Macro Environmental Factors Essay
Macro Environmental Factors
Lancaster (2011) defines the macro environment as ’those global elements over which the organization has no control over but which affect the organization’s ability to serve its customers profitably.’ There are six major macro environment forces: cultural, demographic, economic, natural, political, and technological. The cultural environment includes institutions and other forces that affect the basic values, behaviours, and preferences of the society-all of which have an effect on consumer marketing decisions.
The demographic environment includes the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistical information. The economic environment consists of all factors-such as salary levels, credit trends, and pricing patterns-that affect consumer spending habits and purchasing power. The (ecological) natural environment involves all the natural resources, such as raw materials or energy sources, needed by or affected by marketers and marketing activities. The political environment includes all laws, government agencies, and lobbying groups that influence or restrict individuals or organizations in the society. The technological environment consists of those forces that affect the technology and which can create new products, new markets, and new marketing opportunities.
This is a way a country is governed, and they are usually more than one political party in a country thus bring in threats and opportunities to the businesses operating in such an environment. There two possible out comes from political environment are stability and changes in the ruling government. When a country has a multi-party system the environment is most likely to be associated with political instability as parties are battling for power. Political unrest is destructive to any business activity. In most cases these unrests results in loss of assets without compensation. The decision by the ruling party in Zimbabwe in 2000 was the land reform program which in principle was to redress the imbalance of land ownership between the black majority and white minority. The effect was a sharp decline in agricultural output as the white commercial farmers were mostly replaced by either politician or high ranking government officials most of whom were not really passionate about farming or by peasant farmers who had neither the technical knowledge nor resource to undertake farming at commercial level.
For example, Delta as a result of poor agricultural season sorghum beer volumes declined with 8 percent as the supply of raw materials have been affected and the black majority in the farms could not cope up w this change in the season(The Sunday Mail Business ,page B7, 19 may 2013). Political instability is a favourable environment for an organization to operate in because they will be able to strategically plan and set objectives and they will be SMART. In Zimbabwe since the GNU the economy has stabilizes that firms such as delta could set themselves goals to achieve within a specific time frame and Delta has been pouring cash into re-tooling, re-capitalization and strategically positioning its business. Changes in government, as governments are formed by political parties. Government exert pressure on business through enactment and enforcement of legislation and formulation and implementation of government policies. For example government that might come onto power may cause threats to delta in the sense that it may be
The social cultural factors are those factors which are considered to be socially acceptable in a society. These include the attitudes of the society to foreign goods and services, the dominant religion in that area, population structure-older generation wealth and pressure groups etc. as a firm it has to be aware of the dominant region in the area it is operating. For instance in Zimbabwe there are more than 60% Christians therefore it has to sell more of soft drinks to beer thereby affecting their decisions on what quantity to produce and their pricing strategies. It is unwise for DELTA to market its products in a market it is not aware of what’s being socially acceptable in that area, taking this scenario when DELTA tried to market its products like scud lion lager in the market of Mozambique. In Mozambique people prefer beer in small containers but with high alcoholic percentages, thus their products did not make t in the Mozambique cane market. Therefore a firm has to first consider the social cultural factors of the market it wants to operate in for there are the potential customers of tomorrow for their business.
This is the application of scientific knowledge to convert resources of an economy into outputs. On the technological aspect will be looking at the entrance of better and effective +ways in terms of machinery and products etc. Technology is vital for competitive advantage, and is also a major driver of globalization. This involves the creation of new markets and opportunities were a firm can easily adopt a new innovative way of doing operation and this enables it to compete globally. The uses of better advanced technology have a greater impact on the processes and performance of a firm. Technology is vital for competitive advantage, and is a major driver of globalization. The Delta Beverages has moved into modern packaging like the light 300mml bottle which uses fewer materials in production.
The bottle was 25% heavier than the new one. The new plant for the bottle reduces rejects and output was enhanced to 42000 per hour Let’s take for instance Delta it needs to switch from being labour intensive to capital intensive in order to produce more quality efficiently and effectively as new advanced machinery will be introduced in the market. It means that if there were twenty employees who were mixing the contents and filling containers of coke they are automatically going to be eliminated. Therefore their way of doing operations need to be reorganised .As a result of using modern communication Medias like video conferencing and Skype managers can now make decisions whilst on holiday and it also enables exchange of vital information among workers at different geographical location easily.
Organisations are also affected by the ecological 3factors; these are environmental factors that affect the businesses. It involves factors that occur naturally like drought, tsunami, floods etc. These factors have a greater impact on the operations of a business. For example if Zimbabwe is being affected by drought this means that the agricultural sector will have little to produce and for Delta which rely on sorghum as raw materials to manufacture beer , it will have to export those resources from other countries .Therefore this will affect the decisions ,strategies ,processes and their performance . A worker who will be involved in production will absent themselves from working search of food to sustain their families. Floods have also a negative impact on the operations of businesses as they result in deaths, destruction of infrastructure or the premises of the organisations leading to closure of some business and deaths of personnel.
And the legal factors can be classified as polices, laws, rules and regulations adopted by the Government ruling at that time. These factors may have a greater impact on the decisions and strategies to be adopted by a firm. The Government they may adopt pricing policies. For instance the Government may put a price ceiling say a king-size bottle of soft drinks should not go above $0,50c so as DELTA it has to abide to the laws of the Government for it to continue operate in the market of Zimbabwe. The pricing policies impose on the farm produce also had an impact on the performance of DELTA as a firm. Say sorghum is said that its price should not precede $2 per kilogram, these means that the farmers will not be willing to sell their produce to the market thus leading DELTA to import in order to operate at their expected production line and experience an increase in their cost of production. So we can safely say some of the policies adopted by the Government may lead to an increase in prices or reduction in production causing shortages in the market.
However there are some of the legal factors imposed by the Government to the economy which affect the performance, decisions, strategies and processes of DELTA as a firm. For example the ‘MURAMBATSVINA’ policy which resulted to an increase in unemployment meaning to say that it also lead to an decrease in the level of spending of people. So DELTA as a firm sell more like luxuries goods so people are likely to reduce their consumption of such like products, thus may result in the reduction of prices of the products in order to lure the customers to buy and maintain their market share. Be that it may, not all the policies, rules and regulations set by the Government and laws will have an effect on the operations of DELTA.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 15 October 2016
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