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Macro Environment

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  • Jan. 2011
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“Outline the components of any organization’s macro environment and give an example for each component of a current major operational change or industry trend”. Macro Environment: The factors outside of the industry that influence the survival of the company; these factors are not directly controllable by the organisation. (Elliot, Rundle-Thiele, Walker, p.48) Components of the Marco Environment: There are six (6) major components of which the macro-environment is made up of; 1. Demographic

2. Economic
3. Natural
4. Technological
5. Political
6. Cultural
Demographic Forces: variables of a population which include, age, sex, level of education, employment status, income level, home style status (ownership vs. renting & location) also ethnicity. Example: An increase in the number of caravans purchased in western countries will increase due to the trend of an aging population; the caravan/motor homes industry should see growth

Economic Forces: refers to forces such as level of employment, demographic changes, rate of inflation, rate of interest which in turn affects the amount both people and organisations are willing to Spend along with how they spend it.

Example: Middle East War in 1973 – ‘Oil Crisis’ created economic shock waves right through the western world leading to drastically increased oil prices which lead to increase energy costs along with the cost of oil based raw material. This crisis contributed heavily to a world economic recession

Natural Forces: consist of concerns relating to the environment, green house effect, rates of energy/petroleum, lack of natural resources, and resource management. Example: The farming industry has been affected by drought. The consequence of drought is a decline in crop production as a result of inadequate and poorly distributed rainfall. Therefore with the decline of crop production, farmers are faced with harvest that is too small to feed...