The micro environment includes the immediate forces close to the business that directly affect its ability to serve customers and earn profit.
It is called “micro” because these factors are near and have direct day-to-day impact on operations like sales, production, pricing, and service.
Main elements:
Micro environment matters because it influences:
In exams, you can write: “Micro environment factors are close to the firm and affect business decisions immediately.”
Customers are individuals/organizations that buy the firm’s products/services. They are the most important micro factor because business exists to satisfy customers.
If customers’ tastes change (e.g., toward healthier products), firms must redesign products and marketing.
Competitors are rival firms offering similar products/services to the same target market.
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Any three elements:
(Write any three with one line explanation.)
Customers are important because:
Hence, customer focus is central to business success.
Definition of Business Environment is sum or collection of all internal and external factors such as employees, customers needs and expectations, supply and demand, management, clients, suppliers, owners, activities by government, innovation in technology, social trends, market trends, economic changes, etc.
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The micro environment includes the immediate forces close to the business that directly affect its ability to serve customers and earn profit.
It is called “micro” because these factors are near and have direct day-to-day impact on operations like sales, production, pricing, and service.
Main elements:
Micro environment matters because it influences:
In exams, you can write: “Micro environment factors are close to the firm and affect business decisions immediately.”
Customers are individuals/organizations that buy the firm’s products/services. They are the most important micro factor because business exists to satisfy customers.
If customers’ tastes change (e.g., toward healthier products), firms must redesign products and marketing.
Competitors are rival firms offering similar products/services to the same target market.
Why competitors matter: they influence market share, pricing, and customer switching behaviour.
Suppliers provide inputs such as raw materials, components, and services.
Example:
Marketing intermediaries help the firm to promote, sell, and distribute products to customers.
Intermediaries matter because they affect availability, reach, delivery speed, and customer experience.
Publics are groups that have actual or potential interest in the firm and can influence its ability to achieve objectives.
Example:
Typical responses:
Micro factors change → Firm analysis → Strategy/action (product/price/channel/PR) → Customer value → Sales & profit
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The micro environment consists of immediate forces close to the firm that directly affect its ability to serve customers and achieve objectives.
Elements with examples:
Micro factors (Customers/Competitors/Suppliers/Intermediaries/Publics)
↓
Direct impact on decisions
↓
Product • Price • Promotion • Distribution • Service
↓
Sales, profit and reputation
Thus, micro environment changes require quick and practical business responses.