What is a Macro Environment of a Business

By Max. D Gray. Updated: January 16, 2017
What is a Macro Environment of a Business

There are many external variables which may interfere with the operation of a company, either for good or ill. These factors do not depend on business activity but on extraneous factors that do not only affect businesses but the whole population. They are known as the macro environment of the company, to encompass all of them. In this article we will explain what the macro-environment of a company is.

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Definition of macro environment

The macro environment of a company is the term used to encompass all those external variables that affect businesses. These variables generally affect not only the company but the whole society and its activities, and encompass matters relating to population, legal or technological issues.

It is essential to conduct a good analysis of the macro environment of a company because knowing what environment surrounds our business enables us to protect ourselves from those issues that can be harmful, and take advantage of situations that allow us to increase sales.

Dimensions of the macro environment

Traditionally the business macro environment has been divided into 7 dimensions to study and evaluate, that would be:

  • Demographics: population structure, age, migration, birth rates and mortality.
  • Economic: income, evolution of current GDP, inflation, monetary and fiscal policy of the government, unemployment, interest rate, exchange rate.
  • Cultural and social: lifestyles, social groups, social concerns, changes in the values of the society or drug use, among others.
  • Legal: barriers to entry and exit a market, law, or regulation of specific issues.
  • Politics: division into provinces / autonomous regions, lobbies, political system, groups with a great power in the country.
  • Environment: level of degradation, social concerns, protected areas, protective legislation.
  • Technology: infrastructure, patents and innovations, ID or productivity of industries.

For more information, you can take a look at our article on the differences between macroeconomics and microeconomics.

What is a Macro Environment of a Business - Dimensions of the macro environment

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