INTERNATIONAL TRAINING COLLEGE - LINGUA

Towards Educational Excellence

NCHE Reg. No: R0014
NQA Accreditation No: 000095

DEPARTMENT OF BUSINESS AND MANAGEMENT

MARKING KEY: ASSIGNMENT 3

Lecturer: MR W Mushonga Due Date: Due Date: 02 April 2020

QUALIFICATION : Diploma in Accounting & Finance (NQF Level 3)

: Diploma in Business Administration (NQF Level 3)

: Diploma in Human Resources Management (NQF Level 3)

: Diploma in Office Administration (NQF Level 3)

MODULE : Introduction to Business (NQF3 )

ASSIGNMENT : 3

TOTAL MARKS: 30 marks

Question 1

As the principle guiding force, macro environment agents play a pivotal role in determining the
decisions of an organization. It helps the management to have a complete understanding of
the external or bigger environment prevalent in the region.

Explain the nature and significance of the environmental factors that are indicated on the
diagram above. [30marks]

1. Demography

It has a broad implication referring to the physical attributes of the population of the targeted
region (size, age, gender, occupation, density), population growth rate, migration trends (inter-
migration or intra-migration), changes in demographic structure, nature and characteristics of
communities, among others. A comprehensive understanding of all such features gives a clear
picture of the overall demographic composition of the region so that marketers can pinpoint the
viable audience group within that region, as their prime targets.

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For example, if the region is dominated by matured and senior adults like that in US,
marketers will never try to sell any youth-centric product over there. Instead, they will either
think of some commodity that will appeal to the majority of the demography or move out from
the place. At the same time, if the region is flooded with youths, the same heads will think of
attracting the population towards their product.

Migration trends reveal another significant characteristic of demography. For example, if

marketers find that a major proportion of population migrates from rural to urban areas within
the country; they can immediately make the commodities available within their reach while
conducting campaigns and strategizing communications in all areas.

While observing the present demographical structure, marketers also pay heed to forecasted
changes and shifts in the long-run. For example, with growing urbanization in semi-urban
areas, joint families can break down into single units, or a sudden government’s policy to limit
population growth can result in an adult demography in the long run. With this, they shall be
prepared for marketing to the upcoming demography and make the necessary adjustments in
their plans.

2. Economy

It includes the overall economic scenario of the particular region. Is it a mixed economy where
both government and private players enjoy a 50-50 share in every sector? Or is it a capitalistic
economy where the government has no control over the market except for formulating laws
and securing law and order in the state?

In case of the latter, marketers will definitely have a wider edge and be free of direct
governmental interference in their business operations. Besides these, some other statistics
like current GDP, GNP, PCI, the standard of living, purchase pattern and frequency of the
target group will also enable the management in taking important decisions especially those
relating to product prices.

3. Socio-Culture

The social structure of a place gives an idea about the predominant culture and
psychographics of the target audience. Organisations need to know if the area has a mixed
population of various communities, for example, most metropolitan cities or it has a major
share of a local population like the Marathi in Maharashtra, Bengalis in West Bengal, etc.

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It may so happen that a significant area of the targeted region is inhabited by tribal groups
having their distinct culture and lifestyle. In such a case, the company heads must take the
right approach to communicate to such an audience without hurting the sentiments of the
unique clusters.

Socio-cultural aspect also talks about the eating habits of the people. As an example, people
living in the western world prefer to have high protein food like beef, ham, etc. which is why
their burgers come in that fashion. However, people living in the tropics live on chicken, mutton
and eggs so do their burgers. Hence, eating habit and consumption pattern reveals a lot about
the probable likes, dislikes, and preferences of consumers.

4. Technology

Before investing in marketing activities, an organization must conduct a thorough research on

the spread and use of technology in the targeted areas. They need to understand the
technology penetration and user-technology interface of the region and accordingly make
plans to use technology for their campaigns and communication. For example, if they find that
almost every product used by the consumers is technology oriented, they can easily make
technology a strong tool for their product.

5. Ecology

Another vital aspect of the macro environment is its physical setting. This includes the
geographical location, the presence of ecology and biodiversity, temperature, weather and
climate and predominant seasons. By having a concrete understanding of all these features,
marketers will know where to sell what kind of products.

For example, products like heaters and electric blankets will never be of any use to equatorial
and tropical regions; although these are the highly populated zones in the world. Again, air
conditioners or coolers will never appeal to the Western countries, living in the temperate
zone. Therefore, before launching a product, successful companies study the environment and
ecology of a place to know about the needs and demands of its inhabitants.

6. Political Forces

Perhaps the most important of all external agents, political forces of a country is not just
restricted to the government and its policies and laws. It further extends to the active presence

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and role of pressure groups like lawyers, environmental activists and above all the common
people, who possess the utmost power to make as well as throw the current government.

Even before thinking of any business, an organization always observes the political and legal
situation of a nation. It is because the unstable government or political tensions will act as a
barrier to implementing the marketing strategies.

Interestingly, all the above components are often inter-linked. Ecology of an area determines
its demography (more people living in tropical zones), economic and political affairs affect
demand and supply of commodities and technology plays a significant role in shaping social
thinking and cultural lifestyle of people. The macro environment is, therefore, an umbrella that
engulfs all the above components and lays a comprehensive path to plan and implement
business policies of an organization

THE END

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