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Macro Level Factors In an External Environment, Research Paper Example

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Research Paper

Macro level factors are major external uncontrollable factors that influence the setting up and running of a social networking site and its performance (Kozami, 2005).  These factors include political environment, social factors, and economic factors and porters forces of competition.

Political Factors

Politics affect social networking sites by legislation and passing of laws that give the guidelines how they operate. Currently most governments have enabled the growth of these sites by passing legislation that has enabled technological advances. The caveat placed on the content run in these sites is red flagging inciting comments and leaking of classified information (Khosrowpour, 1996).

Political relations among different countries have a bearing on the success or the detriment of any social site. Political tensions between different countries also affect these sites where some countries ban them (Kazmi, 2008). An example of such is China banned Google site. This was largely influenced by the souring US, China relations. Social media has also been active in pushing for change through mobilizing the mass. Example the Arab spring was started on face book. Social sites also impact on the political landscape.

Economic Factors

These affect the capital resource to start up and run the site. These factors will take into account fluctuations in the growth of the economy of the state and by extension the world wide economy (Kozami, 2005). Example the world wide recession that started the economy slowed down the growth of social sites. Social sites rely heavily on the technology at hand, which translate into the owners and managers to acquire tools that aid high speed network connectivity and convenience. More countries are investing heavily in technology which favours the growth of these sites. The business potential in terms of cheap advertising and marketing has contributed to growth of both large scale and small scale businesses

Social Factors

These factors dictate the attitude a particular age group might have towards the social networking sites. They affect how these sites fashion and craft their content. Success or failure of social sites is dependent on, the age structure of the population, nature of work and the consumer behaviour. Consumer behaviour is influenced on the attitude the larger section of the population holds. This factor enables the growth of these sites since the youth are the largest age group in the populations across the countries of the world.

Porter’s 5 Forces of Competition

They include, threat of new competition, threat of substitute products and services, bargaining power of consumers, bargaining power of suppliers and intensity of competitors rivalry (Roy, 2009).

Threat of New Competition

Porter holds markets that yield high returns will attract new firms. The implication is if there are many new entrants in the social media market then profitability will decrease. Politics as a macro factor influences this force by the legislation and tax regimes instituted by the government. Economic factors also impact this force due to the current growth spurs of the host countries

 Threat of Substitute Products

This means the emergence of an alternative product that doesn’t offer similar services but an alternative service. Example is face book and Twitter. Face book can be a substitute for twitter since they offer different services where one may opt to use one instead of the other. A macro factor that influence this will be the social factor where the different age brackets will determine which products will be substituted for which

Bargaining Power of Consumers

This involves the buyer’s sensitivity to price changes and how they can meet the cost of purchasing the services offered by these sites (Roy, 2009). Economic factors largely affect this force; where the consumer is directly affected by the prevailing economic situation of the country.

Bargaining Power of the Suppliers

This force porter defined it as a market of inputs (Roy, 2009). Supplies to the social networking sites are in the form of expertise and skill. In case there is lack of substitute suppliers the social site is hard pressed to make sure they retain their supplier as well as technological firms that make the equipments they use.

In summary, social factor is the most potent macro factor as it provides any social networking site with audience and clientele. Any negative attitude the consumer have will impact the growth of the site as well as any negative comment the user will have will translate to the government restrictions being tighter and frigid.

Reference

Kazmi, A. (2008). Strategic management and business policy. New Delhi: Tata McGraw Hill Education.

Khosrowpour, M., & Information Resources Management Association International Conference. (1996). Information technology management and organizational innovations: Proceedings of the 1996 Information Resources Management Association International Conference, Washington, D.C. Harrisburg, Pa: Idea Group Pub

Kozami, A. (2005). Business policy and strategic management. New-Delhi: McGraw-Hill Published

Roy, D. (2009). Strategic foresight and Porter’s five forces: Towards a synthesis. München: GRIN

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