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CMA Foundation · Fundamentals of Business Economics and Management · Economic and Business Environment

Which statement about the macro environment and micro environment of a business is correct?

Micro environment factors such as suppliers, customers and competitors affect a particular firm directly, whereas macro environment factors such as economic, political and technological forces act on all firms in the economy broadly. Firms generally cannot control either, so they must adapt to them.

  1. ASuppliers and customers form part of the macro environment because they are outside the firm
  2. BDemographic and economic trends form part of the micro environment because they affect each firm directly
  3. CMicro environment factors affect a particular firm directly, while macro environment factors affect all firms in generalCorrect
  4. DMacro environment is controllable by the firm while micro environment is not

Explanation

Micro environment includes suppliers, customers, competitors and intermediaries that are close to and directly affect the specific firm. Macro environment includes economic, demographic, political, technological and similar forces that affect all firms in the economy. Neither is generally controllable by the firm.

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