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Micro Environment

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Last updated date: 13th Jul 2024
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Introduction

The customer is treated as the king in business. A successful business thrives when the customers are satisfied with the products or services provided by a company. However, other external and internal factors are responsible for the progressive growth and sustenance of any business. Demography, economy, legal forces, etc. are the few external factors that are clubbed together to form the macro environment. In contrast, the  Micro Environment encompasses internal factors like consumers, competitors, employees, shareholders, suppliers, and media. All these  Micro Environment factors are in your grip so they could be easily controlled and governed. 


Consequently, the excellent exercise and coordination between interior factors nourish the core health of any business.


In this article, we will read details of the internal factors of the  Micro Environment. Customers, Competitors, Employees, Media, Suppliers, and shareholders are the controlling parameters of any business. The nature of relationships among these parameters directly decides the success and failure of any business.


What Do You Mean by  Micro Environment?

The term " Micro Environment" refers to the environment that exists within a company organization and can influence daily operations. It is connected to a small area where the company operates. The  Micro Environment is made up of all the forces that surround the company. These factors are specific to the company in the issue. Due to this, a company's performance can be affected in the short term. 


A marketing department works in a business environment that is influenced by circumstances outside the company's control. These forces are classified as "macro-environmental" or " Micro Environmental."  Micro Environmental forces are those that are distinct and individual, such as customers, producers, marketing intermediaries, public entities, and the enterprise itself, whereas macroenvironmental forces include demography, economy, social and cultural factors, political and legal factors, technology, and the natural environment. Customers, Employees, Competitors, Media, Shareholders, and Suppliers, the six  Micro Environmental factors are discussed below. 


Elements of Micro Environment 

The micro environment's features are tightly linked to the company, and they do not affect other companies in the industry in the same way, as some characteristics are unique to the firm.


As a result, we can define the  Micro Environment as the environment that the firm deals with in its specific areas, such as the industry or strategic group.


Customers

Customers rule the business. Every enterprise targets to offer the best quality product and services at the most affordable prices. Additional gifts and discounts lure customers. Monitoring customer feedback consistently, and comprehending customer requirements are gaining importance in every niche of the market. With such a strategic solution, any business can achieve monetary profits in return by winning the heart of their customers. In other words, most businesses exist primarily to satisfy the needs and wishes of their customers. The company's purpose is to satisfy customers while also profiting.


As a result, the ultimate goal is to give the greatest products/services at the best pricing to the consumer. Failure to do so could lead to the company's demise.


This is why paying attention to customers and appreciating their feedback is more important than ever.


Competitors

The humongous number of competitors in the same sector leads to fierce competition for any business. Therefore, you need to have a game plan to tackle the competitors. It will aid you to eliminate the control of monopolies and thriving in any sector of the market. Your product should not just have the USP but also the UPB to make it viable and unique from the ones available in the market. You should stand out from the rest of the world and this is an important characteristic of the competitive environment that must be understood by any organization. There is no such thing as a monopoly in business, no matter how big it is. In the traditional business world, a company faces a variety of rivals. Other companies' differentiated offerings are the most common sort of rivalry that a company's product currently faces.


Employees

It is imperative to win the workplace before winning the marketplace. Employees of any organization play a crucial role in impacting both micro and macro business environments. Employees are directly linked to the rate of production. Hence, they directly decide the growth or downfall of any organization. Any successful enterprise continuously aims to develop and train the skills of each employee. An organization also endlessly recognizes the talent which motivates and encourages the employees. 


The market is considerably more than just the sum of its customers. So, the business must evaluate the market's existing size, growth potential, and attractiveness by hiring the best employees. You can't figure out things like the cost structure of the market; the market's price sensitivity; the market's technological structure; the market's existing distribution infrastructure; the market's maturity, unless you don't have a good team of employees. 


Shareholder

Funds and investments are required for any small-scale or large-scale business to settle and grow. Investors also called shareholders to provide the funds to the company. Henceforth shareholders own the shares of the company, i.e., they invest in the company, and in return, the company shares profits of the business among its shareholders. Thus, the right equation is built between any organization and its shareholders. 


