Macro and Micro Environment in Management Term Paper

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Macro and Micro Environment in Management

Planning is an important function of management. It is an act of formulating a program for a definitive course of action. The management defines a goal and puts forward its strategies to accomplish the objectives defined.


For an organization to begin its planning, it needs to evaluate and assess whether it is ready. An organization need to realize where it is standing and what it wishes to accomplish. They need to assess this by an analytical study of their recent history, their strengths and weaknesses. The organization can also set up a planning committee and hand this job over to them. In any case the organization or a planning committee will need to recognize specific issues that should be addressed to in the planning process.

An important thing to consider here is that enunciated visions comes from those who have a stake in achieving the goal hence the decision regarding where an organization wishes to be should come from all such people in the organization. The mission statement should be written which will show that the organization knows where it is going. It clears any vagueness in the purpose, business and values of an organization. On the other hand a vision statement gives a clear description of the scene after the success.

The next step in planning is assessing the current situation which can include a wide range of issues like the availability of sufficient funds, new program opportunities, assessment of the organizations performance and their weaknesses and strengths. The most important issues must be highlighted and then adressed to.

Further on the organization should then develop its goal and objectives along with the strategies that it will use to obtain its goal. Heads must be put together to formulate any strategies which can give rise to important informations that might also require an organization to go back to a previous step in order to improve it. This step is a slow process and requires time to deal with.

For example, a very small office should recognize that its size could be both a weakness and a strength. The size would limit it to strategies that do not require large human resource commitments, but would allow it to use strategies requiring rapid dissemination of information throughout the organization. (Diane Schilder: 2005)

It is crucial that any strategy developed should reflect the strengths and weakness of an organization's planning process.


One of the most important factors which seves as a barrier to any effective planning and needs to be recognized is communication. Communitcation would involve the problem of information flow. With the problem in communication the workforce and the stakeholders suffer as they are not very clear as to what their roles are and what is expected from them. They are unsure about what is going on in an organization which gives rise to suspicion and thus they are reluctant to accept change In turn this is also a trigger to a poor level of decision making. Irrelevant data or inaccurate data will serve to be an effective barrier in effective planning and hence is of no use to an enterprise.

Poor skill levels is yet another factor whose purpose is to add on to the list of barriers in successful planning as well as the functional abilities of a company. With the poor level of skills another factor that proves to be an obstacle is ignoring the need to include employees in the decision making level. Many organizations are resistant to change and also do not tolerate a wide diversity of views. This again is a barrier to successful planning as diverse views always leads to a broad assessment of the problems and opportunities within an organization.

Furthermore participants are so much caught up in their routine that they feel there is no time to do any planning. This adds up to the obstacles faced by an organization in conducting effective planning. People in an organization sometimes also feel that too much politics in involved in planning and hence it will not work. Mostly this feeling is seen within governmental institutions but at times this trend is also found in other organizations.

Governmental organizations face another problem of inadequate enforcement and abidance:

Deficiencies in enforcement and compliance can present significant barriers to effective planning and management of development. However, empirical research on the enforcement of regulations by local government is limited, and as a result planning administrators find little guidance from the literature.
(Burby et al.: 1998: 324)


Every organization faces specific obstacles to effective planning. These obstacles need to be recognized they should be eliminated for successful planning. In this section we will see how these barriers are to be eliminated.

The organization should also consider and recruit skilled employees. There should be skill assessments on a regular basis over a period of time to ensure that the organization comprises of the best skilled force which will prove useful for its planning process.

Successful planning requires an input from all levels of a firm. As a result the employees should be involved in decision making. Isolating employees and making decision will result in a very limited spectrum of ideas that will not prove to be useful for effective planning. What an organization should do additionally is to encourage strategic thinking which can be stimulated through training and practice. The company should not be resistant to change and be open to a diversity of views.

Information flow and effective communication should be ensured by a company. The employees should be taken into confidence and given the assurance that no politics will be made part of the process. Further the workforce should be motivated in an attempt for them to take out time from their routine work to participate in effective planning. The data collected for analytical purposes should be accurate, useful and timely. The organization should consider the way in which data is collected, distributed and analyzed.

In the planning field, information plays a key role in assuring efficient decision-making processes. In general, better information leads to better decisions. However, relevant information is often unavailable, communication between stakeholders is far from perfect, and decisions are often made in spite of strong disagreements among contending interests. (Matthias Baxmann)


Some of the major external influences in business management are the political-legal environment, the economic environment, natural environment, the socio-cultural environment, demographic environment and the technological environment.

An organization has less or no control over these factors and has to keep an analytical look out for any changes in these factors. The economic environment includes the economic trends affecting the consumer's buying power and spending pattern. It also includes a change in per capital real income and income distribution along with the consumer expenditures, change in interest rates and the cost of living. An organization producing a product that is expensive will have poorer sales where the cost of living is high and the income distribution is irregular. Thus an organization will have to set up goals to produce a product that is cheaper and affordable by the majority of the population.

Natural environment covers the areas regarding the natural resources consumed by an organization in the process of production. It also includes raw material shortages which would prove to be a loss for an organization. Increase in pollution levels, energy cost and an increased governmental intervention in the management of natural resource management also fall under the category of natural environment.

Another example of the influence of macro-environment was seen after the 11 September attacks on the World Trade Center. People resisted using air travel as a means to travel. Many airlines went bankrupt while many sat down to formulate new strategies in order to make profits.

"Since Sept. 11, airlines have stepped up cooperation in the form of code-sharing partnerships. Under these partnerships, carriers can sell tickets on other carriers' flights and honor their frequent-flier miles." (Eric Gillin: 2002)

With new technologies being developed, an organization needs to update its production line in order to fulfill the supply needs of the population. If an organization keeps on producing an out dated product then it will simply go into loss as people will stop buying. It is essential for an organization to distribute products that are technologically advanced and wanted by the population.

A company producing food products need to study the population that it will be dealing with in terms of how health and weight concious the people are. Where these concious levels are high, food products that are health concious would be consumed rather than lets say a chocolate brand. Further products that require less time to cook or are pre-cooked would be preferred where the population does not like spending or wasting time in the kitchen. Such examples are given to show the important of studying these factors and how they affect….....

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