Last Updated 12 May 2020

Organisational External Marketing Environment

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Marketing is a core functional area in any international business organization. 12It is generally acknowledged that the external marketing environment of an organization consists of those factors from outside which exert influence in the running and control of the organization. 13 The marketing function of an international organization is usually determined by a combination of a variety of forces in the host country (Wilson, 1982).

Coca-Cola Press Release, (February 27 2007), Coca-Cola Launches ‘Riwa’ Water, retrieved on April 24 2008 from http://www.ameinfo. com/111995. html 10. Coca-Cola Press Release, (February 27 2007), Coca-Cola Launches ‘Riwa’ Water, retrieved on April 24 2008 from http://www. ameinfo. com/111995. html 11. Kaplan, R. S. , and Norton, D. P. (2002), The balanced scorecard: Measures that drive performance, Harvard Business Review, Vol. 70, No. 1, January –February, p. 71-83. 12. Kaplan, R. S. , and Norton, D. P. (2002), The balanced scorecard: Measures that drive performance, Harvard Business Review, Vol. 70, No. 1, January –February, p. 71-83. 13. Kaplan, R. S. , and Norton, D. P. (2002).

The balanced scorecard: Measures that drive performance, Harvard Business Review, Vol. 70, No. 1, January –February, p. 71-83. Some of the key forces that determine the success of the marketing process of a company’s product in a country include political forces, economic forces, socio-cultural forces, technological forces, legal forces and environmental forces. 14 Comprehensive analysis of the external marketing environment of an organization can be achieved effectively through a critical SWOT analysis (Wilson, 1982). SWOT stands for strengths, weaknesses, opportunities and threats.

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Wilson (1982) emphasizes that SWOT analysis is an effective tool for auditing an organization and its environment. SWOT analysis represents the first stages of planning enables managers to focus on key issues. Identification of key issues facilitates the transformation of the issues into objectives. In a SWOT analysis, strengths and weaknesses represent the internal factors while opportunities and threats represent the external factors. SWOT analysis can be utilized with other tools of analysis such as the Porters Five Forces analysis to provide the organization with the best operational and planning procedures (Wilson, 1982).

The external marketing environment of an organisation is defined by two distinct concepts namely: the microenvironment and the macro-environment. 15The microenvironment is made up of those elements which are closest to the company and which exert the greatest and most direct influence over its ability to deal with its markets. This includes the organization itself, its suppliers, its distribution network, customers, competitors, and the public at large (Wilson & Gilligan, 1999, p. 240).

On the other hand, the macro-environment consists of the rather broader set of forces that have a bearing upon the company, including political forces, economic forces, socio-cultural forces, and technological forces, legal forces, and environmental forces. According to Wilson (1982) these are known as PESTLE factors. 14. Wilson, A. (1982), Marketing Audit Check Lists, London: McGraw-hill, p. 61-74. 15. Wilson, A. (1982), Marketing Audit Check Lists, London: McGraw-hill, p. 61-74 Factors of external marketing environment only come to the fore of a business organization’s strategies after the microenvironment factors.

It is for this reason that the microenvironment and macro-environment concepts of external marketing environment are considered to be complimentary to each other, with the microenvironment representing the core factors that set the pace and necessary conditions for evaluating the macro-environment factors that are more or less peripheral. 16 Therefore, “a comprehensive analysis that represents the true picture of the external environment of a company can only be realised if the analysis of the macro-environment is preceded by an analysis of the microenvironment” (Grant, 2005, p. 29).

The Microenvironment of the Coca-Cola Bottling Company in Jordan The microenvironment is a very important aspect in the analysis of the external environment of an organization. The microenvironment accounts for all the factors that are closest to the organization and determine the day to day affairs of the organization (Porter, 1980). This particular evaluation of microenvironment is based on the Porter’s five forces analysis. Porter’s five forces analysis is a framework for industry analysis that was developed by Michael E. Porter in 1979 as a tool for evaluating business strategy development.

According to Porter (1980), the five forces determine the competitive intensity and attractiveness of a market. Porter (1980) referred to these forces as the microenvironment due to the fact that they consist of those forces close to a company that affect its customers and generate profits. “A change in any of these forces would require a company to re-assess the market place” (Porter, 1980, p. 37). The five forces include: the threat of substitute products; the threat of the entry of new competitors; the intensity of competitive rivalry; the bargaining power of customers; and the bargaining power of suppliers.

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