Analyze Your Macro-Environments

posted: April 06, 2010

Keeping Informed of Changes

Business owners should periodically review their macro-environments to assess what changes that may occur that can impact or increase their operations and marketing. Proactive analysis of potential "changes" can protect or significantly increase your market position.

Unlike micro-environments - such as pricing, advertising, product positioning, hiring and other business factors that you control - macro-environments are market conditions that you DO NOT control. These include conditions such as government regulations, changes in technology, the aging of demographics, etc.

There are about 5 key macro-environmental analyzes that can be performed. These include the following:

Demographic Analysis

Demographic analysis include physical factors such as changes in age, population growth, income and other factors.

The Determinants of Demographic Changes Include:

• population increases/decreases
• changes in age
• changes in income
• changes in family formation and growth
• changes in homogeneity of people

Your analysis reviews how these demographic changes will impact your marketing plan. You need to explore market opportunities that you can develop to take advantage of these changes.

Technological Analysis

Changes in technology or technology delivery can change the way business is done. For example, the expansive growth of networking sites and mobile networks may force your marketing plan to adopt different advertising strategies to reach an evolving market of techno-users.

The Determinants of Technological Changes Include:

• changes in existing technologies
• new technologies introduced
• mobile technologies
• CAD/CAM
• flexible manufacturing

Assess Your Political Environments

Government regulations - both the Federal and local levels - can significantly impact how you operate your business. For example, the new healthcare legislation can significantly change how you fund health benefits. How will this legislation impact your business and your marketing plans?

The Determinants of Political/Legal Changes Include:

• government regulation - deregulation
• consumer protection legislation
• environmental regulations
• changes in the government
• international issues

Economic Analysis

No question that the current recession has impacted your business. Changes in the economic environments - though not always predictable - need to be constantly analyzed to determine your course of action that protect your markets.

For example, if interest rates were to suddenly rise, what is your plan of action? And what about the impending warning signs of inflation? What marketing plan should you develop to address rising interest rates and inflation?

The Determinants of Economic Changes Include:

• rising / lowering of interest rates
• changes in FX rates
• GNP growth
• changes in the leading indicators
• inflation / unemployment

Sociocultural Changes

Sociocultural changes include the overall evolution of individual and family values. Our societal values come and go in cycles.

Changes in the sociocultural can both negatively and positively impact your business. You need to analyze how and why?

completing a scenario assessment

The scenario assessment is an exercise used by strategic managers to assess the probability of certain macro events. They then use the probabilities to design policy options to produce the best desired outcome.

For example:

1. Step 1:
   select events that may happen about the macro environment. Setup different scenario options.
   
   
2. Step 2:
   determine the probability of the event actually happening for each scenario.
   
   
3. Step 3:
   establish your marketing policy options (strategy)
   
   
4. Step 4:
   assign what would be the desired outcome (from 1.00 to 10.00) if you executed the policy option under the possible scenario
   
   
5. Step 5:
   the highest outcome produces the best policy

You can download our illustration on marco-analysis and complete a scenario review: download file (pdf form)

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