Marketing Strategies - Change and Trend in Macro Business Environment - Assignment Example

? Marketing strategies Table of Contents 3 Introduction 3 Detailed overview of the change/ trend in macro business environment 4 Economy at a glance 4 Political trend 5 Economic trend 6 Social trend 7 Technological trend 8 Impact of the trend on South African organizations 9 Implications of the change on marketing strategies/practices 10 Conclusion 10 References 12 Bibliography 13 Abstract This paper deals with one of the most critical area of current strategic marketing of organizations. This is continuous change or trend in the macro business environment worldwide and its substantial impact on the marketing strategies developed by the organizations. This paper will specifically focus on the impact of this macro environmental change on the marketing strategies of South African organizations. Implications of this change on marketing strategies, specifically, major shift from traditional ways of marketing and promotion to major usage of online social media like facebook, tweeter and other popular social networking sites will also be analysed in this paper. Therefore, this study includes a complete package of changing business environmental related issues and its effects and implications on marketing strategies. Introduction Continuous changes in various factors of macro business environment are the most important areas of global businesses. Business organizations keep in-depth focus on the new trends or changes in these macro factors. Most important macro environmental factors are political factors, economical factors, social factors, cultural factors and technological factors. Substantial changes on these environmental factors have major impact or effects on the marketing strategies of the organizations. Management of leading organizations in the world have collaboratively developed business associations to research on the forthcoming trend and trend on global market. There are also many research organization have been formed who specialises in the market research to identify the changes and develop necessary changes in the strategic marketing and provide advisory services to the organizations in each countries. Organizations are constantly facing difficulties in this critical of business where expected or predicted changes sometimes differ from the actual changes in the market especially in the purchasing and consumption behaviour of the potential target consumers. Consumer behaviour changes according to the ever changing trend on economical, social and technological environment in the world or a specific country. In this study, the major changes in the macro environmental factors in South Africa will be discussed in details with respect to changing trend in the global business environment. Detailed overview of the change/ trend in macro business environment Business organizations in South Africa or any other countries have become open systems after the worldwide globalizations or open economy or open market. Therefore, organizations get resources from the environment that may be domestic, may be regional or international. Similarly, nay organizations have the opportunity to get the world market as the target market of them and can access any market across the world. Therefore, external environmental factors of a business have major impact on the both input and output level as organizations always tries to grab the opportunities from the changing business environment in national or international level. Firms cannot change any of the macro environmental influences but they can only react by the continuous changing the strategies with the changes in those environmental factors. Therefore, business change the internal business environment i.e. strategies and activities to grasp the opportunities of changing trend in the external environment and also can protect from any negative impact of new trend on the businesses. Therefore, it is very impotent for the managers, strategic decision makers to analysis the business environment in regular basis be3fore developing any strategic decisions for the organizations. Strategic marketing decisions are only be effective if new trend in various environmental factors especially the social and technological changes are considered Economy at a glance To identify the major changes or trend in the business environment of South African organizations, past and present overview of the key important factors of the economy need to be discussed. Though there are many multinational South Africa business are there but changes in the domestic changes in the business environment have major impact than changes in the foreign countries. The country of South Africa is ranked 34th among the listed 183 countries around the economies in Doing business in the year 2011. The Oxford business Group claims that the country boasts an attractive environment for investment possibilities. A flow of major initiatives serves as the gateway for the drive of the country to cement its place among the rest of Africa (Statssa, 2003, p.16). The report on 2012 which was launched in Johannesburg acts as the evidence to the wide ranging efforts of the government of the considered country to boost the industrial sectors particularly the manufacturing sector which could increase the employment opportunities of the country. The report includes extensive analysis of the automotive as well as the steel sectors. These sectors are the spearhead for further economic transformation. The report also considered the extensive up gradation in transport facilities and secure modes of power supply. The country is now focused on handling the challenge of rising demand. The mining industry of the country is under the spotlight as new markets are emerging which posits the opportunity to trade. The emerging markets promises further growth in iron ore. The country recovered fairly well after e contraction in the year 2009 and such kind of recovery can be matched by very few economies. The focus now has diverted to the sectors that provide multiplier effects and initiatives have been taken to increase the output of the productivity sectors. Unemployment has been a subject of concern for the country but fails to posit serious impact on the economy. The country is following the policy of maintaining political stability and is on the way of providing good business environment along with rich natural resources. Political trend Political environmental factors have major influence on the business. International political relation among the trading countries has major impact on the multinational companies whereas national political conditions have effects on the strategic decisions on the domestic and regional level firms. After worldwide trade liberalization in many countries around the world the trade policies, tariff barriers, government’s extra