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MB0046 : Mention the forces in micro and macro environment that are likely to influence an organisation’s working and functions. Is environmental scanning necessary for all organisations?

Posted on: October 19, 2011

MB0046  : Mention the forces in micro and macro environment that are likely to influence an organisation’s working and functions. Is environmental scanning necessary for all organisations?
Answer: Forces in the micro environment

The Company: Safe Express, a leader in the supply chain management solution wants to hold its number one position in the US $ 90 billion Indian logistics market. The company plans to expand its service areas in the coming months. To meet the targets of the marketing plan, other departments of safe express also expanding their horizon. The above example shows that the company’s marketing plan should be supported by the other functional departments also.

Intermediaries: Marketing intermediaries: These are firms which distribute and sell the goods of the company to the consumer. Marketing intermediaries play an important role in the distribution, selling and promoting the goods and services. Retailers, wholesalers, agents, brokers, jobbers and carry forward agents are few of the intermediaries. Retailers are final link between the company and the customers.

Publics: These are microenvironment groups, which help a company to generate the financial resources, creating the image, examining the companies’ policy and developing the attitude towards the product. We can identify six types of publics

  • Financial publics
  • Media publics
  • General publics
  • Internal publics
  • Advertisement regulation agencies, TRAI, & IRDA of the government
  • Citizen action groups


A company should monitor its immediate competitors as its sale will be affected by the nature and intensity of the competitors. The sale of Coca cola will be affected by Pepsi cola, or Britannia cheese by Amul cheese.

Suppliers: There are many kinds of suppliers to an enterprise or an institution. There are typically, raw material suppliers, energy and fuel suppliers, labour suppliers, office item suppliers and so on. Suppliers are the first link in the entire supply chain of the company.

Customers: A company may sell their products directly to the customer or use marketing intermediaries to reach them. Direct or indirect marketing depends on what type of markets Company serves.

Forces in the macro environment

Demographic Environment: The study of population characteristics like size, density, location, gender composition, age structure, occupation and religion. Demography statistics helps companies to forecast demand. Demographic environment is analyzed on the basis of the following factors.

  • Age structure of the population
  • Marital status of the population
  • Geographic distribution of the population
  • Education level
  • Migration
  • Occupation.

Political and Legal Environment

Government policies, legislations, regulations, and stability will directly affect the business. Therefore it is inevitable for the firm to closely monitor this environment. The political and legal forces are grouped into the following four categories.

Monetary and fiscal policies: These policies regulate government spending, money supply and tax legislations.

  • Social legislations and regulations
  • Legislations, Policies and regulations relating to industries
  • Legislations related to manufacturing, trading, marketing etc

Economic, Monetary and Natural Environment

The economic environment includes consumption patterns, productivity patterns, spending patterns, and sectored growth and so on. The monetary environment consists of inflation, interest rate, exchange rate, money supply etc. These provide vital clues for marketers to decide on product offering, incentive offerings, promotional decisions and pricing decisions.

Natural Environment:

Environmental concerns are growing over the years. Governments are bringing in stringent regulations to conserve and manage natural resources. Marketers should beware of such trends in the environment. Some of the aspects/factors on which organizations should keep a vigil are;

  • Inadequate raw materials arising out of strict mining regulations
  • Global warming and pollution levels which have ushered in new legislations

Social and cultural environment

Growing urbanization, increasing participation of women in livelihood activities, advent of global cultural practices, greater exposure to life styles practiced world wide etc has altered marketing efforts remarkably. A club house and a swimming pool is an essential part of purchase decision for a flat in a metro. Marketers have encased this trend during the nineteen nineties and later too. Companies like Hindustan Lever have successfully marketed their low priced offerings of toiletries and cosmetics in the rural areas.

Technological environment

There are several tumultuous changes being wrought in the technological from which is transforming the way business is conducted. The changes are so rapid and sweeping those enterprises have found it difficult to keep pace. Several have fallen by the wayside for failing to keep with the changes. Major public sector undertakings in India which did not upgrade in time and closed their shutters are, ITI, HMT, and HTIF. On the other hand in the private sector, Hindustan Motors, LML etc are examples who were known as flag bearers, collapsed once they fell behind in the race for technology.

Environmental scanning

Environmental scanning refers to assessing the various aspects of the external and internal environment such that the knowledge may provide information with which to make some predictions for the future. If a mobile service provider is aware that the government is opening up the 3G spectrum it would be able to make a forecast on the demand for cell phones with these facilities.

Need for environmental scanning: It helps in

  • Identifying the opportunities that company has in immediate future.
  • Identifying the threats faced by the company.
  • Demand forecasting
  • Developing appropriate business plans.
  • Adjusting the company strategy in changing competitive environment.

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