Importance Of Macro Environment

When discussing Macro Environment it is essential to state the definition of this terminology for its importance on the level of strategic planning and analysis. Therefore, many definitions are found in references with different words but it all leads to the same meaning.

Marco environment is the major externals and uncontrollable factors that influence an organization’s decision making and affect its performance and strategies. These factors include the economic factors; demographics; legal, political and social conditions, technological changes, and natural forces. (Business dictionary).

The above definition of macro environment doesn’t seem to be the only set of dimensions, but other dimensions also appeared in the industry’s business.

In our discussion, we will focus on macro environment analysis and it is analyzed.

The macro environment analysis or the external analysis is the first move of an organization in analyzing the business environment in order to create its strategy.

Organizations conduct macro environment analysis to identify the opportunities and threats that are uncontrollable within the industry. However; a macro environment analysis can be understood only as a system, in which every factor is related to and affects every other factor Fahey and Narayanan’s (1986).

According to Fahey and Narayanan, all factors that comprise his macro environment model are related to each other’s and any one can’t work in isolation to other factors, or without affecting in a way or another factor(s) in the proposed model.

Taking into consideration the preceded argument and starting with economic factors which might be the most important factors from a business perspective without omitting the other factors.

The economic environment considered to be the most important factor since it represents the core factors of the economic system in which the organization

If the oil prices have increased this will increase the price of goods and services, negatively impact investments, reduce profits, lower purchasing power on goods and services, and reduce savings.

The second macro environment factor is the political environment which refers to the political environment stability and the influence of the party are ruling the country on the tax policies and trade agreements national and international.

An example of a political factor that might be considered is a shift towards greener policies in the new developments.

Third the sociological factors analysis refers to trends in society culture, lifestyle, social classes, birth growth rate, age and wealth distribution …

An example of an age distribution might be relevant to the industry that an organization is