Perfect competition – Many firms, freedom of entry, homogeneous product, normal profit.They are the most important element of their micro environment. Customer is the king, and the reason for the existence of the firm is to satisfy the wants and needs of the customers. Q: In any market, _ is king and they are the organizations most important micro economic factor.Īns: The correct option is A. Learn the vision and mission statement here in detail. This is why companies hire PR managers to help them use the media to a positive effect. So it is necessary that the company maintain their relationship and their status quo with the media.Īny negative coverage in the media can lead to huge losses for the company. 6] MediaĮvery company is going to need media to promote their brand and market their products. For example if the company has a falling out with one raw material supplier it could delay their whole production process by days. This is essential to the smooth running of the organization. So it is necessary for the company to have healthy and amenable relations with their suppliers. Both depend on each other for their survival. The relation between the company and the suppliers is a power equation. Suppliers provide the firm with the materials and factors of production they need to run the business. So the company must find the right balance between the health of the company and the benefits to the shareholders. To keep their interest dividends also have to be paid. They have to create wealth for these shareholders. So it is the company’s duty to earn profits and pass on this benefits to the shareholders. Shareholders will also demand a return on their investment. This means they get a say in the running of a company. They own shares of the company, so they are actually owners of the company in a way. Shareholders invest in the company, but they are not merely investors. If care is not taken in this matter the organization can never succeed, because employees are the back bone of every organization. Hence employing the correct people, best suited to your firm is of vital importance.Īnd training and development of these employees is also essential. Human resources are a significant factor in the success (or failure) of a firm. 3] EmployeesĮmployees or labor is one of the most important factor of production for a company. The products offered must also be better and cheaper than those of the competition. The company must ensure that their products have a USP that makes them different and unique in the market. So the company has to keep a constant check on their competitors. Every organization, whether big or small, has competition and competitors. There are no pure monopolies in the world. This is why customer consumer surveys have increasing importance in today’s markets. This is why it has become increasingly important to listen to customers and value their feedback. Failure to do so may result in failure of the business.
So the ultimate aim is to provide the best products/services to the customer at the best prices. The enterprise aims to please the customer and earn a profit in return. The main purpose for the existence of most organizations is to satisfy the needs and wants of the customers. But the following ones are usually found in almost all companies. These elements are different for different organizations. Let us take a look at some of the most important and common elements of the micro environment. They are more interlinked with the company than macro environmental factors. This is because the functioning of the micro environment has a direct and immediate bearing on the company.
The micro environment is the operating environment of the firm.
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