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Micro Environment of Business - 6 Factors of Micro Environment of Business

The document discusses suppliers and their relationship with companies. It states that suppliers provide necessary resources to companies. Companies must develop clear specifications and select suppliers that can offer quality, reliability, credit terms, warranties, and low costs. The development of the supplier environment can significantly impact a company's operations by helping lower costs and increase quality. It also notes Michael Porter's view that the relationship between suppliers and companies is based on power dynamics and dependence on each other.

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Frank Farai Nyika
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167 views1 page

Micro Environment of Business - 6 Factors of Micro Environment of Business

The document discusses suppliers and their relationship with companies. It states that suppliers provide necessary resources to companies. Companies must develop clear specifications and select suppliers that can offer quality, reliability, credit terms, warranties, and low costs. The development of the supplier environment can significantly impact a company's operations by helping lower costs and increase quality. It also notes Michael Porter's view that the relationship between suppliers and companies is based on power dynamics and dependence on each other.

Uploaded by

Frank Farai Nyika
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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3.

Suppliers:
Regarding the suppliers, the organisation can think of availing the required material or
labour according to its manufacturing programme. It can adopt such a purchase policy which
gives bargaining power to the organisation.

According to Michael Porter, “the relationship between suppliers and the firm epitomises a
power equation between them. This equation is based on the industry conditions and the
extent to which each of them is dependent on the other.”

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Suppliers are either individuals or business houses. They combined together; provide
resources that are needed by the company. Now the company necessarily should go for
developing specifications, searching for potential suppliers, identifying and analysing the
suppliers and thereafter choose those suppliers who offer best mix of quality, delivery
reliability, credit, warranties and obviously low cost.

The development in the supplier’s environment has a substantial impact on the operations of
the company. In recent trends companies can lower their supply cost and increase their
product quality.

4. Public:
Literally word ‘public’ refers to people in general. According to Philip Kotler, “A public is any
group that has an actual or potential interest in or impact on a company’s ability to achieve
its objectives.” The environmentalists, consumer protection groups, media persons and local
people are some of the well-known examples of publics.

The company has a duty to satisfy the people at large along with competitors and the
consumers. It is an exercise which has a larger impact on the well-being of the company for
tomorrow s stay and growth. Create goodwill among public, help to get a favourable response
for a company. Kotler in this regard has viewed that.

“Companies must put their primary energy into effectively managing their relationships with
their customers, distributors and suppliers. Their overall success will be affected by how
other publics in the society view their activity. Companies would be wise to spend time
monitoring all their public understanding their needs and opinions and dealing with then
constructively.”

In the modern business public have assumed important role and their presence in the micro
environment of business.

5. Marketing Intermediaries:
Market intermediaries are either individuals or business houses who come to the aid of the
company in promoting, selling and distributing the goods to the ultimate consumers. They
are Middlemen (wholesalers, retailers and agents), distributing agencies, market service
agencies and financial institutions. Most of the companies find, it is too difficult to reach the
consumers. In such a cases the agents and distribution firms help to reach the product to the
consumer.

Any type of intermediary the company must take into active consideration, the following
aspects:

(i) The company has also to constantly review the performance of both middlemen and
others helping its efforts periodically. If necessary, it may take recourse to replacement of
those who no longer perform at the expected level.

(ii) Middlemen come into being to help overcome the discrepancies in quantities place, time,
assortment and possession that would otherwise exist in a given condition.

(iii) It is advantageous and also efficient to work through the established Marketing channels
instead of creating one and thus going for experiments.

(iv) The manufacturer has to decide the most cost-effective method of intermediaries to
reach the product to consumer that will help to increase the profit.

6. Workers and Their Union:


As per the production function theory, the labour gets more importance. He is also one of the
pillars of the company. The organised labours is highly secured their position compare to
unorganised workers So, the workers now prefer to join labour unions which invariably
resort to collective bargaining and thereby makes them less vulnerable to employer’s
exploitation.

On the other hand, Trade Unions are a major component of a modern business. Trade Union
of workers is an organisation formed by workers to protect their interests, improve their
working conditions etc.

All Trade Unions have objectives or goals to achieve, which are contained in their
constitution, and each has its own strategy to reach those goals Trade Unions are now
considered a sub-system, which seeks to serve the specific sub-group’ s interest (i.e.
workers’) and also considers itself a part of the organisation.

From the point of view of the company, industrial relation is more important to improve the
company, otherwise conflict between labour and management leads to Sick Unit.

Related Articles:
1. What are the Different Components of Business Environment?
2. Business Environment: Short Notes on Business Environment

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