What is the macro environment in business analysis?

In business analysis, we tend to focus our research on individual markets and industries, without paying attention to the greater, so-called macro environment. But what exactly is the macro environment, and why should you care?

The macro environment is the broader business environment across all markets and industries. It takes into account the size and nature of entire national (or even international) economies and societies. Understanding the macro environment is crucial in measuring and strategizing for a business’ success.

Factors Affecting the Macro Environment

Next up is employment, which is the fraction of the local or global population that is or isn’t employed. The employment rate is another factor which gives powerful insight into the state of an economy. Again, for most cases: the higher the employment, the better.

3. Taxes

Macro Environment Analysis

If you’re familiar with PEST or PESTLE analysis, which takes into account the Political, Economic, Social, Technological, and sometimes Legal or Environmental factors affecting a target market, you may have noticed how these analysis tools can equally be applied to the macro environment.

That’s right, if you want to conduct macro environment analysis, you can simply apply the PEST(LE) toolset to the wider business environment. We outline exactly how to do that in this post.

This is just one example of when you might look at the macro environment, but the general rule is that it completes the otherwise-missing piece of the puzzle.

Who Should Conduct Macro Environment Analysis?

If you’re a small or medium-sized enterprise conducting market analysis to get the full picture of your business environment, you should conduct macro environment analysis at the same time. If you’ve already conducted a market analysis before, and you’re not planning to do so again any time soon, you should go ahead and carry macro environment analysis as soon as possible to see whether there’s anything you missed in your market analysis.

Final Thoughts

The macro environment is the broader business environment which affects businesses across industries and geographies. It refers to the national or international business climate as a whole, which is usually dependent on regional economies and societies. Macro environment analysis can be a fantastic tool for your business if you’re looking to complete the business analysis puzzle, and you can get started right away by applying the same PEST principles you’ve come to know and love!