Components of a Company's Microenvironment

Sales & MarketingBusinessManagement

What is Microenvironment?

Microenvironment refers to the environment comprising of all the elements of an organization’s immediate environment which influences the performance of the company, as they have a direct bearing on the firm’s regular business operations.

The microenvironment is popularly referred to as task environment or operating environment.

Important Elements of Microenvironment

Let us take a quick look at some important elements of microenvironment.

Customers and Consumers

Customers are those people who buy or avail an organization’s products/services. In simple words, an organization cannot survive without customers. A consumer, on the other hand, is the end user of the product/service.

For example, a father might purchase a pack of chocolate for his daughter. In this case, the father is the customer, and the daughter is the consumer.

Any successful business must keep a close watch on both customers and consumers of its products or services. It is important to monitor and track any changes in tastes and preferences of the consumer along with changes in the buying habits of the customer.

Competitors

Every business has competition. Competitors are other or similar organizations that compete with each other for both resources and markets. It is therefore important for an organization to be aware of its competitors and analyze the threats from its competition. Any business worth its salt must be aware of its competitors, their strengths, and weaknesses, and must identify the most aggressive and powerful competitors at all times.

Businesses can have direct or indirect competitors. When two businesses compete for similar resources and markets, it is called a Direct Competition.

For example, Maruti and Hyundai are direct competitors. On the other hand, a five-star holiday resort and a luxury car company are Indirect competitors since they offer different products but vie for the same market or customer base.

Organization

It is important that to have a better understanding of the microenvironment of an organization, the organization must do a self-analysis. It must understand its own strengths and weaknesses, objectives and goals of the business, and resource availability.

The following non-specific elements of an organization can affect its performance −

Owners − People who have a major shareholding in the organization and have vested interests in the well-being of the company.

Board of Directors − The board of directors is elected by the shareholders for overseeing the general management of the business and ensuring that the shareholder’s interests are met.

Employees − People who work in the organization are major contributors to its success. It is important that all employees embrace the organization’s goals and objectives.

Market

The market is much more and much bigger than the sum of all the customers. Businesses must study the market in terms of its actual size, the potential for growth, and its attractiveness.

Some important issues that need to be considered are as follows −

  • The cost structure of the market

  • Price Sensitivity of the market

  • Technological structure of the market

  • The existing distribution system of the market

  • The maturity of the market

Suppliers

Suppliers are an important component of the microenvironment of any business or organization. Organizations depend on more than one supplier for equipment, raw material, etc., to maintain and run their production.

Suppliers can influence the cost structure of the industry and are hence a major force.

Marketing Intermediaries

Marketing intermediaries are also a major determining force in business. Most customers are unaware of the manufacturer of the products they buy since they approach retailers, departmental store, chain stores or online stores for their purchases.

Publics

Publics is the group of people that influence the business activities of a company or people who have real or potential interest in the company. They are hugely responsible for building a business or organization’s image amongst the customers or the industry.

Types of Publics

Publics can be classified into the following categories −

Financial Publics

These are the people who affect a company’s funding. These include the banks, investors, brokerage firms, stockholders etc. This type of publics affects a company’s ability to take loans, decide on favorable payment terms etc. They also determine how the customers or other publics perceive a business.

For example, if a company is a supplier of some mechanical parts to an automobile giant and if the latter organization finds that the product is faulty, it may directly hinder the first company’s ability to work with the other giants. Or if a company is known to always be in losses, investment houses may refrain from investing in such companies. The investors can also force and change the management policy if they believe the current management policy is detrimental to the growth of the organization.

Media Publics

This type of publics generally uses newsletters, articles, blogs, magazines, radio and TV announcements, social media etc., to make a perception about a business in the minds of the stakeholders. Having good media relations can always help a company cover its shortcomings and highlight its strengths. But if the media relations are not good, it might lead to heavy losses. This is why most big companies have a dedicated team to cater to their media needs and image building.

Government Publics

The Government rules and regulations need to be followed or strictly adhered to while operating a business. Any change in the rules should be noted and corresponding alterations should be done in the business procedures. A business should always be updated about the Government policies and may consult a Government official or an advocate for doing so.

Citizen-Action Publics

These are the voluntarily or involuntarily formed public groups for the benefit of the general consumer. These include consumer groups, environmental groups, and minority groups, etc.

A company’s PR department needs to be updated about what these groups have to say regarding the company. The general public that might affect the business should be known and efforts should be taken to keep friendly relationships with them.

Local Publics

These include the neighborhood citizens, general local bodies etc. A community relations officer needs to be appointed to solve the issues of the local public.

General Publics

General public includes the general customers. The customers’ brand perception is very important for the company’s success. Various advertising campaigns might be undertaken to build a healthy image of the business or the company.

General public’s perceptions can be judged through their feedback on social media. This is why almost all businesses build their ad campaigns based on current societal trends and avoid controversies so as to keep the business idea safe.

Internal Publics

A company’s employees, managers, distributors, suppliers, volunteers, stakeholders, Board of Directors, etc., are very important assets of a company. If the internal public is happy and content, then only they will try to increase the goodwill of the company in the outside world.

Newsletters, town halls, off-site days, and company meetings, etc., can be used to educate and motivate the employees. They can also be used to inform the employees about the new advancements in the company. A business may develop strategic plans to target some or all of the publics to achieve greater profits through increased goodwill.

Conclusion

Considering these factors can boost the success rates of marketing campaigns for any organization as well as increase the reputation of brand in long term.

raja
Updated on 13-Jun-2022 12:43:20

Advertisements