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Micro Environment Analysis

What is micro environment analysis?
The micro-environment of an organization relates to the immediate periphery of a company. This periphery naturally has a strong influence on the organization.

What is micro environment analysis?
The micro-environment of an organization relates to the immediate periphery of a company. This periphery naturally has a strong influence on the organization.

The micro environment is therefore also referred to as the task environment. Micro doesn’t mean it’s insignificant. Problems in a company’s micro-environment often affect only the company itself, not the entire industry.

It is important for any organization to monitor and analyze all elements of the micro-environment. Examples of elements in a company’s micro-environment are:

  • Customers
  • Competitors
  • Staff members
  • Suppliers
  • Media
  • Shareholders
  • Other stakeholders

Micro Environment Analysis Definition

Micro environment analysis is the analysis that is done on the elements of a micro-environment.

These consist of all actors and elements of the immediate environment of an organization. These have a direct influence on the way the company is run.

Examples of a micro environment analysis

A micro environment analysis consists of several separate analyses, including a competitor analysis, a supplier analysis, stakeholder analyses and market analyses.

The most important are listed below with associated tools and methods.

Competitive Analysis

Competitive analysis is the process of identifying organizations in the market that offer similar products or services.

These competitors are then evaluated against a set of predefined criteria. An effective competitive analysis helps an organization look at itself from the perspective of the competitor and the customer and helps determine where and what can be improved.

An example of a component in competitive analysis is understanding the competitor’s marketing mix. The PEST analysis is also used for this, despite the fact that this is more of a type of method for macro analyses, as well as the SWOT analysis and the VRIO Analysis.

The Porter Five Forces model is used for a thorough analysis of the competitive environment.

Supplier analysis

Supplier analysis refers to the process of analyzing and approving different suppliers within an organization. This is done through quantitative and qualitative research elements.

The goal of a supplier analysis is to ensure that only the best suppliers continue to provide the organization with everything it needs. A commonly used method for assessing suppliers is the Kraljic Matrix.

Customer analysis

The customer analysis is a very important part of every marketing department and a permanent part of the business plan.

Such analysis provides insights into the target audience, determines customer needs and defines how the product or service meets those needs. Customer analytics are usually divided into two parts:

  1. Behavioral Analysis
  2. Demographics Analysis

A method often used when conducting customer analysis is Ferrell’s 6W model.

Stakeholder analysis

All people, both internal and external, who are involved in a project or organization are called stakeholders. A stakeholder analysis is the process of identifying all these people and then categorizing them.

For example, they are grouped according to their degree of influence, interest or participation in a project or company. It also determines how best to deal with each of these types of stakeholders. Who should receive what information? And who has control over decisions in the company?

Market analysis

The market analysis consists of several parts. Some of these fall under the micro-environment, others under the macro-environment. Read more about the macro environment of companies here.

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Internal environment of a company

A company’s micro-environment is not exactly the same as a company’s internal environment.

The internal environment is part of the business environment and composed of various connecting elements of an organization. It includes, among other things, the climate within an organization, corporate culture, machines, work processes, management styles and management practices.

Thus, the internal environment mainly refers to the corporate culture, the company employees, events and other factors that have the ability to influence the decision-making of a company.

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Porter’s Five Forces Model

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Porter’s Five Forces Model: this article explains Porter’s Five Forces Model, developed by Michael Porter in a practical way. After reading you will understand the basics of this powerful competitive advantage analysis. What is the Porter’s Five Forces Model?…
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