Analysis of Macro Factors of the Business Processes of Electronic Firm Sonic Divine - Case Study Example

1. Introduction Sonic Divine is an electronic firm that intends to establish an enviable position in the market. Presently, the company manufactures state of the art electronic consumer items like environment friendly refrigerator and air conditioners. Its recent foray into mobile phone and i-pod was a huge success in the market. It has recently introduced a state of the art gizmo known as Sonic 1000 which packs the features of a laptop and phone into one small unit. Although the unit is broadly categorized under PDA (personalized digital assistant), it has wide ranging functions with multi tasking capabilities. Now, the company intends to introduce Microwave oven with innovative features that would considerably increase its market value. 2. Analysis of Macro factors that impact the market strategy The fast changing dynamics of the current business processes necessitate corresponding change in strategy so as to take into considerations of the emerging risks which may influence the overall development of the business enterprise. Non market factors, in emerging markets become all the more crucial because of the sensitive nature of the new market potential and the volatility of the market forces. The non market factors or the new macro environment factors have significant impact on the market strategies of the products, thus making it essential for the organizations to incorporate the vagaries of those environment elements into its marketing strategy. There are six major macro environment factors that indirectly influence the performance outcome of the organization and would be discussed in detail: economic; demographic trend; changing socio-cultural paradigm; developing new environmental compulsions; advancing technology; and political environment of the region. 2.1 Economic Economic environment is a major consideration for all businesses. Consumer buying decisions are greatly influenced by the buying power of the consumers and the regional and global economic environment. The world economy is presently undergoing tremendous turmoil. In the recent past, the American economy has been under tremendous strain with its deteriorating job market and dismal performance of its various public private companies. The bankruptcy of few of its major financial institutions has resulted in the financial meltdown creating a serious crisis situation in the American economy that has cascaded down to the rest of the world. The recessive trend in the American economy has a cascaded affect across the globe, making it a very difficult condition for the businesses. The new recessive trend and the burgeoning unemployment has considerably reduced the spending power the consumers. The Australian social trends statistics has revealed some worrying demographic data. The unemployment has increased. (graph 1, 2). The main source of income has remained wages and salaries with decreasing private enterprises/ business. The consumption per person has gone up in 2008 while the net worth has remained stagnant (ABS, 2009). Correlating it with the present recessive trends, the business must evolve innovative market strategy to meet the meet the challenges. The organization would need to introduce cost sensitive microwave oven in supermarkets like Aldi that are known to supply quality goods at affordable prices. Graph 1 Graph 2 Company gross operating profits (current prices), Trend estimates - Quarterly change Unemployment rates, 20 years and over looking for full time work-Trend Source: ABS Source: Labor force, ABS 2.2 Demographic The demographic imperatives are strong agents of change in the evolving societies and have huge impact on the market. The demographic changes vis-à-vis population size, age distribution, gender ratio, income group etc. have powerful impact on the economy and consumption behavior of the consumer. An in-depth knowledge of demographic trends is an intrinsic part of market strategy. Kotler et al assert that in the changing global scenario, demographic compulsions significantly impact market position and need to be taken into consideration in a company’s market strategy (Kotler et al, 2007). The developing economies increasingly prefer new electronic gizmos primarily because their age distribution is tilted more towards the young people in the age group of 18-35 and with growing buying power; they are able to buy the new product with more ease. Some of the trends would be discussed in more detail. The Australian statistics (ABS, 2009) of social trends give clear indication of increasing participation of women in the workplace, becoming significant contributor to the household income. In such a scenario, it would be correct to assume that microwave would have great appeal to women who have to carry out household chores as well as go out to work. The following graphs (1,2) give indications to the trends of consumer needs and increasing unemloyment pattern as seen by the data of ABS (ABS, Cat. No 4102). The trends for household items that expedite daily chores are increasing becoming more popular. Indeed, if the demands are correlated with the increasing trend of decreasing family size, it would be a good strategy for the company to introduce a compact microwave with features which like fast defrosting and expedite cooking, thus saving considerable time for the working women. It can thus be claimed that goods and services that facilitate working people in routine household jobs would stand better chance of success in the contemporary demographic changes. Graph 3 Graph 4 Unemployment rates -15-19 years looking for full time work-Trend Rising necessity Graph 1, Source: ABS, labor force, Australia Graph 2, Source: 2006 Pew Research Centre 2.3 Cultural The world is moving towards a multicultural society that is an amalgamation of people from different countries, races and religion. The rapid globalization has created a pluralistic society which has diverse needs and requirement. (see graph 5). The social changes brought about by rapid globalization, have changed the socio- cultural values of a country, forcing them to formulate new strategies and policies to meet the challenges of the emerging pluralistic societies. Graph 5 Population growth, (from Table 6.10) McCarthy et al (1997) emphasize that socio-cultural imperatives are decisive factor in the pattern of consumer. The increasingly busy lifestyle of the current population promotes the need of utilities that would facilitate easy and faster cooking at home. The Australian society is becoming pluralistic encompassing people from diverse culture, race and color. In the current times, people have become more health conscious and are looking for ways and means that would complement their food and eating habits. They are increasing preferring organic food and cooking that would preserve the nutrients of the raw food material have more appeal to the current population. The new microwave would meet their demands very well and the new market strategy must focus on features that help the cooked food to maintain its nutrient value. 