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DESTEP Model - The Macro Environment PDF

The document discusses the six forces that make up the macro environment that shape opportunities and threats for businesses: demographic forces relating to human population characteristics; economic forces affecting consumer purchasing power; socio-cultural forces from a society's values and norms; technological forces creating new products and markets; ecological forces regarding natural resources and environmental issues; and political forces comprising laws and regulations. Understanding how these macro environmental forces impact businesses is crucial for success.

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Rachel Belga
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225 views

DESTEP Model - The Macro Environment PDF

The document discusses the six forces that make up the macro environment that shape opportunities and threats for businesses: demographic forces relating to human population characteristics; economic forces affecting consumer purchasing power; socio-cultural forces from a society's values and norms; technological forces creating new products and markets; ecological forces regarding natural resources and environmental issues; and political forces comprising laws and regulations. Understanding how these macro environmental forces impact businesses is crucial for success.

Uploaded by

Rachel Belga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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The Macro Environment: Six Forces in the Environment of a Business

Adapted from Marketing Insider, 2017

A company is not alone in doing business. It is surrounded by and operates in a larger


context. This context is called the Macro Environment. It consists of all the forces that
shape opportunities, but also pose threats to the company, or the industry it represents.

The Macro Environment consists of 6 different forces:


Demographic, Economic, Political, Ecological, Socio-Cultural, and Technological forces.
This can easily be remembered: the DESTEP model, also called DEPEST model, helps
to consider the different factors of the Macro Environment:

The Macro Environment – Six Forces in the Environment of a Business


1. Demographic Forces in the Macro Environment
Demographic forces relate changes in human populations. This includes population size,
density, age, gender, occupation and other statistics. Why are people important? Because, on
the whole, their needs is the reason for businesses to exist. In other words, people are the
driving force for the development of an industry. The large and diverse demographic
considerations and changes offer both opportunities and challenges for businesses. Especially

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in times of rapid world population growth and overall demographic changes, the study of people
is crucial for business leaders. Changing demographics mean changing markets and changing
markets mean a need for adjusted business strategies. Some of the most important
demographic trends that affect industry are population growth, changing age structure, changing
family structures and geographic shifts in population.
1. Economic forces in the Macro Environment
The Economic forces relate to factors that affect consumer purchasing power and spending
patterns. Business leaders should maintain awareness of such economic forces as economic
growth or decline, tax regulations, unemployment rates, inflation rates, measures of disposable
personal income, and consumer spending patterns.
1. Socio-Cultural forces in the Macro Environment
The Socio-Cultural forces link to factors that affect society’s basic values, preferences and
behavior. The basis for these factors is formed by the fact that people are part of a society and
cultural group that shape their beliefs and values. Many cultural blunders occur due to the
failure of businesses in understanding new, different and/or changing cultural norms. For
instance, appearance, actions, words, symbols or terminology may carry a positive or negative
meaning depending on culture.
1. Technological forces in the Macro Environment
Technological forces form a crucial influence in the Macro Environment. They relate to factors
that create new technologies and thereby create new products and market opportunities or
threats.
Obvious technological developments include wireless communication and business techniques,
smartphone applications, etc. This may mean the emergence of opportunities for a business,
but watch out: every new technology replaces an older one. Thus, business leaders must watch
the technological environment closely and adapt in order to keep up. Otherwise, the products or
services will soon be outdated, and the company will miss new product and market
opportunities.
1. Ecological forces in the Macro Environment
Ecological, or natural forces in the Macro Environment are important since they impact the
natural resources which are needed as inputs for business or for an economy at large. Also,
environmental concerns have grown strongly in recent years, which makes the ecological force
a crucial factor to consider. For instance, world, air and water pollution are headlines every
marketer should be aware of. In other words, you should keep track of the trends in the
ecological environment.

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Important trends in the ecological environment are the growing shortage of raw materials and
the care for renewable resources. In addition, increased pollution, but also increased
intervention of government in natural resource management is an issue.
Because of all these concerns and the increased involvement of society in ecological issues,
companies more than ever before need to consider and implement environmentally conscious
practices in response to consumer demands for environmentally friendly and responsible
products.
1. Political forces in the Macro Environment
Every business is impacted by the political environment. This involves laws, government
agencies and political action groups. These forces influence and restrict organizations and
individuals in a society. Therefore, business decisions are strongly influenced and affected by
developments in the political environment.
Business leaders should maintain awareness of the legal and political environment. How might
a given legislation affect their industry in general and/or their business in particular? What
regulations do need to be most aware of? What regulations might limit the company’s ability to
be successful, vs. which would maximize opportunities? For example, laws covering issues
such as environmental protection, product safety regulations, competition, pricing etc. might
require a business or industry to adapt strategies to the new political landscape.

As we have seen, a business, and the industry it represents, is surrounded by a complex


environment. The Macro Environment consists of a large variety of different forces. All of these
may shape opportunities for the company, but could also pose threats. It is of critical
importance that business leaders understand and have an eye on developments in the Macro
Environment, to help their business and industry succeed in the long term.

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