Macro Environment of Companies in Bangladesh

For any decision there is number of factors which influences the decision. Be it a decision related to any organization, any business concern or even an individual. Thus it is as such very much necessary to understand the influence of each parameter. The factors which influence a decision are also called as its environment. The environment can be Internal; can be controlled by the organization. Micro, specific to the industry and is different for different industries. And lastly Macro, generic in nature and impacts the whole business environment.

An organization's macro environment consists of nonspecific aspects in the organization's surroundings that have the potential to affect the organization's strategies. When compared to a firm's task environment, the impact of macro environmental variables is less direct and the organization has a more limited impact on these elements of the environment.

The company and all of the other actors operate in a larger macro environment of forces that shape opportunities and pose threats to the company. There are six major forces (outlined below) in the company’s macro environment. There are six major forces (outlined below) in the company’s macro environment.

Demographic

Economic

Natural

Technological.

Political

Cultural

Demographic Environment

Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. The demographic environment is of major concern to marketers because it involves people. And a set of potential and actual customers (people) make up markets.

Bangladesh is one of the most thickly populated countries in the world. This has a population of about 140.6 million at present within a total surface area of 147,570 sq. km. The density of population is 97.9 per sq. km, which is one of the highest in the world. The annual growth rate of population is 1.39 percent, which has gradually declined in the recent years. The fertility rate, which is above 2.7 per 1000 live births, is high but is gradually declining. The sex ratio is 105: 100 male/female. 

Changes in age structure

The most important course is the changing age structure of the population. The population is aging because of a rapid growth in the birth rate (in this country) and life expectancy is increasing. The new prime market is the young age group. In Bangladesh most of the company’s main target market is young age people. For example, in most of the departmental stores child and young age people’s products are getting more priority than others.

Changes in family structure

The “traditional family” consists of a husband, wife, children (and sometimes grandparents). Family can be of two types – Nuclear family & Extended family. In Bangladesh most of the families in metropolitan areas are nuclear, but in rural areas most are extended.

Here most of the companies produce goods and services on the basis of family size. For example, Pepsodent family packs for extended family and small pack for nuclear family.

Geographical Shifts in Population

Geographical shift is a period of migratory movement between and within countries. Here in Bangladesh most of the people are shifting themselves from rural to the metropolitan areas. For example, more and more people are shifting to Dhaka city. So, all the business organizations are making their business plan depending on the situation. Now we can see that people from different areas/districts of the country are getting their rural home products sitting easily in Dhaka city. For example, people from all over the country are getting “Taat Sharee” of Tangail very easily. The availability of this product is the cause of their geographical shift.

 

Better educated, white-collar, More professional people

In Bangladesh, rate of educated people is increasing very positively. The work force is be-coming more white-collar. The rising numbers of educated and more white-collar people are increasing the demand of good quality products such as book, magazines, travel and other services. Educated people are using more technologies such as personal computer and internet service. For example, recently there is a rapid growth of internet users.

Increasing Diversity

The final demographic course is the increasing ethnic and racial diversity of the population. Diversity is a force that must be recognized in the next decade. However, companies must acknowledge that diversity goes outside ethnic heritage. With the rise of population, diversity is increasing among Bangladeshi people. For example, in Dhaka city different kinds of people are coming from different areas with various thoughts, beliefs and habits. These varieties are creating much diversity among people. Depending on these people’s living and consumption patterns are varying.

Economic Environment

As we know demand is defined as Desire for a product backed by willingness and ability to pay. Thus it is not only the people but also their ability to buy a product is vital for a marketer. Ability to pay can be measured in terms of Income change (Distribution) and consumers spending patterns.

Changes in income

Bangladesh being coming forth economy with a GDP of $258.608 billion and Per capita income of $1572(PPP Terms) which is increasing gradually. This also impacts the general economic conditions of the economy. The Distribution of Income is also one of the important parameters that shall be considered. A high inequality in distribution will lead to limited potential as the market is widely controlled by few rich as they have the purchasing capability. Income inequality of Bangladesh has come down as the Gini coefficient has shrunk by 0.01 in last five years, said a top government official quoting the latest Household Income and Expenditure Survey (HIES).  It is good news that the Gini coefficient has dropped. It means that the income inequality or unequal wealth distribution has been coming down. "It is good news that the Gini coefficient has dropped. It means that the income inequality or unequal wealth distribution has been coming down.

