Question

• Are any of the macro-environment factors causing demand for the industry's products/services to increase or decrease?
• Are the macro-environment factors leading to higher or lower industry profitability?

Answer 1

Yes, the macro-environment factors causing demand for the industry's products/services to increase or decrease. Every business is affected by macro environmental forces, they can increase or decrease the need for your product, or create entirely new product needs. Raw material costs might be driven up or down. New target markets might be created or old ones changed. Macro environmental forces that directly affect their business, which means understanding the nature of those forces and how to identify and analyze them.

Yes, the macro-environment factors can lead to higher or lower industry profitability. In external environment, political factors are Government actions, rules and regulation. Change in political situation can be a very sensitive issue to a company. Political factors that affect business are uncontrollable like political stability, current and impending legislation. The only solution is to conduct environmental analysis. It will help to know the threats and opportunities and take precautionary measures as desired. For example - more stringent measures are to be made regarding car leases through the consumer lobby group in congress. The tobacco industry has been receiving too much attention from the government albeit on a negative note which makes it the next target. The American firms will find it more difficult to export goods due to the stringent laws that are being put in place to avoid aiding the enemy. Despite the fact that policies being made are to benefit an industry by realization of higher profits, the same could impact negatively on the nation.