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Negative Impact of macro environment on business operation
The external factors are often referred to as uncontrollable, as it hold the ability to destroy an established or entrepreneurial venture in the global business environment. The external or macro-environmental factors are significant to affect the decision-making process of the organizations. Thus, De Villa et al. (2015) stated that it might act negatively and could distort the organization’s strategic performance in the competitive market. The macro-economic factors are listed as:
- Political environment
- Social and cultural environment
- Economic environment
- Technological innovations
- Environmental factors
- Legal and legislative features
The macro-environmental factors are evident to undergo modifications rapidly and thus, it becomes difficult for the business organizations to maintain pace with the sudden changes. Thus, the lack of adaptability to sudden alterations and the obstinate characteristics of the business venture are likely to distort its market performance (Gao et al., 2017). If the business operations are not eager to align its innovative marketing strategies with the changing scenario of the market place, the company will face multiple threats from different aspects of the business operations. Hence, it is advised that the business organizations must embrace the government regulations, external competition and societal values in its area of business expansion. Although micro-environment is observed to be an effective strategic planning tool of the organization’s business operations, the macro-environment is considered vital decision-making factors for the future scope of the business in their selected region of expansion. Thus, if the organization fails to evaluate the external market environment before launching its new marketing strategies, it can face a severe downfall in its revenue flow in the new market sphere.
References
De Villa, M.A., Rajwani, T. and Lawton, T., 2015. Market entry modes in a multipolar world: Untangling the moderating effect of the political environment. International Business Review, 24(3), pp.419-429.
Gao, Y., Shu, C., Jiang, X., Gao, S. and Page, A.L., 2017. Managerial ties and product innovation: The moderating roles of macro-and micro-institutional environments. Long Range Planning, 50(2), pp.168-183.