Macro & Micro

macro environment

general environment, outside forces that are out of control of business but considered during decision-making

(govt, seasonality, natural disasters)

• political

• legal / regulatory

• economic

• socio-cultural

• technological

• ecological

• competition

characteristics of macro

political

made up of laws, govt agencies, & pressure groups influence & limit activities

govt regulations; tariffs & quotas for imports & exports, & regulating taxes

legal/regulatory

protects companies from each other; neutralize competition

protect consumer from unfair business practices

economic

the labor market & consumer spending has continued to grow stronger

disposable personal income + avg hourly income have also risen

• wage inflation

• price inflation

• gross domestic product

• exchange rate

• disposable income

• spending patterns

macro economic characteristics

wage inflation

the wage labor might not be increased, it would depend on the decisions decided to cut the wage or increase the wage by manager

price inflation

bc of recession, if economic decline, the commodity price will rise. it will influence the decision customer makes to travel or not

gross domestic product per capita

the most important economical element are the customer purchasing power and spending patterns. ___ can indicate these elements, bc total purchasing power depends on current income, price, savings, and credit

exchange rate

exchange from peso to dollar is decreasing and therefore, customers might choose domestic tourism rather than abroad for holidays

disposable income

amount of income left after the consumer pays his taxes and other required deductions

discretionary

another name for disposable income

spending patterns

willingness of consumers to spend their discretionary income and incur debt identifies them as good prospects for hospitality and travel services

socio-cultural

different generations have different preferences

social environment

changing trends in the population in terms of demographics and cultural norms

least dynamic of external environment

technological

factors that change the way consumers live and the production and delivery of products and services

ecological

sustainability

greener cities = more tourists

(climate change, green policies, govt intervention)

competition

all business have the right to compete w one another

1. technological adaptation

2. changing customer profiles and brand experience

competition in tourism and hospitality industry is a result of two aspects

Michael Porter 1979

who made the 5 forces

1. threat of new entrants

2. bargaining power of suppliers

3. bargaining power of buyers

4. rivalry among competitors

5. threat of substitutes

Porter’s 5 Forces

threat of new entrants

• economies of scale

• product differentation

• capital requirements

• switching costs

• access to distribution channels

• regulations

bargaining power of suppliers

• # of suppliers

• uniqueness

• switching costs

bargaining power of buyers

• # of buyers

• purchase size

• switching costs

• price sensitivity

• informed buyers

rivalry among competitors

• # of competitors industry growth

• similarities in what’s offered

• exit barriers

• fixed cost

threat of substitutes

• relative price performance

• customer willingness to go elsewhere

• similar products

• availability of close substitutes

micro environment

factors of resources availability and usage that impact individuals and businesses

1. customers

2. employees

3. suppliers

4. marketing intermediaries

5. public

micro characteristics

customers

may be an individual or household, an org that purchases a product for use in production of other products, or an org that purchases product for resale

1. consumer markets

2. business markets

3. resellers

4. government markets

5. international markets

types of customers

consumer markets

indivs and households that buy hospitality services for purpose of leisure, medical needs, and gatherings like reunions, weddings, debuts

business markets

these groups purchase hospiality services to facilitate their businesses

resellers

usually these groups buy a product and resell them

govt markets

made up of govt entities that buy hospitality services for indiv travelers or meetings

international markets

buyers from other countries such as consumers, businesses, resellers, and govt

employees

produces, sell, or service the goods and service that drive the business

suppliers

indivs and companies that provide the resources required by business to produce its goods and services

marketing intermediaries

companies who advise, influence, and make bookings for customers

public

can exert considerable influence on a hospitality business