The Macro general environment consists of factors external to the industry that may have a significant impact on a firm's strategies. Here we will look at six broad dimensions - demographic, socio cultural, political/ legal , technological, economic and global.
All these dimensions of general environment are interrelated. These dimensions not only influence businesses, but also influence each other. After apolitical change in 1991, when Congress government came to power, major economic change took place in the form of LPG, i.e., Liberalization, Privatization, and Globalization. This led to an enhancement in the technological environment of the country. This technological and economical change has transformed the socio-cultural environment of the country .
Globalization has also enabled India to become the software superpower of the world. All global organization now have a new and vast market, as well as cheap manufacturing hub, which has compelled them to change their global marketing and manufacturing strategies.
1. Political Environment:
It is the political environment of a country that decides the fortune of businesses in the country. After the 1917 revolution in Russia , a sudden political change transformed the equation of doing business. After the change of regime in the USSR, in late 1980s and early 1990s business equations changed once again in Russia.
2. Regulatory and legal Environment :
The political environment governs the legal and regulatory environment of a country.The regulatory environment plays a vital role by dictating the dos and don'ts of a business. Every country has a different legal environment.
In India, we have the companies Act the governs companies, the MRTP Act which restricts monopoly, various laws regarding shares, the Consumer Protection Act environmental laws, etc.
The implementation of GATS has resulted in the implementation of international laws regarding patents. There are also laws for import and export, licensing, etc. the have a drastic impact on the business and future of organizations.
3. Demographic:
It is the demographic environment which decides the marketing mix for an organization. It decides the type of product the organization comes out with. In India , a lot of research and efforts are undertaken to reduce the cost of products and to launch products at the cheapest possible rates. A one rupee sachet of shampoo or a five rupee ice-cream cone are some examples. It is the demography that decides the pricing, promotion and distribution strategies. 70% are youth which is why every business house is launching new products, specifically for the rural market.For example, ITC launched its unique and ambitious programme called chaupal, trageted at the rural market.
4. socio-cultural:
Socio-cultural variables like the beliefs, value system, attitudes of people and their demographic composition have a major on the personality of people and their behavior style. The consumers preferences have undergone a drastic change since 1990's. This has led to an increase in the production of cars, refrigerators, air conditioners and other articles that were at one time considered as ostentatious and luxurious.
5. Technological:
Technological forces present a wide range of opportunities and threats that have to be accounted for in the process of business strategy formulation. Technological advancement may dramatically affect an organization's products, services, markets, suppliers, distributors, composition, and competitive position. Some of the important factors that influence the technological environment are;
i, Rate of change in technology, rate of obsolesce.
ii, Communication and infrastructure technology in management.
6. Global Environment:
The international environment consists of all factors that operate at the transnational , cross-cultural level and across the border. The world is a global village today and it is getting closer and closer as far as business is concerned.
For the sake of business, countries are burying their grievances and forging economic relationships with South Africa and Brazil , and is planning to develop a road network in South East Asia. India is also a close ally of ASEAN, and is also a signatory of WTO which has a multilateral trade agreement among more than 100 nations.
7. Economic Environment:
The economic environment consists of macro level factors related to the means of production and distribution of wealth, which have an impact on the business of an organization.
The economic structure of a country, whether it is socialist, mixed or capitalist, has a drastic impact on the economy. Economic policies such as foreign trade policy, industrial policy, fiscal policy, GDP growth rate, policy of licensing, monetary policy, development of financial institutions, development of money and stock market, and the extent of globalization are some of the aspects of an economy that reflect on business in an economy.
8. National Competitive Advantage:
Despite globalization, industrialization is clustered in small and specific number of countries. Most successful computer and biotechnology firms are based in Germany, and the cream of the electronics industry is based in Japan.
All these dimensions of general environment are interrelated. These dimensions not only influence businesses, but also influence each other. After apolitical change in 1991, when Congress government came to power, major economic change took place in the form of LPG, i.e., Liberalization, Privatization, and Globalization. This led to an enhancement in the technological environment of the country. This technological and economical change has transformed the socio-cultural environment of the country .
Globalization has also enabled India to become the software superpower of the world. All global organization now have a new and vast market, as well as cheap manufacturing hub, which has compelled them to change their global marketing and manufacturing strategies.
1. Political Environment:
It is the political environment of a country that decides the fortune of businesses in the country. After the 1917 revolution in Russia , a sudden political change transformed the equation of doing business. After the change of regime in the USSR, in late 1980s and early 1990s business equations changed once again in Russia.
2. Regulatory and legal Environment :
The political environment governs the legal and regulatory environment of a country.The regulatory environment plays a vital role by dictating the dos and don'ts of a business. Every country has a different legal environment.
In India, we have the companies Act the governs companies, the MRTP Act which restricts monopoly, various laws regarding shares, the Consumer Protection Act environmental laws, etc.
The implementation of GATS has resulted in the implementation of international laws regarding patents. There are also laws for import and export, licensing, etc. the have a drastic impact on the business and future of organizations.
3. Demographic:
It is the demographic environment which decides the marketing mix for an organization. It decides the type of product the organization comes out with. In India , a lot of research and efforts are undertaken to reduce the cost of products and to launch products at the cheapest possible rates. A one rupee sachet of shampoo or a five rupee ice-cream cone are some examples. It is the demography that decides the pricing, promotion and distribution strategies. 70% are youth which is why every business house is launching new products, specifically for the rural market.For example, ITC launched its unique and ambitious programme called chaupal, trageted at the rural market.
4. socio-cultural:
Socio-cultural variables like the beliefs, value system, attitudes of people and their demographic composition have a major on the personality of people and their behavior style. The consumers preferences have undergone a drastic change since 1990's. This has led to an increase in the production of cars, refrigerators, air conditioners and other articles that were at one time considered as ostentatious and luxurious.
5. Technological:
Technological forces present a wide range of opportunities and threats that have to be accounted for in the process of business strategy formulation. Technological advancement may dramatically affect an organization's products, services, markets, suppliers, distributors, composition, and competitive position. Some of the important factors that influence the technological environment are;
i, Rate of change in technology, rate of obsolesce.
ii, Communication and infrastructure technology in management.
6. Global Environment:
The international environment consists of all factors that operate at the transnational , cross-cultural level and across the border. The world is a global village today and it is getting closer and closer as far as business is concerned.
For the sake of business, countries are burying their grievances and forging economic relationships with South Africa and Brazil , and is planning to develop a road network in South East Asia. India is also a close ally of ASEAN, and is also a signatory of WTO which has a multilateral trade agreement among more than 100 nations.
7. Economic Environment:
The economic environment consists of macro level factors related to the means of production and distribution of wealth, which have an impact on the business of an organization.
The economic structure of a country, whether it is socialist, mixed or capitalist, has a drastic impact on the economy. Economic policies such as foreign trade policy, industrial policy, fiscal policy, GDP growth rate, policy of licensing, monetary policy, development of financial institutions, development of money and stock market, and the extent of globalization are some of the aspects of an economy that reflect on business in an economy.
8. National Competitive Advantage:
Despite globalization, industrialization is clustered in small and specific number of countries. Most successful computer and biotechnology firms are based in Germany, and the cream of the electronics industry is based in Japan.
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