Answer to Question #156671 in Macroeconomics for EMMANUEL DOKYI

Question

Write a magazine article called ‘Understanding the micro-economic business environment’. In the article you must:

 

·        explain the importance of the micro-environment to business organisations

• analyse business objectives and behaviour in an economic context
• assess the impact of market structures on business organisations.

Answer 1

Understanding the Micro-economic Business Environment

               A micro-economic business environment simply refers to an environment that relates to the analysis of marginal or small aspects of a business organization. Micro-economic business is a term that exists in the realm of the broad subject called microeconomics. Microeconomics is significantly concerned with decisions about resource allocation, utilization, and how they impact individual persons or business entities. A micro-economic business environment comprises several micro-environmental factors that affect the immediate operations of a business, as well as its decision-making process. These factors include customers, distribution channels, suppliers, competitors, and the general public. Other factors that affect almost every business from a micro-economic standpoint include employees, shareholders, and the media.

              A micro-economic business environment is important to organizations since it determines an organization’s efficiency, survival prospects, and profitability projections. It enables organizations to develop realistic business plans and ensure their successful execution. It helps a business to identify its strengths, weaknesses, opportunities, and threats that stand in its way of achieving its strategic vision and mission, hence taking the necessary remedial measures.

              The attainment of business objectives in an economic context is firmly tied to the importance of the micro-economic business environment. The main economic objective of every business organization is to earn a profit. Apart from the objective of earning a profit, the economic objectives of a business collectively include all other objectives that support the main objective of profit maximization and they include the creation of a robust customer base, consistent innovation, and best possible utilization of the available resources.

              Market structures impact business organizations in various ways. First, market structures determine the entry and exit of firms from a particular market using certain barriers to market entry. Second, they affect the supply of different goods and services in the market. Third, market structures determine the level of competition and rivalry among the players within a market. Fourth, they determine the optimal level of profitability in the market. Lastly, market structure affects firms’ pricing decisions.

References

Chand, S. (n.d.). Business Objectives: 5 Most Important Objectives of Business. Your Article Library. Retrieved 19 January 2021, from https://www.yourarticlelibrary.com/business/business-objectives-5-most-important-objectives-of-business/23362.

Kokemuller, N. (2019). Six Microenvironmental Factors That Affect Businesses. Small Business - Chron.com. Retrieved 19 January 2021, from https://smallbusiness.chron.com/six-microenvironmental-factors-affect-businesses-78023.html.

Pratap, A. (2017). Microenvironmental factors affecting business. notesmatic. Retrieved 19 January 2021, from https://notesmatic.com/2017/07/microenvironmental-factors-affecting-business/#:~:text=Micro%2DEnvironmental%20Factors%20in%20Business,%2C%20suppliers%2C%20and%20the%20public.

Tutorialspoint. (2021). Market Structure & Pricing Decisions. Tutorialspoint.com. Retrieved 19 January 2021, from https://www.tutorialspoint.com/managerial_economics/market_structure_pricing_decisions.htm.