Macro Environment Analysis

Definition
Macro environment analysis is a review of all the factors that a company is unable to control. Companies conduct this analysis to stay aware of the issue in the current business environment. A common tool for conducting a macro environment analysis is the PESTEL framework, which include factors from the political, economic, social, technological, environmental and legal aspects in the business environment. The ultimate purpose of this analysis is to create a strategy that will leverage as many of these external factors as possible to the company’s favor.
The political factors of the PESTEL analysis include the current stability of the government, social welfare policies imposed upon companies, trade tariffs or regulations that restrict international business and tax policies on corporate profits. This information is quite important to businesses, as extremely difficult political situations often result in lower profits and a more inflexible business environment. A macro environment analysis may focus heavily on the political factors in countries with difficult business environments.
The group of external factors for this analysis comes from the economic factors within a country. Companies are unable to control issues like the income of buyers in the market, available credit offered by banks, unemployment, interest rates and inflation found in the economic market. These factors can also affect the company, lowering purchasing power from currency, available credit and inflation, which makes it more difficult for the company to conduct normal business operations.
The sociocultural dimensions of the environment consist of customs, lifestyles, and values that characterize the society in which the firm operates. Socio-cultural components of the environment influence the ability of the firm to obtain resources, make its goods and services, and function within the society. Sociocultural factors include anything within the context of society that has the potential to affect an organization. Population demographics, rising educational levels, norms and values, and attitudes toward social responsibility are examples of sociocultural variables.

Technological factors of macro environment analysis include new innovations, the frequency of technological change and new platforms or software used by companies and consumers. Failing to keep pace with technology can put a company behind competitors. Changes to consumer products will also drive this change, as consumers will have certain expectations of technology from products offered by a company.
Environmental factors include the items that affect the common living area around the company and its consumers. Energy consumption, maintaining a livable environment, waste disposal and other items can all affect the natural environment around a business. Companies must be mindful of changes to these laws that can change how they interact with the environment. The macro environment analysis should focus on this as consumers become more aware of the effects of business on environment.
This legal factor includes discrimination law, consumer law, antitrust law, employment law and health & safety law. These factors company must have to follow otherwise it has to be fine. It also influence how firm operates, its costs and demand of its products. Owner and managers must also be aware of current laws and how they affect the business, these laws could drive change in either direction that could have a major implications moving forward.

Industry
The current bird feeder industry is enhanced due to a number of supporting reasons. The solar bird feeder is quickly catching on because people have a real love for birds and a desire to keep squirrels out. Although the industry has not reached its peak in popularity it does have a specific group that it can cater to and yield positive results. Most people involved in bird feeding enjoy bird watching because it brings enjoyment to them to see rare species of birds and that might come once in a life time.

Analysis
Many elements contribute to development of new products; solar bird feeders developed by SDI also fit that description. The first major step is to look at all the factors that could possibly impact your company ability to produce goods and services. Whether the impact will be direct or indirect should be addressed soon as possible so that the company can take proactive steps to make adjustments to the final before production. A key factor in the planning process is using the right tool for the job and in this instance I used the macro environment analysis. Staring with the political factors which had zero impact with the business and next steps it was acknowledged that if things change down the road this could have a more profound impact.
The following factors were unfavorable in the information finding process, Legal and Economic factors. Each factor has valid points and things to watch when making a decision for example; when looking at it from a legal standpoint you have to think about what affects it can have on the company. In this instance your company could have many uphill battles with health care, for a new company this could take away from how you can or cannot take care of your workforce. Another factor will be animal rights activist, if they deem this unfavorable what plans are in place to combat what they are saying about your product when it comes to animals? This can also take away from the amount of time you have to produce bird feeders, it could have a negative impact on your workforce and more importantly bring negative press to your company. Other factors that had a negative impact were that SDI bird feeders were not cheap; they cost a pretty penny and with the economic downturn how can you to appeal to your customers. When it comes to bird feeders the market does exist but for the solar feeder that prohibits squirrels from eating the food the cost are on another level and customer base gets a little smaller. With unemployment numbers soaring through the roof many families are not in the position to support the purchase of such a feeder. Families have tough choices to make but most times they are selecting to make necessary purchases instead of frivolous purchases in the current time we live in.
Fortunately there are other favorable conditions that contribute when making the analysis, like technology. Technology stands on its own, when you have technological advances they can lead to bigger and better things it only helps industry progression. This technology has engineers contributing to the advancement of bird feeders more importantly it puts the company in a position to take that technology and transform it into something else which would expand the business. It also utilizes highly skilled engineers that could possibly be unemployed and not able to contributing otherwise. Unfortunately the natural habitat of birds contributes in a positive way for the company; they are losing more land due to companies building all the time which takes away multiple food sources. Food sources for birds also become limited which does wonders for not just your business but for people that sell bird seed also tend to make a profit. When this occurs people feel compelled to purchase bird feeders, it increases the demand for the bird feeders that feed birds not squirrels. Also, socio culture has a positive and plays a certain role when planning. When the culture changes with time and generations it could have an even better effect now the baby boomers are the most likely group to support and they have a financial structure to support the hobby which is a good thing for business. SDI is also a company that resides in North Carolina, southern states have better weather year round so birds that once flew away for the winter are staying in place longer. Having the ability to produce and support the market and understanding what market to cater to would have helped in the building and success within the industry.
Outcome
The solar feeder overall has favorable conditions based on a number of factors in the macro environment analysis that support the industry. When taking a look at the conditions they could be swayed either way at a moment’s notice but for now they support the production of our product. When using macro environment analysis it is important to view all facts and incorporate our entire team to ensure you capture all of the evidence and use them to your advantage. This analysis could also come in handy when and if you have to present to investors. SDI does have a couple of feathers in its hat to support production; just by saying award winning it brings a certain element to the company. People always want the best and they can proudly boast of have the best product. For the reasons stated in the analysis SDI should continue to produce their solar powered bird feeder, all the information supports the company moving forward.