What is the difference between micro and macro environment?
The business environment determines the success or failure of any business organization. It is important to understand the business environment better to earn more profits.
These business environments are classified into two such microenvironments and macro environments. However, these two terms tend to confuse many students when preparing for exams.
The lesson provides detailed insight into the core difference between micro and the macro environment with a comparison chart for easier understanding.
What Is Micro Environment?
The microenvironment is a business environment that entails factors that directly affect the operation of business activities from within it.
These factors tend to influence the performance of the business and day-to-day operations. The good news is that they last for a short period.
The core micro environment factors are suppliers, customers, competitors, marketing, intermediaries, and the business itself.
Main Components of Micro Environment
- Suppliers are those people who provide raw materials and equipment to the business.
- Competitors are other businesses operating in the same line hence result in competition in the market and raw materials.
- Intermediaries are the middlemen between customers and the business such as wholesalers, retailers, and distributors
- Customers are the king of the business and they are those people who purchase goods from the business
- The business itself which entails owners, shareholders, employee, and board of directors.
What Is Macro Environment?
The macro-environment is a business environment that results in the economy hence the affect the working, performance, decision making, and business strategies.
However, these forces tend to be dynamic in nature. These factors are difficult to control and they affect the business either in a negative or positive way.
Some of these forces are groups, individuals, organizations, agencies, and technology among many others.
Comparison Chart: Micro Vs Macro Environment
|Basic Terms||Micro Environment||Macro Environment|
|Meaning||These are internal forces that directly affect the business from within||These are external forces that affect the working and performance of the business from outside.|
|Lasting Period||Short life impact||Longer life impact|
|Nature||Uniform hence easy to control||Dynamic hence difficult to control|
|Influence||Directly and Regularly||Indirectly and Distantly|
|Other names||Internal environment||External environment|
|Elements||Competitors, suppliers, organization itself, market, intermediaries.||Population & Demographics, Economic, Socio-Cultural, Technological, Legal & Political, and Environmental.|
Core Difference between Micro and Macro Environment
- Microenvironments are those forces that have direct contact with the business while macro-environment are those forces that have no direct influence on the business.
- The macro-environment has an indirect effect on the business while the microenvironment has a direct effect on the business.
- The microenvironment is also known as the internal environment and macro environment as the external environment
- Microenvironment can easily be controlled by the business while the macro environment cannot be controlled since they are dynamic
- An example of microenvironment elements is described as COSMIC analysis while the macro environment as PESTLE Analysis.
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The business environment comprises of macro and microenvironment. These factors have either a positive or negative impact on the business.
Understanding the difference between micro and macro environment will help to change the way business is operated and managed under different environments.
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