Difference Between Micro and Macro Environment

Summary

In this video, Surbhi explains the differences between micro and macro environments in business. The micro environment, or task environment, directly influences a company's operations and includes factors like competitors, suppliers, media, intermediaries, and customers. On the other hand, the macro environment encompasses broader, uncontrollable factors such as political, economic, social, technological, legal, and environmental forces. These external factors affect all companies in an industry, and while the micro environment is more controllable, the macro environment is more indirect and less manageable. Surbhi further explains the tools used to analyze these environments: COSMIC for micro and PESTLE for macro analysis.

Takeaways

• 😀 A business operates as an open system, interacting with its environment by taking inputs and returning goods and services.
• 😀 The business environment consists of internal and external factors that impact a firm's ability to achieve its objectives.
• 😀 The internal environment includes controllable factors like corporate culture, mission, organizational structure, and resources.
• 😀 The external environment includes factors outside a company's control, divided into the micro and macro environments.
• 😀 The micro environment refers to immediate factors that directly affect the company's operations, like competitors, suppliers, and customers.
• 😀 The macro environment consists of broader factors such as political, economic, social, technological, legal, and environmental conditions.
• 😀 Micro environmental factors, like competitors and customers, can be somewhat controlled by the company through decisions and strategies.
• 😀 Macro environmental factors, such as economic conditions and government regulations, cannot be directly controlled by the business.
• 😀 Micro environment analysis is called 'COSMIC' (Competitors, Organization, Suppliers, Media, Intermediaries, Customers).
• 😀 Macro environment analysis is called 'PASTEL' (Political, Economic, Social, Technological, Environmental, Legal).
• 😀 Micro environmental factors have a direct and regular impact on marketing decisions, while macro environmental factors have an indirect impact.

Q & A

What is the business environment?

The business environment refers to the sum of all elements and forces existing in the immediate and remote surroundings of a business that have a direct or indirect impact on its ability to achieve its objectives.

What are the two main categories of the business environment?

The business environment is divided into internal and external environments. The internal environment includes controllable factors within the organization, while the external environment involves uncontrollable factors from outside the organization.

What factors are included in the internal environment of a business?

The internal environment includes factors such as corporate culture, value systems, mission, objectives, organizational structure, company image, brand equity, and human and other resources.

What is the micro environment in business?

The micro environment refers to the immediate or operational environment surrounding the business. It includes factors that have a direct influence on the company's performance, such as competitors, suppliers, media, intermediaries, and customers.

What is the macro environment in business?

The macro environment refers to the broader, external environment that impacts all businesses in an industry. It includes factors like political, economic, socio-cultural, technological, legal, and environmental conditions.

How does the micro environment affect a business?

The micro environment affects a business directly and regularly by influencing marketing decisions, operational strategies, and customer interactions. It involves factors that are often controllable to some degree, such as supplier relationships and customer service.

How does the macro environment influence a business?

The macro environment affects businesses indirectly and on a larger scale. Factors like political instability, economic shifts, and technological advancements can create opportunities or pose threats to businesses, although they are typically uncontrollable.

What is the difference in controllability between the micro and macro environments?

Micro environmental factors are somewhat controllable by the business, such as decisions related to marketing, suppliers, and customer relationships. In contrast, macro environmental factors are largely uncontrollable, including political, economic, and legal conditions.

What is the COSMIC model, and how is it related to the micro environment?

The COSMIC model is a tool used to analyze the micro environment. It stands for Competitors, Organization, Suppliers, Media, Intermediaries, and Customers. This model helps businesses assess the factors directly influencing their operations.

What is the PESTLE analysis, and how is it used to study the macro environment?

PESTLE stands for Political, Economic, Social, Technological, Legal, and Environmental factors. It is a framework used to analyze the macro environment by assessing external factors that can influence a business's performance and strategy.