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The internal environment refers to the organization itself and the factors that are directly controllable by the organization. The micro-environment comprises the forces and factors at play inside the industry in which the marketer operates. Micro-environmental factors affect all parties in the industry, including suppliers, distributors, customers and competitors. The macro-environment comprises the larger- scale forces that influence not only the industry in which the marketer operates, but all industries.
Macro-environmental factors include political ores, economic forces, coloratura forces, technological forces and legal forces. This macro-environmental framework has been called the PESTLE framework. Micro-environmental and macro-environmental forces are outside of the organization and, while they can be influenced, they cannot be directly controlled. The internal environment refers to its parts, people and processes. An organization is able to directly control the factors in its internal environment.
A thorough understanding of the internal environment ensures that marketers understand the organization’s strengths and weaknesses, which positively and negatively affect the organization’s ability to compete in the marketplace. The micro-environment consists of customers, clients, partners, competitors and other parties that make up the organization’s industry. The organization cannot directly control its micro-environment and respond to the current and future needs and wants of their target market. They must understand how each of their partners’ processes work and how their partnerships benefit each party.
They must also understand the risks involved in working with partners and the relative power balance between the organization and each partner. Suppliers are a particularly crucial partner. Marketers must identify, assess, monitor and manage risks to supplies and risks to the price of supplies. To succeed, marketers must ensure their offerings provide their target market with greater value than their competitors’ offerings. Thus, marketers seek to understand their competitors’ marketing mix, sales volumes, sales trends, market share, staffing, sales per employee and employment trends.
Marketers should analyses total budget competition, generic competition, product competition and brand competition. The macro-environment encompasses uncontrollable factors outside of the industry: political, economic, coloratura, technological and legal forces. Political forces describe the influence of politics on marketing decisions. Economic forces affect how much money people and organizations can spend and how they choose to spend it. Coloratura forces affect people’s attitudes, beliefs, behaviors, preferences, customs and lifestyles.
Technological forces are those arising from the search for a better way to do things. Technology changes the expectations and behaviors of customers and linens as well as how organizations work with their partners and within society. Laws and regulations are closely tied to politics and establish the rules under which organizations must conduct their activities. The most significant laws and regulations for marketers are related to privacy, fair trading, consumer safety, prices, contract terms and intellectual property.