ECON 6

macroenvironment factors

all external factors that influence organizations

1. political

2. economic

3. social

4. technological

5. legal

6. environmental

(PESTLE)

categorizations of macroenvironment factors

political

tax laws; fiscal policy; other government rules & actions

economic

GDP; inflation and prices; interest rate; forex; other economic indicators

social

demography; lifestyle change and other trends

technological

technological advances; research & new development; new processes

legal

new and updated business requirements

environmental

environment regulations; resource constraints; climate change

PESTLE

a tool widely used in macroenvironment analysis to identify business operations

1. tax reforms

2. government spending

3. political stability

4. new government regulations

political forces that influence the macroenvironment of an industry or a business

tax reforms

refer to revisions on the implementation and collection of taxes (increasing and lowering if existing tax rates as well as implementation of new ones)

Tax Reform for Acceleration & Inclusion (TRAIN) Law

a law that restricted the personal income tax table in the country

sin taxes

an example of excise tax imposed on goods considered as vices such as alcohol and tobacco

Sin Tax Reform Law (Republic Act No. 10351)

a law driven by public health considerations, but its implementation affected the tobacco and cigarette manufacturing industries in the country

congress( house of representatives + senate)

creates philippine laws

house of representatives

lower house

senate

upper house

the proposed bill first goes through three readings in the house of representatives, then three readings in the senate, then up to the approval of the president OR through the bicameral committee for further review in the event that the president exercises his/her veto right (disapproval of the bill)

how a bill is passed into law in the country

government spending

monitoring of government expenditures to ensure it remains in the budget

tax collection

government revenue comes from what

budget deficit

when government spending exceeds revenue

budget surplus

when government tax is greater than spending

International Monetary Fund (IMF)

a global financial institution where nations borrow money from in an event of a budget deficit (example)

poor fiscal policy

frequent cases of budget deficit indicate..

political stability

the strength & effectiveness of the government in upholding its sovereignty implementing the rule of law

EDSA (Ppl power 1 & 2)

example of political instability

“business as usual” sign

a sign often posted up by businesses to inform the public that they are in operation despite any disruptions which may be in the form of ongoing renovations, public events, holidays, or even during catastrophes

1. GDP Growth

2. Inflation

3. interest rates

4. forex

economic indicators

GDP

equivalent to total output is a measure of a country’s economic performance

increase in total output from previous periods

a growth in GDP means an …

strong and stable economy

a steady growth in GDP signifies a …

inflation

loss in value of money

Consumer price index (CPI)

inflation is measured through..

interest rate

largely the responsibility of the central bank

foreign exchange

managed by the central bank and is the foreign exchange rate

floating

the PH has a ________ foreign exchange rate

demand

determines the value of currency

social factor

examines the importance of culture, population, and other social determinants to the business environment

demography

the study of the population and its attributes

lifestyle and trends

a growing trend for consumers to lead a fit and healthy lifestyle

religion

beliefs, customs, and other social factors that may affect the macroenvironment

technological factor

forces driven by advances in technology

innovations

largely driven by continuous technology development and research

research and development

the backbone of innovation

technology-related legislation

importance of technology staying competitive in governance

legal factor

covers new regulations and government mandates that influence the operations of businesses

new regulations

to protect the welfare of employees, the government, in addition to implementing existing labor laws also comes up with new ones

environmental factor

evaluation of natural resources

resource constraints

a limit in resources

environmental regulations

laws that look after natural resources

1. RA 8749 - Clean Air Act

2. RA 9275 - Clean Water Act

3. RA 9729 - Climate Change Act

existing national environment regulations supported by most programs carried by local government units (LGU)

climate change

accelerated thawing of earth’s ice caps causing the radical changes to the environment

greenhouse effect

gas emissions that contribute to global warming

renewable energy

energy that is derived from the sun (solar), wind, flowing water (hydro) and etc