The macro-environment refers to the “big or macro forces” that affect the area, the industry, and the market, which the enterprise belongs to. They influence how business should be conducted, how consumers will behave, how supply and demand will move, how different competitors would position themselves, and how the cost of doing business will proceed. The macro-environment forces can be divided into five categories composed of the Social, Political, Economic, Ecological, and Technological dimensions or SPEET. The macro-environment forces create their own opportunities for the enterprise to exploit, and their own threats for the enterprise to counteract.
1. Socio-Cultural Environment
The socio-cultural environment includes the demographics and cultural dimensions that govern the relevant entrepreneurial endeavor. Taking this aspect into consideration helps the entrepreneur assess the trends and dynamics of the bigger consumer population, their beliefs, tastes, customs, and traditions. It looks at social structure and shifts in social status and behavior.
2. Political Environment
The political environment defines the governance system of the country or the local area of business. It includes all the laws, rules, and regulations that govern business practices as well as the permits, approvals, and licenses necessary to operate the business. Specifically, it regulates the use of natural resources; the disposal of wastes; the taxation of income; the importation of goods and services; the accounting and reporting of business financial statements; public and private education; health programs; use of public funds; and other such concerns. It includes the establishment of vital infrastructures, logistical access, and interventions that affect the cost of doing business. These factors are important influencers in evaluating the attractiveness of any political domain where the entrepreneur intends to locate and do business in.
3. Economic Environment
Supply and demand forces mainly drive the macroeconomic environment. They are the same factors that drive the interest and foreign exchange rates that fluctuate with the movement of the market forces. In any country, the income levels and the purchasing power of its people as well as the competitiveness (or uncompetitiveness) of its industries and enterprises are sources of opportunities. However, in any opportunity, there is always a threat that lurks behind it. In this case, the entrepreneur must be able to think critically through each and every single economic event that impacts his or her enterprise. For example, a very fast-growing demand for housing may lead to the overbuilding of houses. This threat is what house financing institutions are afraid of.
4. Ecological Environment
The ecological environment includes all-natural resources and the ecosystem, habitat of men, animals, plants, and minerals. There is a growing awareness in the world today that will make this factor more and more important for countries, industries, and businesses.
The threats of ecological degradation have generated countless opportunities such as smoke and spill detectors, filters and screens, pollution counters, and energy-saving devices. Opportunities abound for greener, cleaner, and healthier products, whose objectives are to save the planet and prolong lives.
5. Technological Environment
New scientific and technological discoveries, which often lead to the launch and commercialization of new products with superior attributes or to rendering the old ones obsolete, are the entrepreneur’s nightmares. In such cases, the entrepreneur is left with no choice but to invest in new technologies in order to keep up with competition. Technology does not only come in the form of advanced machinery or equipment, but it can also be in the form of new systems, new processes, or new products.
The table shows examples of opportunities and threats that are present within the macro environment of a fast-growing fast-food chain offering chicken meals and other Filipino favorites.