The micro environment of business

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Introduction

The business environment is a crucial factor in any business, as it must be taken into account while making timely and informed decisions. Additionally, it empowers a business to maintain a competitive edge in the industry and flourish, prosper, and thrive. The environment refers to the external factors that affect the company but are outside its direct control. The business environment can be categorized into two main divisions: the microenvironment and the macroenvironment. Both the micro and macro environments are crucial for businesses to operate properly within their respective industries and consumer markets. Hence, it is imperative for the corporation to comprehend each of these surroundings in order to undertake the requisite measures to guarantee its sustainability, expansion, and triumph in the markets.

What is a Micro-Environment?

A micro-environment refers to the immediate surroundings or conditions that directly influence an organism or system at a small scale.

The micro-environment, also known as the working environment, refers to a collection of characteristics that are directly associated with the operation of a certain organization. It includes all elements, such as individuals, organizational framework, technology, administration, and so on. These criteria serve as inputs in the decision-making process for managers to effectively carry out their jobs.

What is a Macro-Environment?

A macro-environment refers to the external factors and conditions that can influence an organization or industry as a whole. It includes elements such as economic, social, political, technological, and environmental factors that can impact the overall business environment.

The macro-environment refers to the whole economic state of a country. It is commonly known as the overall business environment. The elements consist of general market trends, currency exchange rates, inflation rates, and stock indexes. The macro-environment encompasses the entirety of these components. It is crucial to acknowledge that the micro-environment has a direct impact on the operations of a firm, whereas the macro-environment exerts an indirect influence on it.

1. Management structure

Introduction

Controlling and coordinating roles, powers, and duties is done through management structure. It also decides how information moves between the different levels of management.

A company’s management structure shows how its management system is set up. There is an order in almost all groups. This hierarchy shows who is in charge, how people can talk to each other, and what their rights and duties are in that group. There are different levels of structure within a company, such as Board, Middle, and Lower management.

At the lower levels of management, there is usually a clear structure.

1. Lower Management

Middle Management is usually made up of business units that work together to make decisions when necessary.

2. Middle Management

A decentralized system is used at the Board Level and in upper management. Each department or group has an equal amount of power to make decisions, and they may have varying levels of independence.

3. Board Structures

Social and cultural norms have a big impact on management structures.

1. Companies in egalitarian countries like Sweden tend to have a structure that is simpler and less hierarchical. The Swedish company IKEA opened shops in the United States. When they did, many American workers didn’t like how different employees had the same title.
2. Toyota is one of the biggest Japanese car companies in the world. The company uses a hierarchical organization to help it reach its business and strategic goals.
3. At Li & Fung, Hong Kong’s biggest export trading business, networking is very important. This includes networking within the company, networking with people outside of the company, and networking with people in the whole ecosystem.
4. The American company W.L. Gore uses a Lattice system that lets employees talk to each other more directly and connect with each other to make decisions or get information.
5. Holacracy is how Zappos is set up, governed, and run. Power is taken away from the management hierarchy and given to everyone in the company.

1. Marketing Channels

1. Social media

Social media is a good way to sell your business. It takes adults 95 minutes a day. It might help you connect with your viewers. With social media, you can get people to support your business. You could also try social shopping. Chewy shows how Instagram can be used to connect with people who love pets. Instead of selling, they teach. Businesses can make profiles on social media sites and share interesting material. It spreads the word about your business, brings people to your website, and turns them into leads.

2. Email Marketing

Email is a good way to sell your business. 4.3 billion people around the world use email. Businesses use email to teach, grow, and keep in touch with people on email groups. Ask people to do something, give them useful advice, or let them know what’s going on with your business. Email marketing is pretty cheap and gives you a lot of choices. Send emails to get people to sign up or to let them know about sales. You can also email possible customers without telling them about your business. Just look up an email address and send a message. This kind of marketing is used by experts, freelancers, and marketing firms.

3. Influencer Marketing

Influencer marketing is a mix of new and old ways to sell. It combines endorsements from famous people with promotion based on content. Campaign results are determined by how well brands and influencers work together. The focus is on influencers who might not be well-known in real life. Influencers work with businesses to get the word out about their goods and services. This marketing avenue works well to reach new people and builds trust among followers by using the influencer’s credibility.

4. Search Engine Marketing

SEM makes a site more visible through both paid and unpaid efforts. Pay-per-click (PPC) marketing is another name for it. SEO means getting free traffic from content that ranks highly. Long-term traffic comes from SEO that works, while search engine ads make your site more visible and get possible customers to click on them. SEM makes goods more visible on search engine results pages.

