A
micro and macro environment has two separate meanings in business. In
economics, the micro environment is the study of issues at an
individual level. Known as microeconomics, this field focuses on the
choices made by individuals, as opposed to the whole market group.
Micro in terms of business indicates the items a company can control,
often internal processes. Macroeconomics the opposite of
microeconomics is the study of large-scale theories relating to
consumer spending, inflation and money supply. In business, the macro
represents items outside of the company’s control.
When
studying economic information, economists look at microeconomics
because individuals often behave differently under alternate economic
conditions. A major difference between the study of a micro and macro
environment is opportunity cost. Opportunity cost represents the
potential return lost when an individual selects one choice over
another. This is important in microeconomics because individuals
often have limited income when making decisions. By studying the
individual choices and movements of a consumer, economists can then
make determinations for an entire group. This results in the study of
macroeconomics, which looks at overarching issues that affect all
consumers in each group defined by economists.
Businesses
separate issues in the micro and macro environment to aid owners and
managers with completing tasks and earning the highest profit
available in the market. Micro issues can be the amount of skilled
labor within the company, production processes used to manufacture
goods, facilities owned by the company, internal policies that
dictate employee actions and other related issues. All these issues
fall under the direct control of the firm. The management team can
therefore change these items, issues or policies to improve the
operating environment of the company. Companies may study the
differences between the environments in order to determine which
items they can change to maximise productivity and profit.
Macro issues in business can represent any item or issue not directly controlled by the company. Availability of raw materials, government laws and regulations, number of eligible employees available to hire and the threat of competition can be just a few major forces that separate the micro and macro environment. Companies will often identify these factors and create policies that help them cope with the potential problems that may arise with each one. Studying the macro environment may also require the help of outside consultants more in tune with the changes of this environment.
