Chapitre 2 

: Macro-environment analysis

The macro-environment consists of broad environmental factors that impact to a greater or lesser extent many
organizations, industries and sectors.

ENVIRONMENT => political, economic, social, technological, and legal factors as well as ecological ones.

 The aim of this chapter is to understand how we can limitate the threats and istead take the
opportunities.

I. PESTEL
Factors examine macro-environmental factors according to six key types. These factors include both market and nonmarket
aspects.

- Market : suppliers, customers and competitors.

- Non market : social, political, legal, and ecological factors, but can also be impacted by economic factors

1. Political,

 identifying the importance of political factors

 carrying out political risk analysis : macro/micro dimension & the internal–external
dimension.

2. Economic,

Despite the possibility of unexpected shocks, economic growth rates have an underlying tendency to rise and fall in cycles:
several years of good growth are likely to be followed by a couple of years or so of lower or even negative growth. Industries
vulnerable to economic cycles : Discretionary spend industries, High fixed cost industries (airlines, hotels…)

3. Social

influence the specific nature of demand and supply, within the overall economic growth rate (Demographics, Geography,
Distribution, Culture) and they can shape the innovativeness, power and effectiveness of organisations (Network density
typically increases network effectiveness, Broker positions, Central hub positions typically).
 4. Technological,

There are five primary indicators of innovative activity:

 Research and development budgets: innovative firms, sectors or countries can be identi- fied by the extent of
spending on research, typically reported in company annual reports and government statistics.
 Patenting activity: firms active in patenting new technologies can be identified on national patent registers, the most
important being the United States Patents and Trademarks Office.
 Citation analysis: the potential impact of patents and scientific papers on technology can be measured by the extent
to which they are widely cited by other organisations, with data available from Google Scholar for instance.
 New product announcements: organisations typically publicise their new product plans through press releases and
similar media.
 Media coverage: specialist technology and industry media will cover stories of the latest or impending
technologies, as will various social media.

5. Ecological

I.E. pollution, waste and climate change…

There are three sorts of challenges that organisations may need to meet:

• Direct pollution obligations

• Product stewardship refers to managing ecological issues through both the organisation’s entire value chain and the whole
life cycle of the firm’s products.

• Sustainable development is a criterion of increasing importance and refers not simply to reducing environmental damage,
but to whether the product or service can be produced indefinitely into the future.

The extent to which these ecological criteria are important to organisations relies on three contextual sources of pressure, the
first two arising directly from the macro-environment:

• Ecological. Ecological analysis therefore requires assessing certainty, visibility and emotivity.

• Organisational field.

• Internal organisation.

6. Legal

Three broad varieties of capitalism have been identified, Formal and Informal

- Liberal market economies are institutional environments (United States, England)

- Coordinated market economies encourage more coordination between companies, often supported by industry
associations or similar frameworks (funds through bank)
- Developmental market economies tend to have strong roles for the state, which will either own or heavily
influence companies that are important for national economic development.
 II. Forecasting,
Macro-environmental forecasting draws on PESTEL analysis and often makes use of three conceptual tools: megatrends,
inflexion points and weak signals.

Forecasting takes three fundamental approaches to the future based on varying degrees of certainty:

- Single-point is where organisations have such confidence about the future that they will provide just one forecast
number,
- Range is where organisations have less certainty, suggesting a range of possible outcomes. These forecasts are
often called ‘fan charts’, because the range of outcomes ‘fans out’ more widely over time, reflecting growing
uncertainty over the longer term.
- multiple-futures forecasting involves even less certainty, focusing on a set of possible yet distinct futures.

Direction of change : it is helpful in forecasting to keep an eye on the fundamental directions of likely change.

- Megatrends are large-scale political, economic, social, technological, ecological or legal movements that are
typically slow to form, but which influence many areas of activity, possibly over decades.
- Inflexion points are moments when trends shift in direction, for instance turning sharply upwards or downwards.
- Weak signals are advanced signs of future trends and are particularly helpful in identifying inflexion points.

III. Scenario analysis

A technique that develops plausible alternative views of how the environment might develop in the future. Scenarios are
used to explore the way in which environmental factors inter-relate and to help keep managers’ minds open to alternatives
possibilities in the future.

While there are many ways to carry out scenario analyses, the process often follows five basic steps :