What is a macro environment analysis?


Quick Answer

A macro environment consists of several factors for analysis, including political, economic, social, technological, legal and environmental factors. As such, it is commonly known as a PESTLE analysis. It is a framework that a company adopts to scan and analyze its current or future operating environment.

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Full Answer

Political factors are used to inspect the political situation of a country and the extent of government intervention. This includes the government policy, laws, trade restrictions or any tariffs established by the government. Meanwhile, economic factors refer to the determinants of an economy’s performance, such as rate of interest, exchange and inflation. The economic factors may affect business decisions of the organization.

Social factors include the social environment of the area, such as demographics, cultures or populations. Technological factors deal with several areas, such as the rate of innovation or research and development activities.

Legal factors are further divided into external and internal considerations. External factors include the country’s laws that affect the operating of business, whereas the internal considerations generally refer to policies made by the company itself. The final group of factors in a PESTLE analysis deal with the environment. They include both ecological and environmental aspects, such as climate, weather or geographical location.

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