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Identify the different elements of an organization’s macro environment that impacts its e-business and marketing strategy.

Marks: 10 M

Year: May 2013, May 2014, Dec 2014

1. Introduction:

   i. All organizations operate within an environment that influences the way in which they conduct business.

   ii. Strategy development is strongly influenced by considering the environment the business operates in.

   Diagram

   

2. Macro- environment:

   i. The major external and uncontrollable factors that influence an organization’s decision making, and affect its performance and strategies is called as macro-environment.

   ii. The macro-environment can be better reviewed using the SLEPT factors.

   iii. SLEPT factors:

   a. Social factors: Social factors include the influence of consumer perceptions in determining usage of internet for different activities. Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. For example, an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labour). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers).

   b. Legal and ethical factors: Legal factors determine the way by which products can be promoted and sold online. Government, on behalf of society, seek to safeguard individual’s right to privacy. Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.

   c. Economic factors: Variations in the economic performance in different countries and regions affect spending patterns and international trade. Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy

   d. Political factors: National governments and transactional organizations have an important role in determining the future adoption and the control of internet by which it is governed. Political factors are basically to what degree the government intervenes in the economy. Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided and those that the government does not want to be provided. Furthermore, governments have great influence on the health, education, and infrastructure of a nation.

   e. Technological factors: Changes in technology offer new opportunities to the way products can be marketed. Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation.