Macro Environment of Business

 Macro environment of a company refers to all those economic and non-economic factors which exercise their influence on the business activity in general and thus determine opportunities that a company may have to promote its business.

The role of macro environment from the point of view of the business may be both positive and negative. This implies that the larger forces in the company’s environment do not always provide wider space for business operations. They often put restraints on the business activities of the firm.

Macro environment of business can be broadly classified into

1. Economic Environment and
2. Non-Economic environment.

Since business is basically an economic activity, economic environment of business both domestic (national) and global is of strategic importance. In the national economic environment of the country, country’s economic system, macroeconomic scenario, phase of business cycle through which the economy is passing, organization of the financial system and economic policies of the government are the most important elements.

Economic system of the country determines the parameters of the business activity. Macroeconomic scenario refers to price situation, levels of saving and investment, fiscal, monetary and balance of payments situations and overall growth activity. These factors broadly determine the prospects of business activity.

Economic policies of the government, particularly the industrial, trade, fiscal and monetary policies shape the opportunities for business. However, at times, these policies are used by the governments to regulate the operations of business firms.

Now because of liberalization, from the point of view of the company’s business, global economic environment has become as much important as the national economic environment.

Business, despite the fact that it is an economic activity, is also influenced by its non economic environment. Political system, ideology of the government, legal framework, social system, cultural values, demographic factors, level of technological development and natural and physical environment of the country broadly constitute non-economic environment of business. In fact, all these non-economic elements are of great relevance to present day business. These factors not only determine for business but also, at times, have serious constraining effects

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