External Environment
External Environment
Macro Environment Factors
- Political factors: These include government policies, legislation, and trade agreements that can affect businesses.
- Economic factors: These include economic growth, interest rates, inflation, and unemployment rates.
Micro Environment Factors
- Customers: Businesses must understand their customers’ needs and preferences to sell their products or services effectively.
- Suppliers: These are the businesses or individuals from whom a company purchase its raw materials or goods.
- Competitors: Every business exists in a competitive environment and must understand who its competitors are and how they operate.
Market Environment Factors
- Market trends: Businesses need to keep up with the latest trends in the market to remain competitive.
- Market size: The number of potential customers that are available to a business.
- Market growth: How much a market is growing can significantly impact a business.
Technological Factors
- Innovation: Technological advancements can provide businesses with new ways to communicate with customers, improve products, and streamline operations.
- Automation: Automation can increase production speed and accuracy but may also require a company to invest in new equipment.
Legal Factors
- Regulations: Businesses must comply with various laws and regulations, including health and safety and employment laws.
- Industry-specific laws: Certain industries have specific laws they must comply with.
Ethical and Environmental Factors
- Sustainability: Businesses are increasingly expected to be environmentally friendly and sustainable.
- Ethics: Businesses should behave ethically towards their employees, customers, and wider society.