intervention on the domestic firms, ownership restrictions etc have been changing over the years. These changes lead to major strategic business changes in the multinational firms, operating in many countries under different domestic political and legal restrictions. In south Africa, there are also many changes have been passed way in the political and legal factors like local content requirement, intellectual property regimes, organizational control over the technology transfer, capital and currency flows etc. These are major factors of national political environment of the country which influence the domestic as well international business to make substantial change in the strategic business decisions. Rules and regulations in marketing and promotional communication in terms of quality of the content and mode of communication i.e. technology used are always considered by the organizations for developing marketing strategies. Some areas of legal restrictions in South African organizations have been developed recently. This corporate governance, laws related to environmental issues and money laundering. The companies which are incorporated locally do not have to face any restrictions on non SA citizen or the resident shareholders. The Companies act is currently under the review procedure which aims to facilitate foreign investment. The other aims of the Companies act include steps to bring more transparency and accountability, steps to acknowledge the objectives or the interests of the stakeholders. The recent periods have witnessed significant relaxation of the exchange control regimes. The goal of the government is to provide equal treatment for the residents and the non residents of the country in terms of inflow and outflows of capital as well as abolition of the measures of exchange control. Economic trend Impact of changing economic factors on the business strategies occurs in national as well as international level. After the globalizations, the countries with open economy have been very affected by the major decline in any country’s economy. Best example of this fact is global financial crisis 2007 to 2009 and other economical slowdown earlier. Therefore, along with the multinational firms, the domestic companies are also highly affected by the changes in economic environment of national or global level. The economic system of selected country, South Africa is based upon the free market principles. The prevailing common law and the Competition act regulate the nature of competition. South Africa is country of natural resources and before the globalizations the domestic and regional level firms used to add value on outsourced natural resources and supply the value added product in the domestic market. But, now economic density of the country has been increasing due to presence of the foreign business in this market and the domestic firms are also getting global exposure of advanced technologies used by the international firms. Still, there are ample room for the active and potential firms and potential foreign investors to grab the domestic resources of this country because economic density has raise up to only 2%. Inflation figure rose up to 11% on 2008 which has major impact business in economic level. The entrepreneurs prefer a low rate of interest which would facilitate access to capital as well as the other resources required for entrepreneurship. The rate of prime interest rate is 15% in mid 2008 which is very high and restricts the rate of consumption and the amount of raised capital. Though high unemployment is bad for the economy but it is another motivating factor for new domestic as well foreign investment. But, lack o9f skilled employee is a major drawback in this market (Brooks, Weatherston & Wikinson, 2011, p.1). Social trend Social environmental factors and changes in social and cultural trend also contribute to the reinforcement of external environmental factor on the business in an economy. Social trend of a particular economy is also leaded by the major cultural change in other countries participated in that economy. This is also result of globalizations. In South Africa, most of the foreign organizations are from USA and UK. Therefore, a major shift of social as well organizations culture in the country has took place which seems like followers of western culture. The concept of time differs between the black and white Africans. The white Africans try to keep the pace according to time while the black Africans are usually believed to complete the work at slower pace. Therefore, following western culture in terms of communications is giver high priority among the Africans. The business organizations especially the foreign businesses from developed countries offer available access to advanced technology to the Africans so that they can use those advanced ways of communications for them business communications with the people of the country. The Africans who can speak English generally follows a formal and polite mannerism to address someone. The black Africans generally follow an informal approach to greet someone who is unknown to them. Therefore, use of advanced mode communications like social media websites are very much popular with the white African and this trend has been increasing among the black Africans also. But, lower income level and living standard acts as threats to the faster growth in technology access over all the people of the country. Technological trend Technological change in one of the major change macro environment of businesses in an economy and it has direct and indirect impact on the strategic decision and the business activities of the existing companies of that country. Technological change also has significant impact on economic growth of the country. In South Africa, the government has active intervention in the development of economic condition like infrastructure that suitable for the continuing technological advances. The main objective is to access the technological innovation of the developed countries and transform the domestic economy into wealth creating opportunity for future. In two different ways the government of a country can directly or indirectly involve in technological advances. They can either investment substantial percentage of tax and tariff in the technological research and development or might highly accept the foreign direct or institutional investment in the country. For South Africa, technological changes are happening due to the later reasons and many multinational firms are diversifying in this market in search of valuable resources and potential target market. New technological trend in the country is that the social networking sites have been very much popular among the people with higher disposable income. This trend is the result of major influence of the developed as well major developing countries social as well as business culture. Most