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The macro environment is a collection of economic, social and technological factors that impact a firm that are beyond a firm's control. The term is typically applied to broad factors that impact more than one industry. For many firms, the macro environment is an important consideration in strategy planning, decision making and forecasting. The following are common types of macro environment.
Economic GrowthPeriods of economic expansion, recession and depression.Inflation & DeflationChanges in general price levels such as wages.Interest RatesBaseline interest rates often impact a firm's cost of capital.Financial MarketsCapital markets go through periods where it is difficult or easy to raise money by issuing stocks and bonds.
Business CyclesBusiness cycles such as periods of high commodity prices followed by periods of low prices.Political StabilityPeriods of political instability such as government shutdowns or major protests.Trade BarriersTrade barriers such as tariffs can impact costs and sales.EmploymentIn periods of low unemployment, employees are more likely to leave for salary increases and it can be more difficult to recruit skilled resources.
DemographicsDemographics such as an aging population.Consumer ConfidenceHow optimistic customers are about the future.Social ValuesShifting social values such as growing concerns over environmental and social issues.Technological ChangeTechnological change can cause vast shifts in the economy that impact large numbers of firms. For example, an innovation can replace an entire industry over a relatively short time period.
RegulationsNew laws and regulations or elimination of regulations. For example, reduced regulations may result in more competition as regulations can represent a barrier to entry.TaxationTax rules, rates and interpretations.
Strategic Planning
This is the complete list of articles we have written about strategic planning.
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Analysis of organization abilities.
The difference between a strategy and a plan.
The common types of estimates.
A definition of budget planning with examples.
A definition of market intelligence with examples.
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The basic types of strategy.
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A reasonably comprehensive guide to strategy.
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A definition of strategy vs tactics with two examples.
A few sources of competitive advantage for businesses.
The difference between competitive advantage and distinctive capability.
An overview of a common business strategy.
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