Spending Patterns

Consumer’s spending pattern also depends on their income. People shift their spending across food, housing transportation, healthcare and other goods and services categories as family income rises. Income, cost of living, interest rate and savings and borrowing pattern have a great impact on the marketplace. Credit availability and saving trends in an economy has an influence on the purchasing ability of the consumer. With the change of family income in Bangladesh people’s spending pattern has also changed. With rising income consumers are spending more than before.

Natural Environment

Nature is the source of raw material for the production a product. The raw material may be

renewable, infinite or consuming. In all the cases the raw material will be preserved and wastage

must be minimized.

The natural environment involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. During the past two decades environmental concerns have steadily grown. Some analysts labeled the specific areas of concern were:

1). Shortages of raw materials.

Staples such as air, water, and wood products have been seriously damaged. And non-renewable resources such as oil, coal, and various minerals have been seriously wasted during industrial expansion.

2). Increased pollution

Increasing pollution is a worldwide problem. Industrial damage to the environment is very serious. Eagle-eyed companies are becoming “environmentally friendly” and are producing environmentally safe and recyclable goods. The public response to these companies is encouraging. For example, Bangladesh Recycling Ind. Ltd. as one of the PET Bottle Recycling & Export in Bangladesh territory.

3). Government intervention

In natural resource management has caused environmental concerns to be more practical and necessary in business and industry. Leadership, not punishment, seems to be the best policy for long-term results. Instead of opposing regulation, marketers should help develop solutions to the material and energy problems.

Also the pollution should be minimized to preserve the ecology. Marketers in the current scenario try to Go Green and promote the Eco friendly Concept. For Instance HSBC Bangladesh promotes Save Paper and motivating Suppressing the creation and delivery of your paper statements can be first step to helping save paper and many companies such as Rahimafrooz is promoting Go Green campaign.

Nature is a big resource box. Here using resources different companies are doing business on that. For example, now a day in Bangladesh tourism business is becoming more flourished. Like Sundarbans is getting worldwide recognition as a good site for tourism.

Technological Environment

It is technology changes every fort night. A marketer must be aware of recent technological updates. New technology creates new markets and new opportunities for businesses. It is important for businesses, old and young, to stay on top new technology. Companies that do not stay up to date will soon find their products and services outdated. They will miss all of the great opportunities and markets that technology brings. The latest technology provides competitive advantage over the competitors.

There are unlimited chances for Innovation and every competitor tries to effort the new usage of the product. The innovation can be in terms of new usage, new package, new material, and new method of production or even new kind of promotion. The recent era has seen many indescribable Innovations like Walton is an innovative company which is trying to use opportunities for new methods of production and creating new kind of promotions.

Moreover recent growth of using internet in Bangladesh is making the business field more swift and reliable.

Political Environment

The political environment includes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society.

Legislation and Regulating Business product or services

The legal environment facing organizations is becoming more complex and affecting businesses more directly. It has become increasingly difficult for businesses to take action without encountering a law, regulation, or legal problem. A very brief listing of significant laws that affect business would include legislation in the areas of consumerism, employee relations, the environment, and competitive practices.

Government legislation to: 

a). Protect companies from each other.

b). Protecting consumers from unfair business practices.

c). Protecting interests of society against unrestrained business behavior.

Governments develop different public policy to guide commerce--sets of laws and regulations limiting business for the good of society as a whole. This regulatory organizations work for the welfare of both companies and society. For Example, in Bangladesh BSTI is working for society by maintaining the proper quality of products. Trade license authority is working for making individualism between organizations. Some other government or non government organizations are trying to protect proper rights of citizens such as “SUJON”.

