A dislocation of this link will adversely affect the fortune of a company. Thus, marketing is an important link between a business firm and its ultimate buyers. There are marketing service agencies such as marketing research firms, consulting firms, advertising agencies which assist a business firms in targeting, promoting and selling its products to the right markets. Marketing intermediaries are responsible for stocking and transporting goods from their production site to their destination, that is, ultimate buyers.

Marketing intermediaries include agents and merchants such as distribution firms, wholesalers, retailers. In a firm’s external environment marketing intermediaries play an essential role of selling and distributing its products to the final buyers. Therefore, to survive and succeed a firm has to make continuous efforts to improve the quality of its products. With increasing globalisation and liberalization the customers’ satisfaction is of paramount importance because the consumers have the option of buying imported products. For this purpose, a business firm has also to launch new products or models. In the present day of intense competition a firm has to spend a lot on advertisements to promote the sales of its product by creating new customers and retaining the old ones. Maruti Udyog, therefore, has catered to the needs of all these types of customers by producing different varieties and models of cars.īesides, a business firm has to compete with rival firms to attract customers and thereby increase the demand and market for its product. For example, a car manufacturing firm such as Maruti Udyog has individuals, companies, institutions, government as its customers. To take care of customer’s sensitivity is essential for the success of a business firm.Ī firm has different categories of customers. Since sales of a product or service is critical for a firm’s survival and growth, it is necessary to keep the customers satisfied. The people who buy and use a firm’s product and services are an important part of external micro-environment. Therefore, to reduce risk and uncertainty business firms prefer to keep multiple suppliers of inputs. If there is disruption in production of the supplier firm due to labour strike or lock-out, it will adversely affect the production work of a firm. However, small firms cannot adopt this strategy of vertical integration and have to depend on outside sources for supply of needed inputs.įurther, it is not a good strategy to depend on a single supplier of inputs. Many large firms such as Reliance industries have their own power generating plants so as to ensure regular supply of electricity for their manufacturing business. To ensure regular supply of inputs such as raw materials some firms adopt a strategy of backward integration and set up captive production plants for producing raw materials themselves.įurther, energy input is an important input in the manufacturing business. This will unnecessarily raise its cost of production and reduce its profit margin. If supply of raw materials is uncertain, then a firm will have to keep a large stock of raw materials to continue its transformation process uninterrupted.

A smooth and efficient working of a business firm requires that it should have ensured supply of inputs such as raw materials. An important factor in the external environment of a firm is the suppliers of its inputs such as raw materials and components.

Micro and macro environment