The Macro- Environment: the Firms International Business Performance - Essay Example

The Macro- Environment: the Firm’s International Business Performance 1. Introduction The modern business manager has to operate in an environment that is more vibrant that has undergone evolution which has been dynamic and unpredictable (Nolan, 2008, p. 45)1. Economic variables have been intricate in both form and impact on the practice of business all around the world. Consumers as well as customers have been exhibiting complex behaviours in their local as well as international markets. Competitive pressures have been the most dramatic change that has been identified and competitors have been utilizing different strategies to adapt to the dynamic and unpredictable nature that is exhibited by the business environment. The major single noteworthy stimulus on organizational policy and strategy is the environment that exists outside as well as inside the organization. Organizations are the establishments that are purposely created to achieve and accomplish particular objectives (Barkin, 2013, p. 160)2. The activities that are carried out in these firms are impacted by the situations that exist in the organization as well as the situations that are in existence within the larger society that they operate in. Presently, business environments are thought to have been rarely exceeded in complexity, turbulence and rapid in change and all the firms must be able to focus on their environments more than ever when they are coming up with policies and implementing them in order for them to survive and grow. Micro-environment factors act external to the business are typically uncontrollable in nature even though they have no impact on the marketing ability of the concern in the direct way but in a more indirect manner influence the marketing choices that are associated with the company (Groucutt, Leadley and Forsyth, 2004, p. 27)3. The main exterior and uncontainable attributes that have an effect on the decisions a firm makes also impact the success and strategy associated with it. These factors include legal, technological changes, demographics, and natural forces; economic as well as political which are collectively referred to as macro-environment (Prasad, 2010, p. 284)4. 2. Demographic environments The demographic environment is very important and effective in relation to marketing environment which is out of the control of the control of the business manager. For a business, the first item to consider is the population or the market size since without the population, there is nothing for a market thus for this reason before a business can enter into the market the managers must consider the changes that might take place in the population (Co, 2006, p. 121)5. The geographical living of the population and the shift of geographical living population have a great impact on business since people move to big cities for various reasons. This migration results in changes in the lifestyles as well as demands which the population has and coming up with products that are aimed at the tourists, job seeking people as well as the businessmen is continually becoming a profitable business. Above and beyond, more and more people are going abroad and this makes the changes in demand style which must focus its attention on keeping pace with the international market that is posting continued growth. The rate of education as well as the distribution of jobs must also be considered when a business strategy is being identified since the taste, choice; process of communication as well as the habits cannot be the same when an educated person is compared to one that is uneducated (Gitman, McDaniel and Gitman, 2000, p. 34)6. The same can be stated for the individuals who work in varying work environments and since the rate of education increases on a regular and progressive basis, individuals are taking up more industrial jobs as well as service jobs more than farming. These changes in the environment are vital as far as business and marketing strategy are concerned. In the present times, it is considerably easier to identify the changes that have occurred in family life such as increase in the number of working class women, the income capabilities of women, the right of divorce of women as well as the adult marriage of women which are vital when considering international business. In some communities and nations, since the women have taken up jobs outside the household, the tasks at home have been left to home attendants. More and more people are becoming eager to take up jobs that require less physical labour and in the process; they prefer food that is already processed or repaired, washing machines and other equipment that makes work easier to reduce the amount of work to be done. All this things create market and increase business opportunities in new markets making them grow in a more rapid manner. 3. Economic environment In business and creating of new markets, people as well as their buying abilities are important factors for success since if there is buying ability but a lack of market, then the whole endeavour will be null (Ouden, 2011, p. 109)7. The ability to buy and make purchases is dependent on the earnings of the population, the prices of the products in the market as well as the savings and credit facilities that are available to them. Through analysing the shift in earning as well as spending a business will be in a position to develop it marketing policy. Increases in the rates of inflation, the unemployment rates, taxes as well as a state of economic uncertainty in different international markets are responsible for the downward shift of the customers’ economic situation. Trade and foreign support by different governments are progressively increasing the purchasing powers of some populations but the populations that are characterized by the people who earn a limited living are experiencing conditions that keep on deteriorating. In most of the developing countries, the price of products that come from farming are not keeping in pace with the ones that are produced by industries making the conditions of the farmers continue becoming worse. There is the possibility that prices will rise in the future so people are buying products and keeping them in storage and this makes the multinational companies apply effective strategies for the people that reside in the rural parts. The type of products that the people in the third world countries are buying demonstrates their increasing levels of income and companies that are in the market have to offer a higher remuneration to the people who are searching for jobs in order to match their standards of living. Therefore markets are showing characteristics that exhibit a high rate of cash flow making the prospects for the business better and more viable. Based on the manner in which the different populations are earning, the spending patterns evolve to match them making the buying patterns change also. Most of the household income goes to transportation, food and housing and as the income of the families keep on increasing, the expenses that go towards food are decreasing, the expenses that go to housing remain constant and at the time of increasing of income, the eating habits have to change making the storage of the products or the shortage of products have the ability to change the demand. Changes that have been seen in key economic variables such as the cost of living, savings and credit patterns as well as income have a huge impact on the market and business environment. Companies consider these variables through the use of economic forecasting and businesses do not have to be closed in the event of an economic downturn. With enough warning and forecasting, the businesses should be able to reap the benefits associated with the changes that take place in the economic environment. 