Macro analysis is part of a company’s strategic management that enables it to analyse and identify potential opportunities and hazards that might impact the business.
This has to be one of the major contributors to why businesses fail after a couple of years of trading. Its described as the major eternal and uncontrollable factor that influences the organisations decision making and effect its performance and strategies
Knowing and understanding the macro environment is the first move in creating the business strategy.
Questions to ask
- What are our competitors doing that we are not
- What outside forces are holding us back
- Is the business legally compliant
- How do I stand out from this competitive environment and attract new customers
- How do we monitor our competitors movements throughout the year
You will get Macro Forces that are uncontrollable so the focus then turns to managing risk so you are able to adjust the companies strategy and keep the business on a successful upward trend.
The importance of PESTLE Analysis
Certain factors will aways be outside of your control and PESTLE will allow you to monitor what’s going on and what adjustments you need to make for continual business success.
How we break down PESTLE
- Political factors and how they determine the extent to which a government may influence the economy
- Economical factors as an example, the rise of inflation
- Social factors that monitors cultural trends, demographics and population analytics
- Technology factors that looks at innovations in technology that may affect the operations of the industry you specialise in
- Legal factors and how new laws affect the business environment
- Environmental factors that focus on climate, weather and issues like geographical location
A business should follow a strategy cycle in order to be successful then you will have a continual analysis loop, improving the businesses performance, so let’s understand what we have bullet pointed below.
- Strategic Analysis should be the business six monthly macro review
- Strategic decision where the senior leadership team act on the data analysis
- Strategic implementation where we focus on making significant change
- Strategic review is where we monitor those business KPIs
Business Improvement
Consider running a Macro analysis workshop every three months so you gauge where the business is, focusing on the strategic road map you have set beginning of each year.
This will keep the business alive long after your competitors have imploded