CONGRATULATIONS! You have finished Module 1.
You
can move to module 2.
MODULE 2. ENVIRONMENT OF BUSINESS
OVERVIEW
The second module is the environment of business
environment and the various environmental factors that affect
the business enterprises. You cannot just make a product and
sell it is a vacuum. As it turns out, the environment in
which you will try to sell your product can greatly affect
your marketing strategy. It includes factors such as the
nature of your market, the nature of your competition, the
nature of the playing field, what the end up and upcoming
trends are, and how you can gather information about all of
this.
SUBJECT OUTCOME
On Completion of these modules the student will be able to:
Identify the various internal business environments;
recognize the different external business environments;
differentiate controllable and uncontrollable environment
factor.
LEARNING OUTCOMES
MARKETING MANAGEMENT 1
At the end of this module, students are expected to explain:
1. Identify the various internal business environments;
2. Recognize the different external business environment;and
3. Differentiate controllable and uncontrollable
environmental factors.
Self-Assessment
Task 1
[Link] an example of a trend that you believe is
happening right now. How can an entrepreneur take
advantage of this trend?
ASSIGNED READINGS and/or Enrichment
The Environment of Business
This module deals with the different environmental
factors that affect the business enterprise and the various
reasons behind the failure of an enterprise.
INTRODUCTION
Any kind of business organization works within an
environment. How a company deals with the environment
determines its success or failure. Business environment
consists of factors that a company can control and those that
are uncontrollable. Controllable business factors are internal
to the company. These include the marketing mix—product,
price, place, and promotion. Management decides what product
to produce, how to increase the level of production, how much
will be the selling price of the product or services, how the
products will be distributed, what market to cover, and what
medium of promotion to use to advertise products. Management
also has a big influence when it comes to establishing company
policies. It is responsible for the proper implementation of
company's rules and regulations, and for organizing and
controlling its employees.
On the other hand, uncontrollable business factors
are external to the company. These include factors such as
demographic, economic, socio-cultural, political or
MARKETING MANAGEMENT 2
government, technological, and climate or weather. Thus, for
any business entity to survive and to have a smooth and
continuous operation, the environment needs to be closely
monitored to be able to anticipate its effect to the different
marketing plans or programs of the company so that necessary
adjustments can be immediately made.
TYPES OF BUSINESS ENVIRONMENT
Internal Environment
These are forces that are close to the company and
affect its interaction with its market. Micro-environment
is another term for this environment. It consists of the
company, distribution channels, competitors, the
company's public, and suppliers.
1. Firm/Company – represents the business enterprise that
creates product and sells or provides services to
identified market.
2. Distribution Channel – represents the organizations
that assist a company to promote, sell, or distribute
products or services to actual and potential customers;
examples of channels are retailers, as well as
wholesalers. It is also considered as marketing
intermediaries.
3. Competitors – are business enterprises that offer the
same products or alternative products that other
companies also offer; competitors provide the market
with more choices.
4. Company's Public – are organizations or groups that
have direct or indirect interest to a company;
financial institutions like banks, the media, the
general public, the government, and other citizen-
organized groups are some of the organizations that
have interest to a company.
5. Suppliers - are firms that provide needed equipment,
raw materials, office, and other supplies to a company.
External Environment
The bigger environment or the macro-environment is
uncontrollable or more difficult for a company to
control. Macro-environment is composed of the following:
1. Demographic Factor – includes environmental factors
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such as the consumers' profile—age, gender, education,
population, gender, nationality and religion. These
factors are essential for a company to consider because
variables under demographic factors constitute the
characteristics of the market and these affect buying
behavior; an example is the issue on migration. The
influx of people in an area means a greater consumption
on basic necessities, like food, and an increase in
demand for clothing and housing. On the other hand,
such movement of people will mean decrease in demand
for basic products in other areas
2. Political or Legal Factor – consists of existing laws,
ordinances, or government restrictions that affect or
influence the operation of a business.
3. Economic Environment Factor – includes those that
influence the spending pattern or buying power of
consumers. Examples of economic factors that are
essential to marketers are change in income level,
change in spending pattern, and change in income
distribution. Other factors that may affect economic
environment are family size, cost of products, and
lifestyle of the market.
4. Socio-Cultural Environment Factor – includes those that
affect the values, behavior, or belief of society.
5. Technological Environment Factor – deals with those
factors that create or innovate products due to
technological advancement or modern machineries,
gadget, or equipment.
6. Natural Environment Factor – affects marketing
activities. Some issues in the natural environment are
increased pollution, shortage of raw materials, and
non-biodegradable packaging.
Before answering the
questions, please do
some stretching.
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SELF-ASSESSMENT:
Task 2
Gap-Fill. Choose the right answer from the words in
the box. Write your answer on the line provided before
each number.
a. internal f. macro
b. technological g. socio-cultural
c. economic h. economic
d. demographic i. distribution channel
e. intermediaries j. competitors
________1. Environment where individuals have the power to
control
________2. Consists of new machinery, equipment
________3. Refers to inflation, employment rate, prices
________4. Factor consisting of a person's gender,
educational attainment, nationality, status
________5. Type of environment considered as
uncontrollable
________6. Decision influenced by beliefs, superstitions,
and way of living
________7. Factor that includes change in spending
pattern, change in income distribution, a change in
income level
________8. Helps the company to promote and distribute
products to actual and potential customers
________9. Business enterprise that offers the same
products or alternative products that a company also
offers
________10. Represents the firms that assist the company to
promote, sell, or distribute products to the market
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FEEDBACK
Congratulations for your excellent work. Clearly you were
able to understand, synthesize and apply the theories and
concepts. It manifest your readiness to progress to the
next step of learning. But continue working hard;
education is a lifetime commitment.
For those who have not got a perfect score, you need to
exert extra effort and commitment to improve. Your
inability to understand and apply concepts may be remedies
by further reading and research. But still,
congratulations for finishing the learning tasks, Just
don’t forget to be extra hardworking and goal-oriented to
get back stronger and better.
Summary
Marketing is too important to be ignored. Products that take
consideration effort and time to produce may not be bought.
This is what happens to products that are not wanted, or in
the wrong place, or nobody knows they exist, and some other
reasons. Marketing refers to exchange activities conducted by
individuals or organizations for the purpose of satisfying
human wants with the view of accomplishing individual or
organizational objectives.
The marketing concept which call for identifying the needs of
customers before actual production is deemed superior to the
product concept which emphasize production, and the selling
concept which emphasize selling.
To implement the marketing concept, the formulation of a
marketing strategy is required. Marketing occurs when at least
two parties desire to satisfy their need, and they have means
to communicate with each other, and each has something to
exchange.
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In the attempt to achieve its marketing objectives, the firm
has reckon with certain factors, namely: marketing mix
variables and marketing environment variables.
SUGGESTED READINGS
Web Reading
Post-Demographic Consumerism in Asia
http;//googl/zGssrS
This report by a market observer [Link] lays
out the consumer attitude, opinions and lifestyle that
are now becoming the norms in Asian counties for the year
to come.
References/Resources:
Medina, Roberto Principles of Marketing, 2008 Revised
[Link] Bookstore,Inc.
Balasan, Ma. Nancy T. Marketing Basics A modular Approach
2014 [Link] Bookstore,Inc.
Philip Kotler, Marketing Management International Edition
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