CHAPTER 3
The task and macro environments of
Management
The Environment
- Contains all the elements outside the company that have an influence on the
company's resources, objectives and on reaching the organizational goals.
The task
Environment
The macro
Environment
The international
Environment
(Task + Macro)
The Task Environment
Banks
Customers
Government
Media Organization Suppliers
Community Competitors
Stakeholders = NGO’s
any group, individual, or community that is impacted
by the operations of the organization, and therefore
must be granted a voice in how the organization
functions.
The Task Environment
• Customers: the primary purpose of providing goods and services is to fill needs.
Understanding the needs of an organization’s core customer base, and
optimizing operations to best fill those needs, is therefore a significant part of
managing a business. Interacting with customers through social media, emails,
storefronts, user testing groups, and the delivery of services and goods is an
important aspect of maintaining a strong community (and a strong sense of
what customers want from the organization).
• Suppliers: suppliers are significant in any business since they provide the raw
materials and the consumables that are vital for producing goods or providing
different services. Timely payments, shipments, communication, and
operational processes are key to maintaining a strong relationship with this
stakeholder group.
The Task Environment
• Competitors: competition leads to change and innovation so the organization’s
relationship with the competitors is crucial. If competition is strong this is a
major threat for the organization and can lead to several changes in terms of
products, distribution, price and so on. Competitors and not only rivals but can
also be partners for certain project or product when the know-how and the
knowledge are different so combined they create synergies.
• NGO’s: organizations can provide products, services or money to several NGO’s
helping them to have a significant impact on the community and improving the
organization’s image. NGO can have a strong voice and influence the
organization’s activities or products (ex. PETA - People for the Ethical Treatment
of Animals (PETA) is the largest animal rights organization in the world, with
more than 6.5 million members and supporters).
The Task Environment
• Community: a business can be a great benefit to a community, providing tax
money, local access to unique goods and services, jobs, and community
development programs. However, a business can also be a drain on a community
by increasing traffic, creating pollution, hurting small businesses, and altering
real estate prices. As a result, businesses must look at the needs of the
community, and ensure that negative repercussions are minimized while
community engagement is maximized.
• Banks: provide the financial resources needed for developing a business and
have major contribution to financial stability, local economic development,
business lending, and financial inclusion. As borrowers, the organizations want
the lowest interest rate on their loans and as depositors they want the highest
interest rates they can get.
The Task Environment
• Media: there is no such thing as bad image but the truth is that bad news
provided by the media will affect the organization’s image and will definitely
increase costs. Social networks are collecting vast amounts of data so
organizations need to assure that the collected data is in fact helping her to
reach more clients and sell more. Organizations are introducing social media
tools into the workplace which have the potential to improve communications
between co-workers, boost morale and motivation, increase efficiency, and
foster an organizational culture.
• Government: Governments tax businesses, and therefore have a firm stake in
their success. Governments can in fact be considered primary stakeholders,
considering the profit motive involved. Governments also provide regulatory
oversight, ensuring that accounting procedures, ethical practices, and legal
concerns are being handled responsibly by business representatives.
The Macro Environment
- Has 7 factors or forces:
1. Economic factors:
- Purchasing power of population (e.g. if a business is selling luxury goods a
small purchasing power will affect the company and lead to changes
such as price reduction or the possibility to pay in installments);
- Economic growth (a developed economy will stimulate organizational
growth providing more opportunities for companies);
- Infrastructure (good infrastructure such as roads, air or sea
transportation will help organizations to be more efficient with smaller
costs);
- Financial potential (small interest rates and different funding
opportunities such as European funds will stimulate organizations to
expand their activity and grow. A stable exchange rate is also convenient
for organizations that ,,work” with different currencies).
The Macro Environment
2. Technological factors:
- the existence, availability, and development of technology. This could
include things from computational power to engine efficiency;
- level of Research and Development (R&D);
- technological change
Technological factors affect organizations in three distinct ways:
- New ways of producing goods and services;
- New ways of distributing goods and services;
- New ways of communicating with target markets.
The Macro Environment
3. Political factors:
- These are all about how and to what degree a government intervenes in
the economy. This can include – government policy, political stability or
instability in overseas markets, foreign trade policy, tax policy, labor law,
environmental law, trade restrictions and so on.
It is clear from the list above that political factors often have an impact on
organizations and how they do business. Organizations need to be able to
respond to the current and anticipated future legislation, and adjust their
marketing policy accordingly.
The Macro Environment
4. Legal factors:
- include - health and safety, equal opportunities, advertising standards,
consumer rights and laws, product labelling and product safety.
It is clear that companies need to know what is and what is not legal in order
to trade successfully. If an organization trades globally this becomes a very
tricky area to get right as each country has its own set of rules and
regulations.
There are certain laws that affect the business environment in a certain
country while there are certain policies that companies maintain for
themselves.
The Macro Environment
5. Socio-cultural factors:
- are the areas that involve the shared belief and attitudes of the
population. These factors include aspects related to mentality, religion,
customs, traditions and so on.
These factors are of particular interest as they have a direct effect on how
marketers understand customers and what drives them.
6. Demographic factors:
- are related to population growth, age distribution, health consciousness,
career attitudes and so on.
They are important for understanding the structure of the customers but
also for assuring that the company can find the adequate personnel needed
(in terms of age, studies, gender, qualifications etc.)
The Macro Environment
7. Natural (environmental) factors:
- relate to the influence of the surrounding environment and the impact of
ecological aspects (soil, water, climate etc.).
These factors have only really come to the forefront in the last fifteen years
or so. They have become important due to the increasing scarcity of raw
materials, pollution targets, doing business as an ethical and sustainable
company, carbon footprint targets set by governments (this is a good
example were one factor could be classes as political and environmental at
the same time). These are just some of the issues marketers are facing
within this factor. More and more consumers are demanding that the
products they buy are sourced ethically, and if possible from a sustainable
source.