Explain macro environment forces and how companies have identified and capitalized on opportunities resulting from these forces.

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readerofbooks eNotes educator| Certified Educator

This a great question. To know the macro environment or even the macroeconomic picture is essential for any business to thrive. The best place to start is with a definition of macro environment. Macro environment refers to the economy as a whole, this will include GDP, inflation, monetary policies, and the like.

Based on this definition, if a company knows the macro economic picture, then that company can forecast certain trends and invest in them. For example, if all indicators point to an uptick in GDP and and increase in population and there is a shortage of housing, then a smart company may want to invest in companies that build housing, or  invest in companies that supply builders with material, or even invest in raw materials like copper or steel.

If all the data points to a downturn in the economy with little growth, worldwide, then a company might want to invest in discount stores, like Walmart. Or better yet a company might want to open a few discount stores in view of the downward trend. In addition to this, a company could also short the markets if they know that there is a downtrend.

One more example should suffice. If a company believes that all the central banks in the world will print more money, then that company might want to buy gold and silver as a hedge against inflation. If any company did this in the last few year, they would have made lots of money.

In short, to know the macro picture is a huge asset.