Macro Environment Analysis Theory

The Macro Environment Analysis is traditionally the first step of a strategic analysis; it is sometimes referred to as an external analysis, a pest analysis or a pestle analysis. The purpose of the Macro Environment Analysis is to identify possible opportunities and threats to your industry as a whole that are outside the control of your industry. There are many factors in the macro-environment that will affect the decisions of the organisation.

Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analyse these factors managers can categorise them. This classification distinguishes between political factors, economic factors, social factors, technological factors, environmental factors and legal factors. Political factors such as the degree of intervention in the economy. It’s something like what goods and service does a government want to provide? Or To what extent does it believe in subsidising firms?

It is because Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system. Economic factors such as interest rates, taxation changes, economic growth, inflation and exchange rates. As higher interest rates may deter investment because it costs more to borrow, inflation may provoke higher wage demands from employees and raise costs, higher national income growth may boost demand for a firm's products. Read also Business Article Summary

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In Social factors, Changes in social trends can create an impact on the demand for a firm's products and the availability and willingness of individuals to work Therefore, Mirabella should go and research in what people of this era are more interested to see and what they expect from a bridal boutique and she should do a survey to find out people's opinions. She should also go all out and ask people from all races and age groups and get a clear idea of the type of marriage packages or honey moon packages or bridal clothes they will be interested in.

In Technological factors, new technologies create new products and new processes. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products. Mirabella should use all the high technology equipment in the boutique so that she will be more competitive towards other established outlets . Moreover , because of new technology she will need less labour and will be more efficient and she doesn’t need to pay out a lot for labour cost.

Therefore, a lot of new customers will come to her as she will be able to provide better service than any other outlets. Environmental factors, environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider Legal factors, these are related to the legal environment in which firms operate.

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