Tag - Micro-Environmental Factors

Why Micro-Environmental Factors are Important for your Business?
Oct 26, 2020

In the previous blog, we saw how Macro-Environmental Factors affect the business and why it is important for your business. Today we’re going to see that along with  Macro-Environmental Factors, Micro-Environmental Factors are also important for your business.   What are Micro-Environmental Factors? Micro-Environmental means the environment that has a direct effect on your business. It is connected to the specific region where your company operates and can influence any of your business processes directly. In other words, it consists of all the considerations that concern the company in particular. They have the capacity to influence the company's regular proceedings and general results. However, the influence that they have is not a long-lasting one.   Now, let's dig deeper and understand what are those factors that make up the Micro Environment: Customers - Customers play a key role for a business as they help to attract and retain the majority of customers to generate sales; regardless of what industry you are in or what products or services your business offers. Organizations must also follow a marketing strategy that attracts new customers and retain current customers by taking into account consumer needs and preferences and by offering after-sales and value-added services. Nowadays, for a business to be successful, it must find customers for your products/services. Thus, customers become the most important factor in the Micro-Environment of business.    This is the reason why nowadays business companies are giving more importance to “Customer Satisfaction Reviews”. Now, every business firm is setting up systems to track Customer Attitude and Customer Satisfaction on a regular basis as now it is widely agreed that Customer Satisfaction is the basis for any Business’ success.    Competitors - Competitors can directly influence your business strategies. Thus,  business companies must consider how to do a strategic analysis of competitors and have a competitive advantage. A company must consider what value-added services does the competitor offers or try to know the competitor’s USP. What advantages your business can offer to customers that your competitors do not offer.  A business company must realize that the lack of knowledge of competitors will make it difficult to beat them and lead the market. A business company must consider how competitors respond when there is a shift in the business climate, such as Political and Legal changes, Technological changes, changes in Customer Behaviours that can affect their company. They should also evaluate how their competitors react to market changes and what methods they use to better prepare for these changes. By doing so, your business company can gain an edge over them.    Suppliers - Suppliers are an integral part of the Micro Environment. They control the price structure of the industry through their own bargaining power. They constitute a significant force in the industry that shapes competition. Depending on this Supplier Environment, companies must also make a big Marketing Environment Decision on "Outsourcing" or "In-house Production".  As Suppliers provide the production materials, their activities can also affect the business strategy. For example, if their services are not fair and timely, it can impact the time of production and sales because of the delayed production process.  Therefore it becomes very important for business companies to keep a strong relation with Suppliers as they can help your business in getting an edge over Competitors.   Marketing Intermediaries - Market Intermediaries are either individuals or business houses that support the business companies to advertise, sell, and deliver the items to the final customers. They are Middlemen (wholesalers, retailers, and agents), distribution companies, consumer service companies, and financial institutions. Sometimes, it becomes too difficult for business companies to meet customers. In such situations, agents and distribution companies help to reach out to the customer with the commodity. Any form of Intermediary that the business takes into account must take the following aspects into consideration: The business companies can regularly review the output of all intermediaries as well as those who occasionally assist their efforts. If necessary, business companies can also replace those who are no longer performing at the expected level. Instead of creating one and thus going for experiments, working through the existing Marketing Channels is advantageous and also effective. In order to reach the products/services to the customer, the Supplier has to determine the most cost-effective method of Intermediaries that will help increase the profit.   Public - The term 'Public' simply applies to individuals in general.  Of course, it is in the best interest of each business company to appease(satisfy) the general public. Each move you take also needs to be seen from their viewpoint. How your acts influence others is incredibly important because their opinion can be the one thing that either drives you towards success or takes you down from the pedestal. The manner in which Public acts can make or break an organization. The company should be able to maintain a good relationship with the  Public since whatever it shows would directly impact the business of the organization. If the Public shows a positive response, this would improve the organization's business and vice versa. Some companies maintain a PR Team (Public Relations Team) that oversees activities and handles publicity on behalf of the corporation in order to maintain good relations with the Public.  Companies must bring their primary resources into the successful management of their consumer, dealer, and supplier relationships. Their overall performance would be influenced by how other people in the Society view their actions.  In this new Business World, the Public has acquired an important role and their involvement in the Micro Business Environment.   Conclusion:  Both Macro and Micro Environmental Factors have a powerful impact on how effective the company is. Any decision you make needs to take these two environments into account. If you really want them to be lucrative and hold a respectable marketplace, your marketing strategy must also be focused on them.   RELATED BLOGS: Why PESTLE Analysis is important for your Business?

