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Micro Environment

“The micro environment consists of factors in the company’s immediate environment”. These factors affect the performance of a company and its ability to serve the customers. Every firm has a micro environment that consists of customers, suppliers, competitors, public and market intermediates.

A brief discussion of the firm’s micro environment is as follows:

(i) Customers:

Customers constitute and important segment of the micro environment. Business exists to serve its customers. Unless there is customer, business means nothing. A company can have different types of customers like, households, producers, retailers, Government and goring buyers.

(ii) Suppliers:

Suppliers supply inputs like money, raw material, fuel, power and other factors of production.

Suppliers help in smooth conduct o the business, Firms remain aware of the suppliers’ shortage of supplies’ policies as increase in the prices of inputs will affect their sales and profits. Shortage of supplies also affects the production schedules. Firms should have more than one supplier so that change in polices of one supplier does not disturb their production schedule.


Competitors form an important part of the firm’s micro environment. Firms competes to capture a big share of the market.

They should constantly watch competitors’ policies and adjust their policies to gain customer confidence.

(iv) Public:

“A public is any group that has an actual or potential interest in or impact on and organization’s ability to achieve its interest’. Public can promoter demotes company’s efforts to serve the market. The market. The term’ public’ consists of financial public (bands, financial institutions etc.) media public (newspapers, radio, television.) Government public, customer organization, internal public (workers and managers), local public (neighborhood or community residents) and general public (buyers at large). Companies observe the behavior of these groups to make  functional policies.

(v) Market Intermediaries:

They are the likes that help company to promote, sell and distribute their products to final consumer. They are the physical distribution firms (transport firm), service agencies (media firms), financial intermediaries (banks, insurance companies) etc. that help in producing, marketing anted insuring the goods against loss of theft, fire etc. Firms maintain good relations with them to carry their activities smoothly.

All these factors are largely controllable but the firms but they operate in the larger macro environment that is beyond their control.

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