2.4 Natural In the contemporary environment of advancing technology and growing population statistics, sustainable development has become one of the most crucial factors of the time. The rapid advancement of technology has brought about a massive change in our lifestyle which has not always been in our best interest. Some of the ways and means, which have contributed towards our better living conditions, have also brought certain challenges in its wake that needs our urgent attention. The limited natural resources like water, land and fresh air are being taken for granted with scarce regard for future. The fast depletion of natural resources and advancing technology has paid little heed to conservation and preservation of environment. The various tech savvy items have significantly contributed to present concern of rapid climate change and increasing frequency of natural disaster like tsunami, forest fires, hurricanes like Katrina and global warming. Thus, new microwave must entail features that would promote preservation of environment and contribute towards sustainable development processes. Hence, features which save energy, like auto switch, faster menu based defrosting need to be included. The market strategy should emphasize these features through aggressive marketing-mix strategy. It would also help to disseminate information about new cooking methods in microwave that would help maintain the nutrients of the food. Companies like General Motors, Suzuki are testing new approaches for developing environment friendly cars like Hybrid cars. World bodies like United Nations Environment Program (UNEP), Inter-governmental Panel on Climate Change (IPCC) and UNFCC and have issued guidelines and research reports for environment friendly business practices. Microwave oven as an energy saving device has huge appeal for people at large. 2.5 Technology In the era of rapidly advancing technology and globalization, the traditional approach to development of new products has undergone dramatic transformation. Speed and flexibility have become extremely important ingredients for the products so that the organizations can timely and efficiently meet the fast changing preferences of the customers. The new product development requires an integrated approach to creative learning that may result in the development of new products. In the changing business paradigm, the diversification of products and services has become intrinsic part of business’ flexible practice. Using the imperatives of advancing technology in the microwave oven would provide the company with competitive edge in the current scenario of cut throat business. Another area where the company must utilize new technology like computer and internet services is in promoting its business interest. The advent of computer and internet has tremendously changed the business format and has redefined the communication with its far reaching implications and has become one of the most important parts of any business strategy. Business leadership has ‘realized that the “objects” of strategy – such as business units, industries, supply chains, customer relationships, organizational structure, and so forth – are held together by a “glue”, and that glue is essentially information’ (Evans, Wurster, 2000). Looking at the increasing popularity of the internet, using this media in wider interest of business, the company can advertise the microwave oven as the new age revolution in environment preservation and sustainable development. The vast database of internet users would help the company to significantly gain market position. New microwave oven, not only incorporates the latest technology in its operation but the use of cyber technology and e-commerce would penetrate new tech savvy market. 2.6 Political These macro environment elements have direct and indirect impact on the overall performance and operation of the firm. ‘These are characterized by 4Is: issues, institutions, interests and information’1 (Baron, p2). Broadly they are the socio-political environment within which the firm has to operate and would be discussed later. The role of government regulations and the legalities involved, play a very important part in establishing a firm specially if it is foreign company. Political dynamics combined with the media, public opinion and stakeholders are few other institutions that make up non market factors. These are behind the scene elements that become very hot issues if not dealt judiciously and sensitively with foresight. Non market factors, in emerging markets become all the more crucial because of the sensitive nature of the new market potential and the volatility of the market forces. In the recent times, Australia has promulgated more stringent laws vis-à-vis energy saving and reduction of green house gases, safe appliances, ethical practices, sustainable development practice and corporate governance modules within the organization, working in Australia. These are very important macro environment which need to be taken into account while expanding business across the globe. The company needs to plan its market strategy within the socio-political and legal framework of the country and make efforts to conform to the wider objectives of globalization and diversity. The safety features are important macro factor and must be ensured. The various promotional techniques using marketing mix concept must ensure highest regard for socio-cultural perspectives of the target population and use sustainable practice in it work culture. The features highlighting the environment preservation and conservation of the microwave oven would greatly add to its appeal. 3. Conclusion In the age of virtual markets, the concept of marketing has undergone tremendous transformation. Hence one needs to be more open when Shultz say that it is the end-users who now control the markets rather than the marketers (Shultz, 2001). It is essential that we shift from the traditional to embrace the diverse cultures and incorporate the needs and requirements of the people coming from different culture, race and religion. The macro environmental elements become highly relevant in the contemporary environment of globalization. Non market factors necessitate formations and incorporations of management strategies that go beyond the realm of individual company’s concern and interests. The globalization has made the role of such factors, an integral part of broader management strategy which encompasses planning for distinctive competencies along with considerations for wider ramifications of the socio political environment of the place. Perhaps the most important factor that has direct implications on non market issues is the modus-operandi of the company with regard to its stand to the issues and the way it is handled by them. The projection of its image to the public has strong influence on these factors. The credibility and its positive image are big non market assets and can be adversely affected by irresponsible actions. (2131) Reference Australian Bureau of Statistics. Social Trends. Available from: [Accessed 28 September, 2009]. Bateman, Thomas S., and Carl P. Zeithaml. Management: Function and Strategy. Homewood, IL: Irwin, 1990. Baron, David E. Integrated Strategy: Market and Non Market components. California Management Review. Vol.37 N. 2, 1995. Evans, Philip & Wurster, Thomas S. (2000). Blown to Bits: How the New Economics of Information Transforms Strategy. HBS Press. Kotler, Brown, Adam, Burton & Armstrong (2007). The Global Marketing Environment. Prentice hall. Luxury or Necessity: Pew Social and Demographic Trend. Available from: [Accessed 28 September, 2009]. McCarthy, E., Perreault, W., & Quester. P. (1997). Basic Marketing: A managerial approach. 2nd edition, Irwin, Sydney. Shultz, Don E. (2001). Bid Farewell Strategy based on old 4Ps. Marketing news; Feb 12, 2001; 35,4; ABI/INFORM Global. p 7. Read More