5. Content Marketing

Making and sharing useful material is part of content marketing. It draws people in and keeps them interested. Blog posts, videos, and other types of information can be used in this marketing channel. It makes the company a thought leader in its field.

6. Affiliate Marketing

Publishers are paid by affiliate marketing to bring people to a company’s goods or services. For advertising the company, publishers get paid. Affiliate marketing has grown into a billion-dollar business thanks to analytics and cookies. Companies use internal data and links to keep track of how many leads turn into sales. Affiliate marketing depends on partners to spread the word about your business through the platforms they already use. Affiliate schemes are used by 84% of publishers. 83% of marketers use this medium to raise awareness, and 79% use it to convert. It can be used at any point in the buyer’s journey.

In conclusion

An important part of any business’s marketing plan is its marketing channels. A marketing platform that is well-thought-out and well-run can help a business reach its target market and build brand recognition. It builds relationships with customers and your image in the market. It doesn’t matter if a business uses direct or indirect channels; they all have to fit with its general marketing goals. It’s important to keep an eye on and see how well marketing platforms are working. Tracking helps you make the changes and improvements that you need to make. A well-thought-out marketing avenue that is well-run can give a business an edge over its competitors.

1. Markets in which a firm operates

Introduction

When economists talk about a market’s structure, they mostly talk about how competition works and how prices are set in that market. Because companies set the prices of their goods based on how the market works, prices depend on how much competition there is. Many times, the number of companies in a market that sell the same goods or services is thought of as its structure.

Things that affect how different firms act

There is a lot of power in the organization of a market over how individual firms act in it. The biggest thing that this affects is pricing.

How different goods are provided and the barriers to entry into the market are also affected by the structure of the market. Keep in mind that there are low barriers to entry into a monopoly market but none at all in a perfect competitive market.

Different market arrangements also act in ways that are affected by efficiency. From an economic point of view, monopolies are the least efficient, while firms with perfect competition are the most efficient.

Ways to Figure Out the Structure of a Market

1. How Many Firms Are in a Certain Market?

In a monopoly, there is only one company that makes goods for sale. In a market where many companies make the same things, there will be an oligopoly. Also, there are only two companies in a duopoly market. Finally, there is only one buyer for a monopsony. A lot of monopolies are run by the government. The military is a good example of this.

2. The concentration Ratio of a firm or company

For monopolies, the concentration ratio is 100, and for full competition, it is 0.

3. The amount and nature of market costs

This part talks about economies of scale and sunk costs, which are costs that a company has already paid for but can’t get back.

4. The degree of vertical integration

Vertical integration means that different steps of production and distribution are brought together and run by the same company. This happens a lot in monopolies, where the company that makes the product is also the one that sells it, distributes it, and handles customer service after the sale.

5. The Degree to Which Products Are Different

When a few fairly big companies sell different kinds of goods, this is called monopolistic competition. In oligopolistic competition, on the other hand, there are only a few sellers of a product that is pretty much the same. An example of this is the oil business.

6. How Flexible is demand?

A market with demand that doesn’t change much is called a monopoly market. The companies in a market with a perfectly elastic demand curve, on the other hand, are in direct competition with each other.

1. Competitors and stakeholders.

1. COMPETITORS

Introduction

Your competitors are not just those you are currently competing with. They also include any potential competitors who may choose to compete in your market in the future. This could involve a competitor from a different geographic location expanding into your area or a competitor deciding to expand its offering to target a different part of the market.

Types of Competitors in Business

Your competition are not just the people you’re in business with right now. They also include any possible rivals who might want to enter your market in the future. This could mean that a competitor from a different area moves into your area or that a rival decides to offer more products to reach a different group of people.

Types of Competitors in Business

1. Direct competitors.

It’s likely that when you think of your competition, you think of a straight rival. These are companies in the same market that sell similar (or the same) goods or services. They also want the same group of customers.

Apple vs. Android, Pepsi vs. Coca-Cola, and Netflix vs. Hulu are all well-known cases of direct competitors. But well-known national or foreign brands aren’t the only ones that can compete directly with each other. Two shoe shops in a small town in the country are straight competitors. There are a few real estate agents who work in the same area.

There is also direct competition for digital businesses. For instance, when Twitter’s Periscope app became popular, Facebook turned its attention to live video to keep up.

