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Microenvironment Vs

The document discusses the differences between microenvironment and macroenvironment considerations in strategic planning. It defines microenvironment as small internal and local external forces that a company can control, such as suppliers, customers, and competitors. Macroenvironment includes larger societal forces outside a company's control, such as economic, political, and industry factors. A SWOT analysis is used to evaluate strengths, weaknesses, opportunities, and threats in a company's microenvironment and macroenvironment to inform strategic planning.

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76 views

Microenvironment Vs

The document discusses the differences between microenvironment and macroenvironment considerations in strategic planning. It defines microenvironment as small internal and local external forces that a company can control, such as suppliers, customers, and competitors. Macroenvironment includes larger societal forces outside a company's control, such as economic, political, and industry factors. A SWOT analysis is used to evaluate strengths, weaknesses, opportunities, and threats in a company's microenvironment and macroenvironment to inform strategic planning.

Uploaded by

DIVINE AZALETEY
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Microenvironment vs.

Macroenvironment
Learning Outcome
 Differentiate between macroenvironment and microenvironment
considerations in strategic planning

Business (or Strategic) management is the art, science, and craft of formulating,
implementing and evaluating decisions that will enable an organization to achieve
its long-term objectives. It is the process of specifying the organization’s mission,
vision and objectives, developing policies and plans, often in terms of projects and
programs, which are designed to achieve these objectives, and then allocating
resources to implement the policies and plans, projects and programs.

Strategic planning is an organization’s process of defining its strategy, or direction,


and making decisions on allocating its resources to pursue this strategy, including
its capital and people. Various business analysis techniques can be used in strategic
planning, including SWOT analysis (Strengths, Weaknesses, Opportunities, and
Threats ) and PEST analysis (Political, Economic, Social, and Technological
analysis) or STEER analysis involving Socio-cultural, Technological, Economic,
Ecological, and Regulatory factors and EPISTELS (Environment, Political,
Informatic, Social, Technological, Economic, Legal and Spiritual)

Strategic planning is the formal consideration of an organization’s future course. All


strategic planning deals with at least one of three key questions:

1. “What do we do?”
2. “For whom do we do it?”
3. “How do we excel?”

In business strategic planning, the third question is better phrased “How can we beat
or avoid competition?”. [1] In many organizations, this is viewed as a process for
determining where an organization is going over the next year or more—typically 3
to 5 years, although some extend their vision to 20 years. In order to determine where
it is going, the organization needs to know exactly where it stands, then determine
where it wants to go and how it will get there. The resulting document is called the
“strategic plan”.

Strategic planning may also be a tool for effectively plotting the direction of a
company; however, strategic planning itself cannot foretell exactly how the market
will evolve and what issues will surface in the coming days in order to plan your
organizational strategy. Therefore, strategic innovation and tinkering with the
‘strategic plan’ have to be a cornerstone strategy for an organization to survive the
turbulent business climate.

Strategic management seeks to coordinate and integrate the activities of the various
functional areas of a business in order to achieve long-term organizational
objectives. A balanced scorecard is often used to evaluate the overall performance
of the business and its progress towards objectives.

No discussion of strategic planning can ignore the micro and macro factors that are
relevant in the success and possible failure of the retail business. The business
environment is a marketing term and refers to factors and forces that affect a firm’s
ability to build and maintain successful customer relationships. The three levels of
the environment are. We will focus on micro and macro factors in this module:

1. Micro (External) environment – small forces within the company that affect
its ability to serve its customers.
2. Internal environment – can be controlled, however, it can’t influence an
external environment.
3. Macro (external) environment – larger societal forces that affect the
microenvironment.

Micro Environmental Factors


Micro environments in retail is anything in the immediate environment including
suppliers, customers, competitors, and stakeholders. Any government and other
regulating body can be thought of as a stakeholder. Typically the micro environment
is local to the business and any business owner should be well aware of those factors
affecting the retail business.

Macro Environmental Factors


Macro environments are often outside of the retailer’s control and are typically of a
larger scale and are usually of an economic and industry viewpoint.

SWOT Analysis
In understanding micro and macro environments a SWOT (Strengths, Weaknesses,
Opportunities, and Threats) analysis is commonly used in retail. Strengths and
weaknesses are those internal factors impacting an organization while opportunities
and threats are external factors that are outside of the organization’s control. Look
at these slides reporting on a SWOT analysis of GAP Inc then let’s walk through a
SWOT analysis for the GAP below.

Some of the positive internal attributes are franchising opportunities and global
brand recognition. Strengths answer question such as: What value do we bring to
the customer? What do we do well? What is making a difference? Some of the
weaknesses include a dependence on outside vendors as well as long term
debt. They also have a dependence on an older consumer. Weaknesses address
questions such as: What needs improving? What isn’t working? What do our
customers dislike? In looking at those external opportunity factors affecting Gap that
are positive you can see they have a market for plus size women’s apparel and they
are growing the online business. There is also an opportunity for growth in
Asia. Opportunities address the following questions: What should be
changed? What should the company start or stop doing? Finally, threats are those
external factors that can’t be controlled but are still a consideration. The Gap has
strong competition, slow economic recovery, and increased labor costs. Threats
answer the following questions: What are the threats to the business? Are there any
economic, political, or customer trends? Are there any financial threats such as cost
or debt?

In addition, PEST (Political, Economic, Social, and Technological) as well as


Porter’s 5-Forces analysis is also used as a way to understand new competition, the
threat of new competition, the bargaining power of suppliers and customers, and the
level of competition.

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