Today we will be talking about the Macro Environment, specifically Politics, Economics, Technology and Socio-Cultural influences on

business’s

INTRODUCTION

THE MACRO ENVIRONMENT

• The Macro Environment is influenced by many factors and are not limited to the fore mentioned topics.

• The Environment itself refers to an organisations ability to grow and develop, whilst under the influence of outside, uncontrollable forces.

• This means most companies must be able to adapt to constantly changing situations, whether it be new legislation or advances in technology.

EXAMPLE OF THE MACRO ENVIRONMENT

Economic situation in IrelandThe graph shows how the economic recession in Ireland has affected national income and expenditure.

HOW THIS EFFECTS BUSINESS’S• With less expendable income, people are more inclined to save

rather than spend.

• Marketers now faced with the difficult challenge of encouraging consumers to buy their product, must rebuild consumer confidence

• As according to (http://www.investopedia.com/articles/economics/08/recession-affecting-business.asp) an economic recession will cut down business expenditure meaning less employment and cuts on sectors including advertising

• Smaller companies get hit the hardest by negative changes in the economic environment with a much higher rate of bankruptcy than that of larger firms

HOW COMPANIES ADAPT TO ECONOMIC CHANGES

• Most companies main goal is to make profit. Ireland is a lucrative environment in terms of its very low corporation tax of just 12.5% on trade income, relatively low when compared to that of Frances 40%. Companies such as Google are taking advantage of this.

• Companies such as Samsung have in fact been growing, this year alone according to http://www.ibtimes.com/ Samsung has outgrown Apple by bringing in profits of $5.2 billion in the second quarter of 2013 compared to Apples $4.6 billion. As stated in http://www.ibtimes.com/ this is due to ‘strong volumes, high wholesale prices and tight cost controls’ this is an example of how one company has adjusted to Economic Environmental changes.

SOCIO – CULTURAL EFFECTS• socio – cultural effect on the macro environment deal with

things such population, age, gender, race, and value system of a country.

• It is important that when a company sets up in a new country that they respect the countries culture, as it could affect their sales or worse break a law set by the country.

EXAMPLES – POPULATION DEMOGRAPHY & AGE• Levi’s

• Ageing population in America – improvements healthcare & low birth rate

• Previously popular with younger generation

• Smaller target audience

• Developed Dockers label – strong with adult market

• Maintained sales

RELIGION • Muslim countries

• Strict laws prohibiting alcohol

• Qatar and Oman have laws which allow tourists to drink & black market exists

• This proves that there is potential for a market for alcohol, but due to socio cultural factors present in these countries the alcohol companies are not allowed take advantage of this with the mass population

ZIMBABWE• Before 1980, one of the richest countries in Africa

• Production in Zimbabwe was based on farming and mining

ROBERT MUGABE• In 1980, Zimbabwe became independent country

• Robert Mugabe was elected for president and started his reforms

NATIONALIZATION• R. Mugabe's decision of forced expropriation of most commercial farms devastated

agriculture sector

• But still he determines the law, which calls for foreign-owned businesses to sell a 51 per cent stake to a local partner

TECHNOLOGY• Technology improves marketing for businesses.

• It also helps reach new customers in new places which is hugely beneficial.

THE NEGATIVE AFFECT!• Technology decreases business morale. For example, reduces the personal aspect of

businesses and business life.