Question

Why study the ‘Economic environment’ of a country? Describe the information you will be collecting in studying the Macro and Micro environment and how it will help you in developing marketing strategies?

Answer 1

The economic environment of a countary consist of various macroeconomic and microeconomic that affects the business in one or other way. It consist of various factors in the immediate market place and economy. As these factors affects the success of a business and its its strategies it becomes very important to study the economic environment of the country. The various information collected after studying the various macroeconomic and microeconomic factors is as follows

The microeconomic environment refers to things that happen at the individual company or consumer level.

Microeconomic factors do not affect the whole economy. Below are some microeconomic factors that may influence a business:

• Competitors.
• Demand.
• Market size.
• Suppliers.
• Supply.
• How you supply your goods, i.e., the distribution chain. For example, through retail stores, distributors, the Internet, etc.

The macroeconomic environment, on the other hand, refers to things that affect the entire economy. Macroeconomics is concerned with general or large-scale economic factors, such as:

• Unemployment
• Inflation.
• Interest rates.
• GDP growth. GDP stands for Gross Domestic Product. In other words, is the economy in recession, is it booming, etc.?
• Taxes.
• Exchange rates, i.e., how much currencies are worth in relation to one another.
• How much discretionary income consumers have, i.e., income after paying tax, social security, etc.
• Levels of consumer confidence.
• Savings rates.

The study of Micro and macro environment is very crucial in the development of various strategies . The study of macro environment helps to decide the macro policies of the business .It also helps in reduction of tax liability. The study of micro environment helps to understand the need of customers their demands , level of competition etc. All these policies leads to a successful rum of business.