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Analysis of Macroenviromental Factors

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Public administration operates in a global environment that requires a greater emphasis on cooperation among nations. Globalization has become a catch world for international development endeavors throughout the world. With globalization borders between regions and nations are no longer important.
A final component of the general environment is actions of other countries or groups of countries that affect the organization. Governments may act to reserve a portion of their industries for domestic firms, or may subsidize particular types of businesses to make them more competitive in the international market.
Some countries may have a culture or undergo a change in leadership that limits the ability of firms to participate in the country's economy. As with the other elements of the macroenvironment, such actions are not directed at any single company, but at many firms.
One of the most recent joint efforts by governments to influence business practices was NAFTA. The agreement between the United States, Canada, and Mexico was intended to facilitate free trade between the three countries. The result has been a decrease in trade barriers between them, making it easier to transport resources and outputs across national boundaries. The move has been beneficial to many businesses, and probably to the economies of all three countries. In most economic associations, preference is also given to products from member countries at the expense of products from nonmembers.
Probably the best-known joint effort by multiple countries to influence business practices is the Organization of Petroleum Exporting Countries (OPEC). The formation of OPEC, an oil cartel including most major suppliers of oil and gas, led to a drastic increase in fuel prices. Rising fuel prices had a significant effect on the demand for automobiles worldwide. The increases in oil prices also contributed to inflation all over the world. OPEC's early success encouraged countries producing other basic products (coffee beans, sugar, and bananas) to attempt to control the prices of their products.
A more recent example of an economic association serving multiple countries was the International Coffee Organization (ICO). The United States rejoined the ICO 2004 in hopes of fostering sustainability and competition across countries and the industry. The United States works with the Honduras, Mexico, and Nicaragua, among others, as part of this organization.
Changing relationships between the United States and other countries may alter the ability of firms to enter foreign markets. The United States' establishment of trade relations with China in the 1970s created opportunities for many firms to begin marketing their products in China.
The rise of Ayatollah Ruhollah Khomeini to power in Iran altered the lives of many Iranian citizens. Wine, vodka, music, and other forms of entertainment were prohibited. Black markets provided certain restricted items. Other products, such as wine, began to be produced at home. Anti-American sentiments throughout the country showed the hostility of many citizens. Non-American firms thus had an opportunity to capitalize on the anti-American sentiments and to provide goods and services formerly provided by U.S. firms.
Another example that illustrates this is a case study of the U.S. approach to policies that relate to health and social programs is what sociologists classify as an Anglo-Saxon or liberal model
TABLE 8-1 The Association Between Political Themes and Health Outcomes: Findings of 73 Empirical Studies

Political Theme of Countries Positive Association with Healtha N (%)
Inverse Association with Healthb N (%)
Mixed Resultsc N (%) Total N

Democracy 21 (81) 3(12) 2(8) 26
Globalization 1(17) 4(67) 1(17) 6
Egalitarian political tradition 9(90) 1(10) 0 10
Welfare state generosity 19(61) 1(3) 11 (36) 31
Total N (%) 50 (69) 9(14) 14(19) 73 (100)

aPolitical variable demonstrates a positive, direct or indirect, association with a population related health outcome. bPolitical variable demonstrates a negative, direct or indirect, association with a population related health outcome. cPolitical variable is either unrelated or inconsistently related to a population-related health outcome.
SOURCE: Adapted from Muntaner et al. (2011, Table 2).
Page 212
Suggested Citation: "8 Policies and Social Values." National Research Council and Institute of Medicine. U.S. Health in International Perspective: Shorter Lives, Poorer Health. Washington, DC: The National Academies Press, 2013. doi:10.17226/13497. FIGURE 8-1 A model of structural and political influences on population health.
SOURCE: Hurrelmann et al. (2011, Figure 3).

In different countries, sometimes even within a country, there are substantial differences in attitudes, beliefs, motivation, morality, superstition, and perception, as well as other characteristics. Geert Hofstede (b. 1928) developed a model in which worldwide differences in culture are categorized according to five dimensions. These dimensions include:
Power distance—the degree of inequality among people which the population of a country considers normal.
Individualism vs. collectivism—the degree to which people in a country prefer to act as individuals or as members of a group.
Masculinity vs. femininity—the degree to which values like assertiveness, performance, success, and competitiveness are used to guide decisions versus values like the quality of life, warm personal relationships, service, and solidarity.
Uncertainty avoidance—the degree to which citizens of a country prefer structured over unstructured situations, rigidity of procedures, or willingness to accept risk and potential failure.
Time orientation—the extent to which decisions are based on long-term orientation versus short-term orientation, past versus present versus future, and punctuality.
Hofstede argues that U.S. management theories contain a number of idiosyncrasies that are not necessarily shared by managers in other cultures. Approaches to motivation and leadership, for example, differ widely throughout the world. Citizens of Japan tend to put greater importance on collective effort and working as a team member. Individual recognition is not desired. It is viewed as contradictory to being a good team member.
Similarly, in other countries, high tax rates may make bonuses and other forms of monetary compensation less attractive and less motivating than in the United States. Hofstede argues that employees and products are more readily transferred between countries sharing similar cultures.
The macroenvironment consists of forces that originate outside of an organization and generally cannot be altered by actions of the organization. Dimensions of the macroenvironment consist of sociocultural factors, technological factors, political-legal elements, economic factors, and international elements. A firm needs to study these elements of its environment, as they have the potential to affect how the organization should operate to attain and maintain its competitive advantage.
Additional Considerations

A newer force which is gaining in importance is ethics. These can be defined by the set of moral principles and values that govern the actions and decisions of an individual or group. Ethics and morals serve as guidelines on how to act rightly and justly when individuals are faced with moral dilemmas.
This force could include corporate social responsibility, fair trade, affiliation between corporations and charities. A particular problem may exist with how ethical factors relates to legal forces as they may be at different stages in development. Something may be ethical but not protected by law, whereas other,activities may not be ethical, but are legal.

A PESTLE analysis should feed into a SWOT analysis as it helps to determine the threats and opportunities represented by macro-environment forces that the organization usually cannot control.
On an international basis, it is best to perform the analysis on a country-by-country basis because factors can differ greatly between countries (or even regions).


"Macro-Environmental Analysis." 21 Mar 2016 .

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