that,influences of one person to a different person additionally influences their call on whether or not to eat Pizza Hut or not.If a important a part of a specificc town isnt of fascinated by having pizza .Therefore , there is a reduction in the amount of potential customers of Pizza Hut.

Environment forces are the powers that will influence trade.Components within the economy comprise of the unemypoyment and sewlling rates .Financial is one of the poweers that we couldn’t control since this will be based on the nation inflations.When it comes to financial issue, the customer will alter their buying control and their spending patterns since they got to purchase what they require to begin with at that point they as it were can seek for their wants.Besides tht,some shoppers obligation level are rising and their salary are still the same ,hence this kind of customer ought to seek for their needs to begin with and their investing designs will alter base on their incomes and obligations .Not as it were that,for a new of the wealth like businessman,when comes to financial issue there are lesser wealthy individuals to purchase Pizza Hut franchisee since they will without a doubt misfortune a huge sum of cash rather than benefits .Besides ,there are numerous competitors within the showcase such as Dominos Pizza ,Dad John’s and any other eateryse.

The technology evironment would be a calculate that influences commerce since in this unused period innovation are mushrooming day by day .Organization must keep track of unused innovation if the organizations need their business to outlive .These days individuals are searhing for more quick ,simple and helpful way to do something.It is outlined to serve individuals superior .Nowdays ,evereybody around the world are talking alomst online shopping ,buy thing and order thing through online since it is exceptionally helpful and the client don’t have to go out.Within the past elderly will say that online shopping doesn’t make sense but innovation may be a thing that no one can control.In expansion to that,it will ake everything straightforawrd and simple and have openings to induce more benefits in an organization.Other than that,innovation doesn’t cruel as it were on web but phone calls or other gadgets thing.For illustration ,Pizza Hut has given arrange through utilizing online or by the phone call and the conveyance benefit.Pizza Hut in our country also always come out with more variety of pizza to attract customer whereas other competitors are doing promotions only.This is because Pizza Hut has improve their service effeciency by upgrading their baking and heating oven and also new vehicles.

Cite this page

Macro and micro environment. (2019, Nov 17). Retrieved from

Macro and micro environment

👋 Hi! I’m your smart assistant Amy!

Don’t know where to start? Type your requirements and I’ll connect you to an academic expert within 3 minutes.

get help with your assignment