Why PESTLE Analysis is important for your Business?
Oct 16, 2020

Marketing is an important aspect for an Organization's products and services. The right Marketing Strategy allows Organizations to achieve their respective goals and also helps to have an upper-hand in this Competitive Market. Enterprises worldwide conduct various short-term and long-term analysis to assess their business environment. One such analysis is PESTLE Analysis.   What is PESTLE Analysis (Macro-Environmental Factors)? It is a framework/tool used to examine and monitor the “Macro-Environmental Factors” that may have an extreme impact on an Organization’s performance. This tool is very useful when starting a new business or expanding your business Globally.   Now, let’s dive deeper and understand which are those factors that makes the PESTLE Analysis:   Political Factor - All the influences that a Government has on your business could be classified here. This can include Government Policy, Political Stability or Instability, Corruption, Foreign Trade Policy, Tax Policy, Labor Law, Environmental Law and Trade Restrictions, etc… Political factors have an effect on Organization to a huge extent as any decisions made by Government regarding Laws and Policies will have an direct impact on the business. Political and Government intervention (interference) is not feasible for the business and can hurt the business setup in the long run. Similarly, Trade Regulations imposed by the State Government might impact an Organization’s cost of labor and their ability to target an Overseas Market.  Example - Let’s say, currently “Govt. A” is in the ruling power and Govt. A has made the decision for “Globalization”. So naturally, Overseas Companies will be eager to invest. Now due to Globalization, they will invest as much as they can to expand their business and will leave no stone unturned to make their Company's Name a trusted one. Now, to sell their products, they will open Factories and Stores in various states. But now what if in the next Elections “Govt. A” lose the elections and new “Govt. B” becomes the ruling power and denies Globalization? Just imagine to what extent that Overseas Companies who invested so much in the country have to suffer? So, Political Factor is The Most Important Factor for your Business. PERIOD.   Economical Factor - Marketing is directly proportional with the Economic Factors. Organizations won’t be able to launch or promote their product and service appropriately if the Economy isn't steady and progressing. Economic Factors have a direct or indirect long term impact on an Organization, since it affects the purchasing power of consumers and can possibly change the demand/supply models within the Economy. However,  it also affects the way Companies price their products and services. Economical Factors includes GDP, Economic Growth, Exchange Rates, Inflation Rates, Interest Rates, Disposable Income of Consumers and Unemployment Rates.    Social Factor - Social Factor includes Demographic, Customs, Norms, Culture and Population within which the Organization operates.  This also includes Population Trends such as the Population Growth Rate, Age Distribution, Income Distribution, Career Choices, Safety Importance, Health Consciousness, Lifestyle Trends and Cultural Barriers. These factors are especially important for marketers when targeting niche customers. Example - Social Factor is the reason why Youth-Centric Start-ups, Companies, Products and Services are doing very well in many countries, especially INDIA.   Technology - It refers to the Innovations in Technology that may affect the operations of an Organization, favorably or unfavorably. In today’s era, the impact of Technology is enormous and multifaceted. Marketing Strategies must focus on the constant changing Technology as Technology strengthens the business structure.  Technology includes Technology Incentives, Level of Innovation, Automation, Research and Development (R&D) Activity, Technological Change and the amount of Technological Awareness that a market possesses. These factors influence the decisions whether to enter into certain industries or not, whether to launch certain products or to outsource production activities abroad or not. By knowing what is going on in the current technology-market, you may be able to prevent your company from spending a lot of money on developing a technology that would become outdated very soon.   Legal Factor - When it comes to the Legal Factor, Organizations need to be crystal clear about what is legal and what is not in order to trade successfully and ethically.  This situation (Legal Factor) becomes even more tricky when an Organization is trading globally because every country has its own Rules and Regulations. However, you also need to be aware of the possible changes in legalization rules by the Government which may affect your business in the future. In such situations, having a “Legal Advisor” could prove very beneficial.   Environmental Factor - Organizations cannot survive if the Environment is not suitable or favorable. However, Environmental Factors are not in control of the Organizations but Organizations need to be clear about whether the products/services they offer are suitable to the respective Environment or not, before setting up the business . Location impacts the Organization’s marketing plans since changes in climate and consumers’ desire for a particular offering can be an issue. Weather, Climate, Environmental Policies, Natural Disasters, Air and Water Pollution, Recycling Standards, Support for Renewable Energy all these affect the long-term planning of an Organization.   Conclusion - PESTLE Analysis provides a vast study of the external and internal factors that pose a challenge to the Organization’s Marketing Strategy. To successfully achieve marketing goals, Organizations must use PESTLE Analysis to assess the market conditions so that they can plan and strategize accordingly.   RELATED BLOGS: Why Micro-Environmental Factors are Important for your Business?