The Micro Environment Comprises all those organizations and individuals who directly or indirectly affect the activities of a company. It includes: – Customers – Intermediaries – Suppliers – Other stakeholders Components of external(micro) environment Customers-Individuals or organizations that purchase products and / or services. Organization today build customer relationship and ensure customer satisfaction so that they stay close to a customer to build rapport and receive continuous buying. E. G. KEA provides babysitting, children playground and cafeteria to make customers feel at home and want to stay and shop.
Suppliers Are those organizations and individuals that supply the resources (raw material, products services) the organization needs to carry on operations Competitors Other organizations that either offer or have a high potential of offering rival products or services. Organizations need to keep abreast of what their competitors are doing. E. G. McDonald’s, Opposes, KEF Government agencies Agencies that provide services and monitor compliance with laws and regulations at local state or regional and national levels e. G.
Minister of Health go to MAC to check the cleanliness of the store, Ministry of Education go to PIPIT to check the education system in the college What is Internal Environment? Internally, the structure and politics of an organization affect the manner in which the organization responds to environmental change Can be difficult to change cultural attitudes when the nature of an organization’s business environment has changed Internal Environment factors are: (1) Financial Aspects (2) Marketing Aspects 3) Personnel Aspects (4) Production Aspects Factors that are influences and drives for change: Customers develop new needs and wants.
New competitors enter a market. New technologies mean that new products can be made. A world or countrywide event happens e. G. Gulf War or CARS disease. Government introduces new legislation e. G. Increases minimum wage. Change in management style or new management.
Importance of Business Determining Opportunities & Threats – Helps the business enterprises for meeting the challenges successfully Giving direction for Growth – Opens up new frontiers of growth for the equines firms – Enables the business to identify the areas for growth and expansion of their activities Continuous Learning – Easier to deal with business challenges – Managers are motivated to continuously update their knowledge, understanding and skills to meet the predicted changes in realm of business Image Building – Environmental understanding helps the business in improving their image Meeting Competition – It helps the firms to analyze the competitors’ strategies and formulate their own strategies accordingly Identifying Firm’s Strength & Weaknesses – In view of the technological and global placements PEST Analysts PEST Analysis is a simple but important and widely-used tool that helps you understand the big picture of the Political, Economic, Socio-cultural and Technological environment you are operating in. The use of PEST analysis in important for the main reasons: 1. By making effective use of PEST Analysis, you ensure that what you are doing is aligned positively with the powerful forces of change that are affecting our business. By taking advantage of change, you are much more likely to be successful than if your activities oppose it. 2.
Good use of PEST Analysis helps you avoid aging action that is doomed to failure for reasons beyond your control. 3. PEST is useful when you start operating in a new country or region. Use of PEST helps you break free of unconscious assumptions, and helps you quickly adapt to the realities of the new environment. How to use PEST Analysis: Using the tool is a three stage process: – Firstly, brainstorm the relevant factors that apply to your business; – Secondly, identify the information that applies to these factors; and – Thirdly, draw conclusions from this information. The following factors may help as a starting point for brainstorming : Political: