- Various tools may be used to analyse the events in the macro environment in
order to:
❖ Determine how the business should react to eliminate any threats.
❖ Capitalize on opportunities to achieve a competitive advantage.
- Environmental scan:
o Used to identify factors that may have an impact on the business.
o The business will scan the macro environment in order to identify issues
which need to be addressed.
- SWOT analysis:
o May be used to evaluate factors in both the external and internal
environment, in the macro environment, only opportunities and threats
are considered.
- PE₂STLE:
o Is useful tool to identify specific opportunities and threats in the macro
environment.
▪ Economic factors:
- Economic factors that may affect the business include:
❖ Economic growth and development rates in the country.
❖ Inflation rates.
❖ Interest rates.
❖ Exchange rates.
❖ High unemployment rates.
❖ Taxes such as income tax, VAT, import duties.
, ▪ Political factors:
- This factor is important in relation to =
❖ The local political situation of the country in which the business operates.
❖ The political situation of other countries in which the business may operate.
❖ World politics.
- When reviewing political factors, the following aspects should be considered =
✓ Degree of media freedom/freedom of speech which may be used to criticize political
parties when government officials make themselves guilty of corruption.
✓ Degree of political stability in the country.
✓ The likelihood of government interference in the economic functioning of the
country.
▪ Ethical factors:
- Ethics refers to the principles and/or values that will determine if decisions
and actions are acceptable.
- Elements that the business has to consider when looking at ethics include =
✓ What is the difference between ethical and legal.
✓ Fair trade.
✓ Corporate social responsibility.
✓ An employee’s privacy.
▪ Social/socio-economic factors:
- Refers to the impact that social trends have on the economy and the role
players in the economy, such as businesses and consumers behaviour and
their lifestyles.
- Factors that the business should consider =
✓ The number of single parents providing for a family.
✓ Levels of literacy/education.
✓ Unemployment rates.
✓ Personal safety and crime.
✓ Distribution of wealth/poverty.
▪ Technological factors:
- Refers to equipment the business uses to buy, advertise or sell the products or
services.
▪ Legal environment:
- Refers to all laws that impact on the business.
- This may include =
✓ Labour legislation.
✓ Laws that protect the environment against exploitation and pollution.
✓ Laws relating to paying tax.
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