Shareholders are not only investors; they are also the company's owners. They own equity in the company and are consequently, in a sense, the company's owners. This implies that they have a say in how a business is run.


Shareholders will also be looking for a return on their investment. As a result, it is the job of the corporation to create a profit and distribute it to its stockholders. For these investors, they need to make money.


Dividends must be paid for interest to be retained. As a result, the organization must find the right balance between its long-term health and shareholder returns.


Suppliers

A supplier is a group that provides raw materials and other inputs required for the bulk manufacture of products. Any business in good shape has a strong symbiotic relationship between the organization and its suppliers. Thus, the healthy and amicable relationship benefits both entities for their existence. It can also be understood by the incident where a firm falls short of raw materials and the whole production and supply process gets delayed.


In terms of suppliers, the company could consider obtaining the essential materials or labor under its manufacturing schedule. It can put in place a purchasing policy that offers it bargaining power


Media

Media is a powerful platform to promote the product and services of any brand. It is a convenient model to reach customers directly. Thus, it is also mandatory to have an amenable relationship with the media. Any negative feedback or coverage could drastically bring not only financial losses but also a reputational loss to the brand. There are experts like PR managers hired by the organization who are helping in utilizing the strength of media for the promotion and expansion of a business. Say, for example, you are running a business, you will need media to advertise your brand and sell your goods. As a result, you must maintain your current status and relationship with the media. If you don't do this, the media may defame your business and it can cause you a huge financial loss. This is why companies pay public relations consultants to help them use the media effectively.


Fun Facts

  • Did you know COVID -19 pandemic, marked as a national emergency, had enormously impacted the economy of each nation worldwide? All the micro and macro environmental factors affecting business are knocked out. Not just demand, but also the supply of each commodity is hit. As a result, both essential and non-essential products are out of the way of consumers. It has severely brought down the profits of every business. It has also definitely impeded the technological and demographic situation.

  • Do you know marketing managers play a pivotal role in understanding the influence and significance of every component constituting both the micro and macro environment? They are also responsible for associating the micro and macro environmental factors together and maintaining the equilibrium between the two environments.

FAQs on Micro Environment

1. Explain the impacts of the Macro environment and  Micro Environment in marketing?

The broader societal macro-environment factors like economy, demography, technology, legal, and political forces generally affect all small and large enterprises. However,  Micro Environmental factors are the close adjoining elements under which any firm operates. Both of these macro and micro-business environments integrate to form a general marketing environment of a company and influence various operations related to a company.


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Marketing Environment

2. What are the different types of public in the  Micro Environment?

An organization is surrounded by multiple types of the public like the financial public, media public, internal public, local public, the general public. This public is none other than the shareholders and investors, media people, employees, suppliers, and customers, who impact one’s business directly. For example, satisfied customers are a public that backs a promotion program by spreading their positive feedback among the general public. Financial people like investors put in their money in the business and often get the return in the form of a share of profits made by the company.

3. What are the different components that constitute a  Micro Environment?

If you want to understand the concept of the  Micro Environment, you need to know all the components or elements that make up the  Micro Environment. So, elements that are responsible for constituting the  Micro Environment of an organization are customers and consumers, competitors, organization, market, suppliers and intermediaries. All these components play a key role in defining the  Micro Environment of an organization. 

4. How can a  Micro Environment be defined?

To define the  Micro Environment of any firm, organization or company, you need to understand the different elements that are related to that particular firm. A  Micro Environment can be defined as the environment which is close to any business organization and it includes all the people that work in that environment. All the forces such as employees, of any organization, are important for that organization as its performance depends wholly on these forces. 

5. How can the concept of a  Micro Environment help me?

If you are an owner of a company, you need to be aware of all the forces that run your company and these forces tend to form the  Micro Environment of your company. If you don't know much about the concept of a  Micro Environment, you won't be able to communicate with your employees as effectively. The performance of your company majorly depends on its  Micro Environment, so it becomes important for you to know about your company's  Micro Environment.