GSM Lecture 5

Management > Global Strategic Management > Conditions > Macro/microenvironment

Macroenvironment and microenvironment

The macroenvironment refers to the forces at work upon the general business environment, including social, cultural, demographic, political, legal, technological and economic factors.

The global macroenvironment is concerned with global trends, while the national macroenvironment is concerned with national trends.

The microenvironment refers to the forces at work upon the competitive environment the firm faces, including factors from the macroenvironment and also the strategy of the firm and that of its rivals.

The global microenvironment is concerned with global industry and market trends, while the national microenvironment is concerned with national industry and market trends.

Industry

The industry is a group of businesses producing similar goods or services. They will be similar in terms of skills, competences and technology, processes, value-adding activities, materials, supplier and distribution channels.

Industry analysis establishes the type and concentration of industry and the competitive position of firms within it. It is important to understand the influence of the macroenvironment on the industry level.

An industry should also be seen as a continual process, it is a dynamic system which changes through time, often in response to market changes.

Market

The market is a set of demands that share some set of characteristics. A market can be defined in a broad or specialised way in terms of shared products, customers and their requirements, distribution channels and competitors.

Porter's 5 Forces

Five Forces explained

Five Forces continued