Difference Between Micro and Macro Environment

Organizations operate businesses in a business environment that consists of different factors. The business environment is categorized as Micro-environment and Macro-environment. Business activities are directly affected by micro-environment while macro-environment leaves an indirect impact on all businesses on a large-scale.

The difference between Micro and Macro business environment can be understood by looking at various factors of both that affects business activities.

1. Micro-environment and its factors

Micro-environment has a direct impact on routine business activities and associated with business at a small-scale. It consists of different forces that are specific to a particular business and are capable to influence daily operations and performance of the business for a shorter period. These forces or factors include suppliers, shareholders, customers, employees, competitors, media, etc.

• Suppliers: These provide resources to businesses like raw material, machinery or equipment, etc. Their actions can create an impact on the organization’s strategy as they provide necessary inputs for production. In the absence of timely and adequate services, the production process may delay that result in more production time and fewer sales.

For example, the marketing strategy of business gets affected in case of increased raw material prices by suppliers. It will further increase the final product prices. So it is very much required to maintain a healthy liaison with suppliers to gain a competitive advantage over competitors.

• Customers: Customers being the king of any business are the final receivers of products or services. They are central to any organization as they contribute to generating revenue by attracting more customers. So the marketing strategy of an organization is required to be focused on existing customer retention and attracting potential customers by satisfying their needs and preferences. After-sales service and more value-added services also play a key role in increasing the customer base.

For example, In today’s digital era most of the customers share their positive or negative reviews about the product or services of a brand on different social media channels. This influences the buying decision of other customers as well because a lot of people are using social media for different purposes. So satisfied and happy customer always increases the brand value of a business and contributes to increasing customer base and more loyal customers of the organization.

• Competitors: Competitors or rivals of businesses can directly affect business strategies. So, it is very much required to conduct a competitive analysis of competitors to a competitive advantage that includes the knowledge of their USP (Unique selling point) of product and service offered. Also, a business can remain in a competitive position by offering products or services better than competitors.

For example, Wow! Momos brand’s USP lies in its diverse range of momos of different flavors that give it a competitive advantage over its competitors.

• Employees: Organizations can achieve objectives through skilled employees who are also experts in their areas. By hiring the right employees and providing adequate training and development opportunities to them, organizations can ensure success.

For example, Different departments of an organization like finance, production, purchase, HR, etc. can be more productive if these have competent staff having adequate skills and knowledge in their respective domains. In case of incorporating new technology in an organization to increase the efficiency of staff; training on how to use that technology is required to be given to employees so that they can use the new technology in a better and productive way.

• Shareholders: Shareholders are those who invest their money in a company and also own shares of it. By doing so, they attain ownership in the company. Ultimately, they are eligible for return on investment on their share. This makes organizations liable to forward benefits to them from profits. Organizations also pay dividends to keep the interest of shareholders. So, to make the right balance between the stakes of shareholders and own interest is an essential aspect for the organization.

For example, shareholders may expect an increase in their share in the organization’s profit that can affect an organization in the future. So, better and strong relationships with shareholders are required for success in the long-run.

• Media: Media channels also play an important role in the way organizations market themselves. Media has become the necessity of any business for promotional activities of its products and services. So, organizations are required to maintain a healthy relation and status with the media people. The company’s negative image in the media may result in heavy losses. That’s why organizations now have separate PR (Public relations) department to handle media related activities smoothly and positively. Also, organizations need to find alternative ways to reach their audience or customers to create a positive brand image among them.

For example, Different media channels are being used for this, i.e. newspaper advertisements, television mediums, social media platforms like Youtube, Facebook, Twitter, Instagram, Linkedin, etc.

2. Macro Environment and its factors

The macro-environment of an organization is related to its general and external environment that impacts the working style, decision-making process, strategy, and performance of the business. The macro-environment is a dynamic environment that has a changing tendency. It has external factors that an organization can’t control.

The macro-environment study is termed as PESTLE analysis that includes different external environment factors or forces like:

• Political forces

• Economic forces

• Socio-cultural and demographic forces

• Technology forces

• Legal forces

• Ecology and physical forces

We’ve thoroughly explained the macro environment in a separate article here ➡️ https://studiousguy.com/marketing-environment/

So, by the above definitions of Micro and Macro environment following differences in both can be seen in the below comparison chart:

Major or key differences that differentiate Micro and Macro environment are mentioned as below:

• The micro-environment is a specific environment that is in close contact with the organization. Wherein, the macro-environment is general to the organization that can make an impact on all business functions.

• The micro-environment factors can affect a specific business, whereas factors of the macro-environment influence whole business groups.

• Factors of the micro-environment are under control of the organization but controlling the macro-environment factors is next to impossible for organizations.

• Micro-environment factors include internal factors i.e. customers, suppliers, competitors, etc. whereas macro-environment has external factors like political, social, economic, etc.

• Micro-environment factors functioning revolve around the strengths and weaknesses of an organization which is internal to it. However, macro-environment factors are concerned about opportunities and threats in the external market of an organization.

3. Summary

Both micro and macro-environment play an important role in the organization’s growth, success, and existence. Despite being different from each other, both are complementary. By studying these environmental factors, an organization can prepare a marketing strategy by doing SWOT (strength, weakness, opportunity, threat) analysis of its business.