BUSINESS ENVIRONMENT ANYALYSIS

Micro factors- The micro-environment is the environment that has a direct

impact on your business. It influences your daily proceedings and general
performance of the company.
1. Competitors
Availability of substitute cars that provide similar quality/features at
same or lower rate poses as a threat. A firm must keep reviewing its
pricing policies and closely follow its competitors’ moves.
2. Marketing intermediaries
Companies that have distribution channels branching across the world,
can improve the brand perception and thereby facilitating expansion of
the business.
3. Customers
Disposable income i.e. income that remains for expenditure or savings
after tax deduction is major factor that consumers take into
consideration at the time buying expensive goods such as a car.
4. Financiers
Car manufacturers have to incur huge costs right from production and
sales to after sale services. There is also the expense of introducing new
technological changes. All this requires continuous cash flow which can
be sought from the government or reliable financial investors.

Macro factors- The macro-environment is more general - it is the environment

in the economy itself. It has an effect on how all business groups operate,
perform, make decisions, and form strategies simultaneously.
1. Political factors
Government policies relating to the car industry play a vital role in its
demand. For instance, a move to eliminate car replacement schemes as
has been done by the government of some countries, discourages
buyers from buying new cars thus leading to a lower demand.
2. Technological factors
Car manufacturers are using advanced technology for product
improvement and adding innovative features at reasonable cost. This
attracts more consumers and higher demand as safety and sturdy
 components are prime factors that influence a consumer’s decision to
buy a particular car.
3. Socio cultural factors
Companies that develop a trustworthy brand name naturally gain a
larger market share because brand not only acts as an assurance of
quality but also becomes a status symbol often. Additionally, nationalist
sentiments can drive the consumers towards home grown brands
instead of foreign companies.
4. Economic factors
Changes in economic variables such an unemployment and interest rates
also influence the car industries. When consumers hold secure jobs or
the interest rates on credit are low, it leads to higher demand.