Relationship between micro economic and macro environment

Macro vs. Microeconomic Indicators | Your Business

relationship between micro economic and macro environment

The business environment is a marketing term and refers to factors and forces that affect a firm's ability to build and maintain successful customer relationships. The three levels of the environment are: Micro (internal) environment – small forces within the company that affect its The analysis of the macro marketing environment is to better understand the. In the event the micro components on the economic climate are weak when it comes to general performance the macro economic climate will. The primary difference between micro and macro environment is that the micro environmental factors are controllable by the business, however.

Studying macroeconomic indicators can help alert you to potential economic downturns so you can prepare for them. The type with high prices and small plates. You do some basic macroeconomic research and find that unemployment is up along with consumer financial stress. Under these circumstances, and given that most restaurant startups fail, you may be better off buying into a fast food chain. This is the number of new houses that begin construction within a specific time frame.

relationship between micro economic and macro environment

If housing starts are down, this could indicate that consumers are not confident in the economy. Consumer sentiment is very important. You should never ignore it. When consumers are burdened with debt or growing inflation, they are less likely to invest in big purchases, and are less likely to buy luxury items.

High consumer financial stress indicates that consumers have less disposable income. If house sales go down, this could be an indicator of high consumer financial stress. On the other hand, high house sales indicate that consumers feel confident in the economy. Microeconomics Microeconomics refers to the more company-specific economic factors.

This includes things like your specific industry or niche, changes in tax policy, price changes your competitors make, and the general supply and demand. These are the economic factors you will be most familiar with.

These are the people that help the company promote, sell, and distribute its products to final buyers. Resellers are those that hold and sell the company's product. They match the distribution to the customers and include places such as Wal-Mart, Target, and Best Buy. Physical distribution firms are places such as warehouses that store and transport the company's product from its origin to its destination.

Marketing services agencies are companies that offer services such as conducting marketing research, advertising, and consulting. Financial intermediaries are institutions such as banks, credit companies and Insurance companies. There are different types of customer markets including consumer markets, business markets, government markets, Globalization international markets, and reseller markets.

relationship between micro economic and macro environment

The consumer market is made up of individuals who buy goods and services for their own personal use or use in their household. Business markets include those that buy goods and services for use in producing their own products to sell. This is different from the reseller market which includes businesses that purchase goods to resell as is for a profit.

The Difference Between Micro and Macro Economics

These are the same companies mentioned as market intermediaries. The government market consists of government agencies that buy goods to produce public services or transfer goods to others who need them.

International markets include buyers in other countries and includes customers from the previous categories. To remain competitive a company must consider who their biggest competitors are while considering its own size and position in the industry. The company should develop a strategic advantage over their competitors. The final aspect of the micro environment is publics, which is any group that has an interest in or effect on the organization's ability to meet its goals.

For example, financial publics can hinder a company's ability to obtain funds affecting the level of credit a company has. Media public include newspapers and magazines that can publish articles of interest regarding the company and editorials that may influence customers' opinions.

Government public can affect the company by passing legislation and laws that put restrictions on the company's actions. Citizen-action publics include environmental groups and minority groups and can question the actions of a company and put them in the public spotlight.

Local publics are neighborhood and community organizations and will also question a company's effect on the local area and the level of responsibility of their actions. The general public can affect the company as any change in their attitude, whether positive or negative, can cause sales to go up or down because the general public is often the company's customer base.

And finally those who are employed within the company and deal with the organization and construction of the company's product. Macro-environment[ edit ] The macro-environment refers to all forces that are part of the larger society and affect the micro-environment. It includes concepts such as demography, economy, natural forces, technology, politics, and culture.

The purpose of analyzing the macro marketing environment is to understand the environment better and to adapt to the social environment and change through the marketing effort of the enterprise to achieve the goal of the enterprise marketing. Demography refers to studying human populations in terms of size, density, location, age, gender, race, and occupation.

An example of demography is classifying groups of people according to the year they were born. These classifications can be referred to as baby boomerswho are born between andgeneration Xwho are born between andand generation Ywho are born between and Each classification has different characteristics and causes they find important.

This can be beneficial to a marketer as they can decide who their product would benefit most and tailor their marketing plan to attract that segment.

Demography covers many aspects that are important to marketers including family dynamics, geographic shifts, workforce changes, and levels of diversity in any given area. Another aspect of the macro-environment is the economic environment.

relationship between micro economic and macro environment

This refers to the purchasing power of potential customers and the ways in which people spend their money. There are different schools of macro economics offering different explanations e. Keynesian, Monetarist, Austrian, Real Business cycle e. Macro economics places greater emphasis on empirical data and trying to explain it.

Micro economics tends to work from theory first. Differences between microeconomics and macroeconomics The main difference is that micro looks at small segments and macro looks at the whole economy.

But, there are other differences. If demand increases faster than supply, this causes price to rise, and firms respond by increasing supply. For a long time, it was assumed that the macro economy behaved in the same way as micro economic analysis. Great Depression and birth of Macroeconomics In the s, economies were clearly not in equilibrium.

There was high unemployment, output was below capacity, and there was a state of disequilibrium.

The Difference Between Micro and Macro Economics

Keynes produced his The General Theory of Employment, Interest and Money; this examined why the depression was lasting so long. It examined why we can be in a state of disequilibrium in the macro economy. Keynes observed that we could have a negative output gap disequilibrium in the macro-economy for a prolonged time. For example, Irving Fisher examined the role of debt deflation in explaining the great depression.

Sincemacroeconomics developed as a separate strand within economics.