Emphasis on ethics and socially responsible actions

Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. Some companies try to imply their responsibility through their products or services. For example, in Bangladesh “PHP Arabian horse super” tin is an environment friendly product of PHP industries. Beside this some organizations are spending on tree plantation program such as, “British American Tobago”. They are trying to look outside the regulation and “do the right thing.” The e-commerce and Internet marketing has created a new band of social and ethical issues. Concerns are Privacy, Security, and Access by vulnerable or unauthorized groups.

To build more positive image by exercising social responsibility some organizations are now linking themselves to some worthwhile causes. For example in Bangladesh “Bashundhara Tissue” is giving 1.00 tk. Donation to the charity fund from their per box tissue sales.

Cultural Environment

Culture is set of beliefs and customs pertinent in a society. A marketing campaign must be in tandem with the beliefs. The market should adjust the decisions with respect to the cultural and social beliefs. Intuitions and other forces that affect society’s basic values, perceptions, preferences and behaviors. Cultural changes account for people's core beliefs or values. How people view themselves, others, organizations, society, nature, and the universe all play a part in shaping one's culture. Companies need to take these principles into consideration when working in the market place. People’s core beliefs and values are passed on from parents to children and are reinforced by schools, business and government. Secondary beliefs and values are more open to change.

Shifts in secondary cultural values

Since secondary cultural values and beliefs are open to change, marketers capitalize on the change potential. Society’s major cultural views are expressed in: 

a). People’s views of themselves.

People vary in their emphasis on serving themselves versus serving others. Some people seeks personal pleasure, some want fun and others seek self realization religion or other life goals. Thus people’s view and beliefs changes and companies are trying to imply their service according to people’s views.

b). People’s views of others.

Observers have noted a shift from a “me-society” to a “we-society.” Consumers are spending more on products and services that will improve their lives rather than their image.  In views of others some people are going out less with others and staying home more to enjoy the creature comforts of home and hearth. Depending on that, now a day’s cable channels and broadband connection business is increasing.

c). People’s views of organizations.

People are willing to work for large organizations but expect them to become increasingly socially responsible. Some people like government organizations, but some other like private organizations. Now a day’s in Bangladesh education system is becoming privatized. Higher education is depending largely on private sector. Like that more and more people are choosing private organizations for doing job. That’s why number of private business organizations is increasing. Many companies are linking themselves to worthwhile causes. Honesty in appeals is a must.

 

d). People’s views of society. 

People vary in their attitudes toward their society. Some people have more awareness about society but some have less. Some really work for the welfare of the society and some are not bothering about that. Some people are of fond of their core culture. For example, people who like the Bangladeshi culture as a consumer getting culture based products and services. Every fashion houses are producing different types of clothes. And tourism companies are offering various tour packages depending on seasons. Many companies are doing good societal tasks.

e). People’s view of nature. 

There is a growing trend toward people’s feeling of mastery over nature through technology and the belief that nature is bountiful. People vary their attitudes toward the natural world. It means how people think about the nature. Some are careful about the nature but some are not much careful. Some are constructing the nature and some other are destroying the nature.

Now a day’s many companies are producing nature friendly goods. For example, in Bangladesh PHP group of companies is producing environment friendly steel products.. 

f). People’s views of the universe.

People vary in their beliefs about the origin of the universe and their place in it. There are two types of people in the universe – some believe in god but some do not. Depending on that spirituality many religious beliefs are taking form. Many religions such as Christianity, Hinduism, Islam, Buddhism and some others. Companies produce products and services on the basis of their religions. 

Also the companies who are in tandem with the cultural beliefs and who promote the culture is able to attract the loyal customers more easily and can retain them more effectively. For example,

Archies galleries have made its market in Bangladesh by promoting different occasions like Valentine’s Day, Fathers Day and friendship day.

CONCLUSION

Thus as a Marketer one must understand each and every parameter of the Macro Environment and

be flexible to the changes in the environment. As these factors are external to the business and

cannot be controlled, ability of being flexible to the changes in these factors will provide competitive advantage to the firm.

 " Thank You "