Q.
a) Discuss two (2) of the elements of a company's micro environment and how each may affect the company's ability to serve its customers. (10 marks)
b) Discuss two (2) forces of the company's macro environment and how they affect the market plan. (10 marks)
(20 marks, 2012 Q4)
A.
2 elements of a company's micro environment are:
Human Resource - a winning team for the company.
Capital Resource - ability to invest in appropriate channels to reach the customers.
Human Resource - a winning team
A successful winning company needs to have a winning team of people to carrying out all the plans and reach out to target customers. The marketing team of the company should be given enough empowerment to deploy man power to carry out the strategies and action plans for the company. These marketing sales force should be trained appropriately and equipped with the knowledge and skills of the company's product. In so doing, the message "value proposition" can be delivered to the outside in loud and clear manner. The company is selling the product to the right target group, and the sales force should know who these target groups are, and not diluting time and resources to the wrong target segment.
If the marketing sales force is not coherent, and makes mistake, the message can be delivered wrongly to the wrong audience. This will affect company performance and in serious consequences, results in the wrong use of company products, hence a matter which may attract litigation due to product malfunction.
Capital Resource - tools to reach customers
Company depends on appropriate channels to reach out to the target audience. One of the channels is by sales force, and others can be via the mass media. Advertising in the print media and the broadcast can be expensive. Thus, capital investment in the advertisement of company product can be a big toll in company's finance. Celebrity endorsement and product launch in 5 star hotels are also very capital intensive. Nevertheless, if it is done in the right manner, the target reach can be very effective. On the contrary, if the image of the product is damaged by a certain endorsement by celebrity, it is also very damaging and long term. To reach out to the right target customer, the company has to study the various channels and alternatives in advertisement, distribution and promotion. Annual Property Exhibition is a good way to reach out to the public, but may cost a huge sum of money in securing a exhibition booth.
b)
2 forces of company's macro environment are:
Government loan rates - increase in overnight policy rate (OPR).
Material supply market - shortage of steel supply.
Government OPR - cost of fund
Macro environment which can affect property market is availability of loan. As property is usually sold by credit and securing loan from banks, a hike in Overnight Policy Rate by Bank Negara Malaysia would have effect in a higher Base Lending Rate (BLR). This means the cost of fund, or interest payable to bank is higher for house buyers. In such manner, less people are able to secure loan to buy property. Thus, marketing houses during difficulty in securing a loan would be longer repayment period or adjusting pricing of property prices to suit lower income group.
Material supply market - shortage of steel
When the supply of steel is limited, developers would have to use substitute materials or resort to simple construction designs. Marketing of products build largely from steel as raw material would be very costly. Hence, the company may need to study again the feasibility of going ahead with the market plan. In a high material price market, developer may shelf the project and delay the launch of a market plan.
[For example, the macro environment could include competitors, changes in interest rates, changes in cultural tastes, or government regulations]
Ref:
Own account.