BUSINESS

ENVIRONMENT
 SCANNING THE BUSINESS ENVIRONMENT
• The starting point of understanding and
knowing the intricacies of the external
environment (macroenvironment and
microenvironment) and internal environment.
• The tool to recognize various opportunities
and at the same time understand the arena
where the business operates.
• The internal environment is the controllable
forces inside the business which is consisted by
the human and non-human resources of the
business, and organizational system and process.
• The internal environment are the sources of the
strength (S) and weaknesses (W) that affect the
survival of the business.
• The external environment is the uncontrollable
forces outside the business.
• The external environment of the business is
consisted of the micro and macro environment.
• The micro-environment is the immediate forces
outside of the business that affect the business .
• The macro-environment is consisted of the bigger
uncontrollable forces such as the political,
economic, cultural, natural, technological and
demographic environment.
• The positive impact of the external environment
on the business is called its opportunity (O).
• The negative impact of the external environment
is called its threats (T).
• Thus, in analyzing the business environment to
seek, scan and exploit the business opportunity,
SWOT analysis is employed.
 External Environment
• Consists of the micro and macro environment.
• Includes all the factors outside the business that have
impact on its marketing operations.
Microenvironment
• Factors that are near to the company, which have
impacts on the delivery of products and services.
• Consists of individuals and institutions that affect the
marketing program of the company.
 Suppliers

Public Market
Intermediaries

Company

Competitor Customer

Microenvironment Forces
Supplier Environment
• Comprises of individuals or institutions that provide
resources necessary for the company.
Marketing Intermediaries
• Individuals or institutions that support the operations
of marketing by promoting, selling, distributing the
goods to the consumers.
• Distributors, department stores, grocery stores, and
financial organizations.
Customer Environment
• Classified according to the market as consumer,
business, reseller, government and international
markets.
• Complicated environment since each has different
types of needs to be satisfied.
Competitors Environment
• Consists of companies that produce products in the
same category in the market.
• Immediate industry that the company is doing
business.
Public Environment
• the group of people that influence the business
activities of a company or people who have
real or potential interest in the company. This
public is responsible for building your
company’s image amongst the customers or
the industry.
Macro-environment Forces
Macroenvironment
• Consisted of greater societal factors that affect the
entire business programs in the industry.
o Political factors – includes legal, government
agencies, and pressure groups that can force or
restrain different groups or individuals in the
given society through various laws, policies, and
regulations developed by the government to
protect the companies, consumers, and public
interest
o Economic Factors - consists of variables that
affects the consumers purchasing power and
patterns; these include the trends under economic
environment as follows:
• GNP
• Consumer’s growth income
• Income distribution
• Impact of oil price about transportation fares
and commodity prices
• Recession or economic decline
 Philippine Social Class Differentials
• Upper Class (1%) – large landowners; highly
successful professionals; prominent business
people; top government officials
• Upper - Middle Class (10%) – owners of farms
over 20 hectares; most of them are professionals;
operators of medium-size business; middle-
echelon government administrators; some
university professors; bank, department stores,
factory manager
• Lower - Middle Class (20%) – lower echelon
government workers; most professors and teachers;
owners of farms of 3 to 9 hectares; nurses; some
small business people
• Upper - Lower Class (32%) – factory workers,
skilled workers, small farmers, store clerks, office
workers, most sari-sari owners
• Lower - Lower Class (37%) – unskilled laborer –
farmers with less than 1 ½ hectares; most household
servants; landless farm labor – most tenant farmers;
most physically handicapped; peddlers and
scavangers
o Cultural Factors – institutions and factors that
make an impact on the basic values, perspective,
choice, and other behaviors; in the Philippines
these factors include the following:
• Language
• Festivals
• Food
• Religion
• Customs, traits and traditions
o Natural Factors – natural resources that are needed as
inputs by marketers or that are affected by marketing
activities; this environment is affected by the
following:
• Protection of resources
• Ecotourism
• Recycle and reduce waste
o Technological Factors – variables that produce new
technologies, create new products, and discover
marketing opportunities which affect the operation of
the business through the birth of new technologies.
o Demographic Factors – deals with the population
of human according size, density, location, age,
race, occupation, and other statistics essential in
the description of the market; essential to
marketing as it helps companies to identify
potential market for products and services, and
serves as baseline for strategizing the marketing
activities.
 Emerging Development in the Demographic
Environment
• Change in the age of customers
• Emerging new markets
o Baby boomers – this age generation is the middle age group
going to old age of the market.
o Generation X or Gen X – synonymous with MTV generation
due to the heavy influence of music television channel in the
80s era; now entering the middle age group of the market.
o Generation Y or Echo boomers or Millennial generation –
occupies the youth segment (children and teens) of the
market; characterized by heavy dependence on new
technologies.
• Change in family structure