important factor of this increasing trend is that the availability of internet access in major areas and it has been possible by the market diversification of leading multinational telephone and internet service providers. Many leading ecommerce companies like Amazon, eBay etc have place their footprint in this potential market and people have been becoming very much internet friendly (Divol, Edelman & Sarrazin, 2012, p.1). Impact of the trend on South African organizations By this new trend, the domestic as well as multinational companies are getting benefited from cost effective marketing and promotional activities which has better potential than traditional mediums of marketing and promotion. From the derailed analysis of change or trend in macro environmental factors like political, economical, social and technological, major changes have been found out in the South African business environment. These major changes are direct or indirect result of increasing trend of using social networking among the people in the country. It has both positive and negative impact on the business organization in the country. The people with moderate and higher income level are getting easy access of internet. They are getting connected with the people around the world. It is the easiest and cheapest ways to get connected with the people in any part of the world. Facebook has become the largest social networking websites which has been spreading from one people to another, one region to another and even one country to another by the reference of the people only not by any advertisement of the company. People of this country are becoming updated about new trend of social and organizational culture through social networking with the people in other countries. They get information about any technological innovation, social issues, economical instability, and international political buzz from the use of social networks. All members have right to share any legal information and contents. Therefore, a single platform has become the universal stage of wide information. This has major impact on the domestic as well as international companies in this market. Life cycle of a product has becoming shorter as people are information about the new arrival of a particular brand. This can be new upgraded version of an electronic product of a popular brand or might be a new collection of new wearing brand. The people herein gain access to a large number of potential options that tend to broadly affect their purchasing behaviours related to a product or service concerned. Implications of the change on marketing strategies/practices A major trend or change has been identified towards the increasing usage of internet among the people in South Africa. As a cost effective medium of marketing and promotion, the organization also have been focusing on virtual media in this market. The multinational organization already have enjoyed huge benefit from using internet and especially the social networking websites as the virtual way of marketing and promotion of products and services. Therefore, multinational organizations that operate in South African market support this trend of increasing usage of social networking sites by the African people. The domestic companies get global exposure form the participated international business in any domestic market. It is happening in this market also. The domestic firms of South African market also have started focusing maximum usage of social networking sites as their new potential platform of marketing and promotion. The leading multinational internet service providers are encouraging this trend of society and enjoying huge reach of target customers from a single platform. Facebook and tweeter are comparatively new in this market than other developed countries like USA and UK. People are also getting benefit by using these social networking websites in terms of staying connected with their friends and relatives. By the same time they come to know about new arrival product and services promoted by the companies. Therefore, a major change or trend can be identified in the marketing strategies of the South African businesses. They are shifting towards the virtual media like social networking websites from the traditional promotion strategy i.e. promotion through print medium. They are benefited in terms of both cost saving marketing activities and better penetration of their communication with more number of people in very short time which was not possible through traditional medium marketing communication. Conclusion From the detailed analysis of macro business environmental factor like political, economical, social and technological factors, many changes have been identified in the business environment in South African market. But a major trend that has paced major impact on the marketing strategies of the South African businesses is that increasing usage of social networking websites by the people of this market. This has substantial positive impact on the domestic as well as multinational firms operating in this market. But a negative impact on the traditional media of advertisement like print media has been resulting major decline in this industry. Advertisement is main source of revenue of the traditional media companies and they are not getting sufficient clients for operating their businesses. Overall, a major changes or new trend has been identified in the marketing strategies of South African businesses. References Divol, R, Edelman, D. & Sarrazin, H. 2012. Demystifying social media. Available at: http://www.mckinseyquarterly.com/Demystifying_social_media_2958. [Accessed on November 2, 2012]. Statssa. 2003. Statistics South Africa 2003. [Pdf]. Available at: http://www.statssa.gov.za/about_statssa/strategic_plan.pdf. [Accessed on November 2, 2012]. The Economists. 2006. Going global: South Africa's big companies have spread their wings abroad. [online]. Available at: http://www.economist.com/node/7167171. [Accessed on November 2, 2012]. The World Bank. 2012. South Africa Economic Update: Focus on Inequality of Opportunity. [PDF]. Available at: http://graphics8.nytimes.com/packages/pdf/world/South-Africa-issue3-report-20120723.pdf. [Accessed on November 2, 2012]. Bibliography Brooks, I., Weatherston, J. & Wikinson, G. 2011. Globalisation, challenges and changes. [Pdf]. Available at: http://catalogue.pearsoned.co.uk/assets/hip/gb/hip_gb_pearsonhighered/samplechapter/Brooksch9.pdf. [Accessed on November 2, 2012]. IFC. 2012. Doing business in a more comparative world. [Pdf]. Available at: http://www.doingbusiness.org/~/media/fpdkm/doing%20business/documents/profiles/country/zaf.pdf. [Accessed on November 2, 2012]. World Bank. 2012. Business Environment Snapshot – South Africa. [Online]. Available at: http://rru.worldbank.org/BESnapshots/South%20Africa/default.aspx. [Accessed on November 2, 2012]. Read More