Accounting Paper

QUESTION 2: What are the main differences between the macro environment and specific environment, give example of what you have seen recently of an organization’s or your organization in responding to its environment.@CP4

Macro Environment is also called as external or remote environment. Macro Environment refers to the wide ranging economic, socio-cultural, political and technological forces that affect the organization and its operating environment. Macro environment often influences long-term strategic/objective of a firm. These forces originate beyond the firm’s operating situation. Most strategic management modals incorporate an environmental analysis, which scans the existing macro influences and potential opportunities. A situation analysis evaluates environmental influences in relation to internal factors, to establish an individual firm's limitations and competitiveness. Macro environment included: Political Factors, Economic Factors, Social Factors, Technological Factors.

Microenvironment is also called as specific environment or operating/competitive/task environment. Micro environment refers to factors affecting firms in a specific sector or industry. Micro factors include suppliers, distributors, customers, labor and competition. The "Porter's Five Forces" modal is an industrial analysis used by firms to understand the micro environment. Micro environment can impact the organization’s ability to obtain inputs and discharge of its outputs. Factors in the microenvironment are largely within the control of the managers. In this way, organizations can be much more proactive in dealing with the task environment than in dealing with the macro environment. Micro environment included: New entrants of the market, bargaining power of customer, bargaining power of suppliers, threat of substitutes and competitor.