The framework allows a business to identify and analyze the important forces that determine the profitability of an industry.
Part 2 P4 some positive and negative impacts of the macro environment on the business operations. Macro environment includes those external factors which are uncontrollable and also affects decision makin g, performance and strategies of the organisation.
These external factors include economic, legal, cultural and social factors, technological changes and natural forces. Change in consumers taste and preferences, change in interest rates, change in government policies are the example of macro environmental factors.
In the external environment new risk factors are arises regularly and they difficult to identify for the managers of the business. Macro environment factors include: Political and legal factors: Political and legal factors include change in the government activities and changes in the legal policies and regulations.
Political and legal factors affect marketing decisions of the company. For example government provide subsidy or low rate of taxation of retailer business then it impact positively on the marketing decisions of the organisation.
Political forces include possibility of election and the possible outcomes whether environment will peaceful or there will be chances of political transition. Economic factors are broad in range it is the mixture of national and international environment.
Organisation should take decision after considering the availability of these resources. These factors include new technologies, skills and knowledge required for production of goods or services.
Social and cultural forces: If business produces goods as per customer taste and preferences than it affects organisation positively. Big and major changes in the macro environment factors are usually outside the control of business so it is necessary that management of the company should be able to analyse the effect of these factors so they could make good decisions.
P5 Conduct internal and external analysis of specific organisations in order to identify strength and weakness. External environment factors and internal environment factors affects thebusiness organisation. Before making any business decision internal and external analysis should be conducted because environment in which business operates is an important part of planning.
With the help of internal and external analysis organisation can identify their strength and weaknesses and plan their activities accordingly. Under internal analysis company ensures that it has proper amount of resources for carrying the working activities and processes.
Resources include financial resources, physical resources like plant and machinery, human resources, intangible assets resources and cultural resources. With the analysis of resource availability organisational capability can easily identified.
External analysis is a process of analysing the environment in which organisation operate.
External analysis use to identify current market trends and events that affect the strategic decisions of the organisation Schirone, D. External analysis can be done through SWOT method.
Analysis of economic factors whether there is any change in interest rate, inflation rate and inflation rate. Analysis of technological factors shows changes required in the existing technology by updating them or replacing them with new one.
Analysis of legal environment helps in identifying change in legal regulations related with any special act, changes in duties and taxation policies. Cultural and social analysis helps in identifying current trends, lifestyles, fashions and other components of culture.
On the basis of internal and external analysis Organisation may find its strength and weakness which may include following: Strengths includes special features or characteristics of the business organisation.
Biggest and most important strength of an organisation is clarity in its vision which is earning profit and satisfies customers irrespective of the market conditions.
Company can measure its strength by applying key performance indicators Pandey, A. P6 Strengths and weaknesses interrelate with external macro factors.
Strength and weaknesses of the business organisation are related with macro and micro environment factors. A sudden change in environmental factors affects the decisions taken by management.
Economic factors include change in interest rate, inflation rate exchange rate in the market.Get affordable online Locus Assignment Help in Unit 1 Business Environment Assignment – IKEA, in most colleges in UK. Get affordable online Locus Assignment Help in Unit 1 Business Environment Assignment – IKEA, part of Level 4 course taught in most colleges in UK Micro environment includes factors like competitors, suppliers.
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A Study On Analyzing Ikea Business Essay. Print Reference this. Published: 23rd March, Macro Environment (PESTEL) The macro environmental factors which affect to the organization are political, economical, social, technological, environmental and legal.
These are the important factors as per the present time. Micro environment includes factors like competitors, suppliers, stakeholders, investors, customers etc and macro environment includes economic environment, technological environment, and cultural environment etc factors.