Since straight competitors sell similar goods in the same way, this kind of competition is usually a zero-sum game. This means that if a customer buys a competitor’s product, they won’t buy yours. Case in point: If you get a burger at McDonald’s, you probably won’t go to Burger King and get another one.

2. Indirect Competitors who are not directly involved.

Businesses that sell different goods or services to solve the same problem but are in the same group as you are indirect competitors.

For instance, both Taco Bell and Subway are fast food restaurants, but their menus have very different items. They both want to feed hungry people, which is the same problem, but they do it in different ways.

Another example is how home repair stores like Home Depot and Lowes compete indirectly with painters who work on homes. Once more, the group is the same, but the products are different.

It’s not always a zero-sum game in indirect competition. Think about someone who goes to Lowe’s to paint their house again but does a bad job. They might hire a painter in the area to fix the problems.

3. Replacement Competitors

One of your new competitors sells a product or service that is similar to the one you sell. You both want to fix the same problems, but you’re going about it in different ways.

In this case, a coffee shop and a restaurant in the same area could be replacement rivals. As people walk down the street, some might pick up a lunch to go from the coffee shop, while others might choose the restaurant.

This means that customers are buying the alternative with the same tools they could have used to buy your products.

There could be danger from these rivals if there is more than one way to fix the issue you want to fix. In addition, these are the rivals that are hardest to spot. At the end of the day, we can’t read thoughts and know all the choices people made that brought them to us.

We can get this information in other ways, though, like by asking customers for comments or keeping an eye on what people are saying about them on social media. You can better understand your audience and find your replacement rivals now that you know this.

You might find more than you thought as you try to figure out who your rivals are. Do not feel too much. Don’t forget that not every rival is the same; some are weaker than others.

1. STAKEHOLDERS

Who or what is a stakeholder?

Stakeholders are people or groups who have a reason to care about whether a project, business, or organization succeeds or fails. People like employees, customers, suppliers, investors, communities, rivals, and government agencies can all be added. Different stakeholders can have different effects and levels of influence on the project or group. To make sure things go well, their needs and expectations must be managed and taken into account.

Different Kinds of Stakeholders

There are different types of stakeholders based on how they relate to and are involved with the project or group. Here are some popular types of stakeholders:

1. Internal stakeholders: Internal stakeholders are people or groups inside the company who have a direct stake in how it works and what results it achieves. They can be workers, managers, or executives who are in charge of making daily decisions and long-term plans.
2. External Stakeholders: These are people or groups outside the company that are affected by its actions or want it to succeed. Customers, suppliers, investors, government agencies, regulatory bodies, local communities, and lobbying groups are just a few examples.
3. Primary Stakeholders: These people have a direct and important effect on the company or project. The people in this group usually have a direct stake in the project and are directly touched by its results. Employees, customers, and investors are all examples of main stakeholders.
4. Secondary Stakeholders: These are people or groups that have an indirect or less important effect on the business or project. Even if they aren’t directly involved or affected, what they say, do, or decide can still affect how well the job turns out. The media, competitors, and business groups are all examples of secondary stakeholders.

Examples of Stakeholders

To get a better idea of what stakeholders are, let’s make up a story about a tech company releasing a new product:

1. Employees: The employees of the company have a clear stake in the development, marketing, and sales of the company’s products. Their knowledge, hard work, and happiness are very important to the success of the offering.
2. Customers: Customers are outside parties who are directly interested in the new offering. The product’s qualities, price, and marketing will be based on what they want, need, and say.
3. Investors: Investors, like shareholders and venture capitalists, are the main people who have a cash stake in the success of the product. Their money and help are very important for the product’s growth and getting into the market.
4. Suppliers: Suppliers are outside parties that give the product the raw materials, parts, or services it needs. Their dependability, quality, and prices can affect how much the product costs, how easy it is to get, and how well it does altogether.
5. Competitors: Competitors are secondary players who may not be directly involved with or financially interested in the product but can have an effect on how it is positioned in the market and how well it does. The company can make better choices if it keeps an eye on and understands its competitors’ strategies.
6. Communities: A community can be anything from a small group of people in one place to people all over the world. They are an important part of shareholder theory, no matter what that means.
7. Government: This includes the government and regulatory bodies. Through laws, rules, and taxes, they can have a big impact on how a business runs.
8. Friend & Family: According to stakeholder theory, you also need to please your own friends and family, as well as the families of your workers. This may seem a little strange.