The Macro Enviroment

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CHAPTER 3: THE MACRO ENVIRONMENT
MGMT 488 – STRATEGY AND POLICY

OVERVIEW
The macro environmental analysis is the first step in creating the Environmental Analysis. The macro environment examines the general business climate as it relates to the organization, but has nothing to do with the organization itself. The macro environment is primarily concerned with major issues and upcoming changes in the environment. The acronym for the macro analysis is “STEEP.” The five areas of interest are Socio-cultural and demographics; Technology; Economic conditions; Ecology and physical environment; and Political and legal.

SOCIO-CULTURAL AND DEMOGRAPHICS
Societal values and lifestyles change over time, and the most important of these should be discussed. For example, over the past generation, it has become acceptable for women to work outside the home – or not; smoking is not as acceptable as it once was; people are not retiring at 65; students going to college are older; and people are more aware of the environment and healthful living styles. The changes in values and lifestyles may come from many sources: medical (smoking, healthy eating, exercise); science (global warming, going “green”); economic (people working longer, women in the workforce); cultural diversity (music preferences, foods, living accommodations, medicine); and technologies (Internet dating, biodegradable plastic) are just a FEW examples. Some changes in values and lifestyles will be important to the industry, but not to your business. For example, the current trend is to adopt pets from a shelter, rather than from a pet store; this has an impact on the pet store industry. However, if a pet store is located in a town that does not have a shelter or the store does not sell pets (just supplies – like PetSmart), then the change does not affect the business. When discussing demographics do NOT discuss the target market. This section deals with changes to the population and demographics as a WHOLE and those that may affect the specific industry not the business. It is not important that the population of Billings is growing. It is important that more people are moving to smaller cities and rural areas. It is not important that the average age of the population of Montana is 35.2 years. It is important that people are living and working longer, in general.

MGMT 488

Chapter 3 - Macro Environment

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TECHNOLOGY
Technology encompasses more than computers! Remember that technology comes in many forms – medical devices, new plastics, production techniques – and be sure to include them in the list if they are important. The technology discussion should not include what the business does – but what is available to members of the industry!

ECONOMIC CONDITIONS
The state of the economy is usually in some sort of flux. The current situation (specific to the industry) and any changes that may be forecast are important. The current economic situation is not conducive to new car sales, but may be better for used car sales and while new appliance sales are in decline, repair people are seeing a large increase. How might these situations change if the economy improves?

ECOLOGY AND THE PHYSICAL ENVIRONMENT
The ecology and physical environment plays a large part in many busineses – especially those who have production facilities. But also, everyday businesses are affected. For example, the impact of climate change must be considered: water and fuel costs could change dramatically if the world warms by only a couple of degrees.

POLITICAL AND LEGAL
In this section, an analysis is made of pertinent local, state, and federal legal information in the business and industry environment. But also consider political ramifications. Democrats and Republicans, Independents and Green – all of these parties have fundamentally different views on business, environment, taxes, and many other issues that may affect a business. General business laws such as zoning,...
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