4. The cultural environment The cultural environment is a blend of several organizations and forces that affect the fundamental values of the society, their perception, behaviour as well as preferences and the societies that people grow up in are most often than not responsible for the shaping their beliefs and values (Harrison and St John, 2010, p. 5)8. They also develop a global perception that defines their interaction with other people. Different cultures create a difference between different countries and it is these different cultural views that significantly affect the overall marketing and business environment. The cultural environment has some vital impacts that have an effect on the businesses and commerce of particular environments especially international ones. a. Persistence of cultural values People in a particular society typically hold varying beliefs and views with the main ones having a high level of persistence. For instance there are some places where the people are peace loving, marry one and hold strong religious beliefs that make them honest. These beliefs play an important role in shaping the particular attitudes and behaviour that can be seen in day to day lives of the populations. The key beliefs and values are picked up by the children from their parents and are strengthened by schools and other learning institutions as well as businesses. The secondary values and beliefs are more likely to evolve, for instance the belief in marriage is a core one while the belief that people should marry while they are still young is a secondary one. Business people and marketers have some amount of opportunity that might allow them to change their main beliefs. A good example is the fact that people need food to survive and this makes it a core factor, the place where they will eat that food is a secondary factor that the business people can be able to influence. b. Sub-cultures All the cultures are comprised of sub-cultures which have beliefs, attitudes as well as ethics that display some similarity to the main culture while also having secondary beliefs that are specific to them (Walker, 2011, p. 192)9. For instance, the people who are wealthy have a different way of thinking when compared to the rest of the population. Their life styles in terms of the things they spend their money one, the food they eat and even clothes differs from the lifestyle that the other people live. They normally present themselves to be different from the rest of the population. c. People’s perception of others In the decades that have passed, there have shifts in the attitudes that people have directed at others that have become evident. Presently the demand the people have for things like television sets, DVD sets among others that have the best and latest technology has increased. This is because other people own them and the people that want to acquire them want to follow this trend. People’s preferences keep changing making the pace of life decreasing the need for some things while at the same time increasing the need for others. d. Shifts in secondary cultural values Even though the main values in a society have some level of persistence, cultural shifts take place from time to time in the form of music groups, hair styles as well as styles of clothes (Esmer and Pettersson, 2007, p. 13)10. Business and marketers strive to make predictions of the marketing shifts so that they can be able to identify any new opportunities which may arise. For instance, there should be communication between individuals and the fixed telephone lines were initially the main medium of communication n the times that have passed. Eventually there was the introduction of the mobile phones into the market and this changed the manner in which people communicated making it a big factor of the market in terms of communication of the businesses as well as a product to be bought by the customers. This has made many businesses in the world adopt a shift in the cultural values they have always held. The main cultural values that a society has are displayed through the perceptions the people have of themselves as well as others and also in the perceptions they have of their different organizations, the universe and their societies. e. People’s perception of themselves The attention that people pay to serving themselves as compared to serving others differs with individuals whereby some individuals are after personal pleasure, fun and escape while others prefer to follow self-realization that is achieved through religion and other personal objectives. Individuals utilize products, services as well as brands as a way of expressing themselves through buying the products which complement the perceptions they have of themselves. This can be seen in the people who are relatively rich and may want to buy and wear clothes and shoes that are made by a particular designer as opposed the ones who are relatively poor who may not be able to afford such. Another example is the manner in which the individuals who are adventure seeking may not follow the same path or item more than once. Even though they might appreciate a particular art such as photography, there is a higher chance that they will take part in an activity that is riskier. They like to put themselves in situations that very few people would rather find themselves in. therefore, businesses especially international ones. Will produce and sell their products to the consumers depending on the views the consumers have of themselves. f. People’s view of the organization The attitudes that people have towards different corporations, agencies and other organizations vary depending on the individual and people are typically willing to be associated with the major organizations and expect more from them than the relatively smaller ones (Kotler and Armstrong, 2001, p. 111)11. People normally seek satisfaction from the different organizations. For instance, in the banking industry, the banks that have a higher customer demand are the ones that provide a higher level of satisfaction as well as a desired degree of service to their customers. Individuals prefer to be enrolled in the universities that have made a name for themselves in relation to education and so on. Therefore, companies and businesses need to identify and develop new ideas that will enable them win customer and worker confidence especially when international business is involved. 5. Conclusion A business that wants to be successful must have a very clear understanding of the trends that are associated with external business environments as well as the forces that affect the competition. This level of understanding will allow the organization to make a choice of the best approach that fit the trends that are seen in the external business environments. Also considering the rapidly changing and uncertain environment that most businesses compete in, it is imperative that the organizations maintain the systems that measure their performance to make sure they remain appropriate and provide information that has relevance to the issues that are important at that particular time. Bibliography Barkin, J. 2013, International Organization, 1st ed. Palgrave Macmillan, Basingstoke. Co, M. 2006, Entrepreneurship, 1st ed. Pearson Education, Cape Town. Esmer, Y. and Pettersson, T. 2007, Measuring and mapping cultures, 1st ed. Brill, Leiden. Gitman, L., McDaniel, C. and Gitman, L. 2000, The future of business, 1st ed. South-Western College Pub, Cincinnati, Ohio. Groucutt, J., Leadley, P. and Forsyth, P. 2004, Marketing, 1st ed. Kogan Page, London. Harrison, J. and St. John, C. 2010, Foundations in strategic management, 1st ed. South- Western Cengage Learning, Mason, Ohio. Kotler, P. and Armstrong, G. 2001, Principles of marketing, 1st ed. 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