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MGMT 488 – STRATEGY AND POLICY
The macro environmental analysis is the first step in creating the Environmental Analysis. The macro environment examines the general business climate as it relates to the organization, but has nothing to do with the organization itself. The macro environment is primarily concerned with major issues and upcoming changes in the environment. The acronym for the macro analysis is “STEEP.” The five areas of interest are Socio-cultural and demographics; Technology; Economic conditions; Ecology and physical environment; and Political and legal.
SOCIO-CULTURAL AND DEMOGRAPHICS
Societal values and lifestyles change over time, and the most important of these should be discussed. For example, over the past generation, it has become acceptable for women to work outside the home – or not; smoking is not as acceptable as it once was; people are not retiring at 65; students going to college are older; and people are more aware of the environment and healthful living styles. The changes in values and lifestyles may come from many sources: medical (smoking, healthy eating, exercise); science (global warming, going “green”); economic (people working longer, women in the workforce); cultural diversity (music preferences, foods, living accommodations, medicine); and technologies (Internet dating, biodegradable plastic) are just a FEW examples. Some changes in values and lifestyles will be important to the industry, but not to your business. For example, the current trend is to adopt pets from a shelter, rather than from a pet store; this has an impact on the pet store industry. However, if a pet store is located in a town that does not have a shelter or the store does not sell pets (just supplies – like PetSmart), then the change does not affect the business. When discussing demographics do NOT discuss the target market. This section deals with changes to the population and demographics as a WHOLE and those that may affect the specific industry not the business. It is not important that the population of Billings is growing. It is important that more people are moving to smaller cities and rural areas. It is not important that the average age of the population of Montana is 35.2 years. It is important that people are living and working longer, in general.
For example. especially if changes to the laws are pending or being discussed. state. General business laws such as zoning. especially those with pending legislation. The current situation (specific to the industry) and any changes that may be forecast are important. but may be better for used car sales and while new appliance sales are in decline.Macro Environment Page 2 TECHNOLOGY Technology encompasses more than computers! Remember that technology comes in many forms – medical devices. The major laws and regulations should be discussed. and federal legal information in the business and industry environment. housing. a pet store would deal with federal animal welfare and prohibited pet laws as wells as state laws concerning animal cruelty. How might these situations change if the economy improves? ECOLOGY AND THE PHYSICAL ENVIRONMENT The ecology and physical environment plays a large part in many busineses – especially those who have production facilities. veterinary care and so on. But also. everyday businesses are affected. minimum wage. environment. repair people are seeing a large increase. The current economic situation is not conducive to new car sales. and OSHA should be mentioned. taxes. an industry may have specific laws and regulations. production techniques – and be sure to include them in the list if they are important. taxes. Independents and Green – all of these parties have fundamentally different views on business. But also consider political ramifications. Additionally. new plastics. an analysis is made of pertinent local. The technology discussion should not include what the business does – but what is available to members of the industry! ECONOMIC CONDITIONS The state of the economy is usually in some sort of flux. Democrats and Republicans. and many other issues that may affect a business.MGMT 488 Chapter 3 . other human resource issues. POLITICAL AND LEGAL In this section. For example. . the impact of climate change must be considered: water and fuel costs could change dramatically if the world warms by only a couple of degrees.
why do it. You may use a combination of both. . Here is an example of how a Macro environmental analysis should be presented for a mythical pet store that sells pets and supplies in rural Montana. if needed. or in paragraph form.MGMT 488 Chapter 3 .Macro Environment Page 3 ANALYSIS AND PRESENTATION Introduce the section – what is it. what does it tell the business owner? Present the analysis in bullet format with short complete sentences.
Many older couples are becoming “pet parents” – lavishing the attention and money on pets rather than their children. has recently become a societal issue. • • Several key factors regarding demographics and population are • • • • People are living longer. assisted-living. Families are larger. Some urban people think that an animal dropped at a farm will automatically be taken in by the landowner. As children leave home.Macro Environment Page 4 MACRO ENVIRONMENT The purpose of the macro environmental analysis is to determine what outside influences may have an effect on the industry. dumping unwanted animals in those rural areas seems to be acceptable. regulations. and. Dumping – In some areas. generally large cities that are mostly surrounded by rural communities. with more children. . 4) Demographics and population. The analysis examines five areas of interest: 1) Laws. SOCIO-CULTURAL AND DEMOGRAPHICS • Pet Adoptions – Adopting pets. and 5) Technology. Barak Obama. o Increasing amount of bad press regarding animal cruelty and abuse Pets as companion animals – Many nursing homes. however. stated his intention to adopt a dog from a shelter o Increased advertising by the Animal Human Society and sponsors such as Pedigree® brand dog food. 3) General economic conditions. and legislation. retirement communities and long-term care facilities are allowing residents to bring small pets as companion animals. 2) Societal values and lifestyles. as opposed to buying them. “empty nest” syndrome becomes important. TECHNOLOGY Several enhancements in technology have affected the Pet store industry. This trend is expected to continue and the number of eldercare facilities allowing small pets is expected to increase for the foreseeable future (cite).MGMT 488 Chapter 3 . therefore. which may indicate an increased desire for pets (cite). The awareness of animals in shelters has come about from several sources: o A popular president. which may increase the need or want for companion animals (cite). In the next five years the number of people moving from urban or suburban areas to rural areas will increase 27% (cite). this is not usually the case. Two of the most important are micro chipping and advances in pet store POS systems. the business.
Alligators and Boa Constrictors in Florida Over population of domestic (dog and cat) populations o Spay and neuter issues o Unwanted kittens and puppies o Feral populations Sustainable practices in manufacturing of pet food and accessories • • POLITICAL AND LEGAL Politics play no explicit role in pet stores. Pet ownership is deemed acceptable and desirable by most political parties. a recovery is estimated to begin within the next 18 months.MGMT 488 Chapter 3 . or upscale treats o May shop at supermarkets rather than pet stores as they feel pet stores charge more Projected recovery – When the recovery begins some areas that may improve are o Increased number of people wanting pets either because they can afford the pet itself. • Current recession – In general. its care. . people are spending less. or a house that allows them to have pets. This may have an impact on the Pet store industry because potential customers o No longer have homes to house pets because of foreclosures o May opt to adopt a mongrel rather than a more expensive pure bred animal o May opt not to get a pet at all o May not spend as much on non-essential pet supplies such as new toys.” • ECOLOGY AND THE PHYSICAL ENVIRONMENT While pet ownership does not have a specific direct impact on the physical environment. o Increase in sales in upscale pet accessories as people feel guilty for “neglecting” their pets when “times were hard.g. several issues must be considered: • Exotic Pets o May be depleting natural populations o Some people release – they may replace native populations E.Macro Environment Page 5 ECONOMIC CONDITIONS The world economy is in a recession. fancy leashes. However.
and federal laws that are generally required of businesses such as zoning. this would not be important. otherwise. expected to be raised to $7. and overtime pay. • • 1 ABC Pets hires most of its clerks at minimum wage. Local Laws o Zoning – many cities or counties limit the number of animals that may be kept within specific zoning areas.Macro Environment Page 6 Pet Stores must adhere to all standard local.MGMT 488 Chapter 3 . EEO. OSHA. state. . Additional laws and pending regulations that are specific and important to the industry are: • Federal Laws o Animal welfare o Prohibited pet laws State Laws and Regulations o Animal cruelty o Housing o Veterinary care o Minimum wage 1 – currently at $6.55 in Montana.00 on January 1. 2010.
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