Lesson 8:

THE MACRO
ENVIRONMENT
Presented by:
Group 3
 The macro environment is the condition of the
economy as a whole. In the Philippine context, it
refers to every industry and other factors that
contribute to the economy's growth. Among the
industries that contribute to the country's
development are agriculture, manufacturing,
construction, and telecommunications.
Macro Environment
Macro environment forces:
1. Demography- each faction of the population acts differently, relying on
factors, like age, status; company can manufacture only products which suit
the necessity of buyers
2. Economic Environment- like exchange rate, inflation rate; an organization
can effectively offer products when consumer have enough cash

3. Physical Environment- climate, atmosphere, environmental change,

accessibility of raw materials; a company has to implement policies contained
by restrictions set by nature
4. Technological factors- each innovation creates another business and group
of clients
5. Social and cultural factors- like lifestyle and qualities, and culture
AGRIBUSINESS
According to Arangkada Philippines
2010: A Business Perspective, the agricultural
sector compromised 19% of GDP in 2009 and
provided work for 34% of the labor force.
Among the ASEAN 6 (Indonesia, Malaysia,
Philippines, Singapore, and Vietnam) the
Philippines and Singapore posted more
imports than exports.
 Agricultural Goods Agricultural
Agricultural food
food exports,
exports, % of
Countries % of total
Exports Imports Trade Balance total agricultutral merchandise
exports
exports

Indonesia 25.3 11.4 13.9 79.2% 21.1%

Malaysia 20.9 12.3 8.5 84.5% 13.3%
Philippines 3.2 5.6 -2.4 92.7% 8.3%
Singapore 6.2 8.8 -2.6 90.1% 2.3%
Thailand 28.0 9.4 18.6 79.1% 18.4%
Vietnam 10.7 9.3 1.4 90.2% 18.9%
 We are now experiencing an influx of
imported poultry products which compete
with the produce of our local growers. The
government can counteract this by
minimizing risks through the
implementation of tariffs and import
quotas.
 Another way to minimize risks is to
penetrate the export market for poultry
and hog raising. Our local government can
compete in the world market if they are
given the opportunity and assistance by
the government.
 There are several undertakings that
integrate small farmers with large
agribusiness enterprises:
• Thailand’s Charoen Pokphand Foods
• Nestle
• San Miguel Corporation
 The letter for future partners or
partnership of San Miguel Corporation, helps
small partners be given the opportunity to be
partners of San Miguel Corporation. The
concept of starting small and being part of a
bigger entity is having the best of two
worlds, meaning most of small firms who
cannot afford to become bigger becomes part
of San Miguel which is the biggest entity in
agriculture.
Free college Education in Farm Management
The government supports agricultural
programs by extending free education to
college students who employs themselves in
farm management. This is a way to entice
students to take a degree in agriculture and
engage in farming as a livelihood.
According to the official website of NFA:

NFA buys from farmers/farmers’ organizations at

the government support price to ensure market to
accommodate farmer to produce and enable farmers a
fair return on production investment. This program is
undertaken to ensure and establish manageable buffer
stock in line with the agency’s function of stabilizing
consumer price levels and assuring an adequate supply
of rice
 15.6%

31.7%

24.5%

5.2%
16%
1.5%

Coconut Products sugar and related products bananas

forest products other agri based products other fruits and vegetables
Manufacturing
In economic development, a structural
information is needed for a nation to increase
an output. As an emerging market, we already
shifted from a low-value agricultural
products and services to high-value
manufacturing and exports.
 For the past 30 years, we have been gaining from
globalization where manufacturing firms abroad
penetrate the local scene by putting up their factories
here because of lower production costs.
An example is the electronics sector. There are
around 1,000 firms employing 400,000 workers
throughout the Philippines . Acer, Epson, and Lexmark
are some of the firms that outsource production to the
Philippines for the assembly of parts, accessories, and
computer components
 Another example is the garment
sector in the Philippines which peaked
at around 1995 but went down because
Bangladesh, Cambodia, China,
Indonesia, and Vietnam showed lower
costs.
Retail trade and Service
Tourism is the fourth biggest
contributor to our foreign exchange with
average annual earnings of 2.2 billion dollars
(2000-2009). We increase our tourists
arrivals by 5% to 7% each year. But the big
portion of the arrivals are local tourists.
Real YOY Growth- is the real rate of growth of total
domestic passengers. Real rate of growth is a technical
term which means that the current number of
passengers is divided by the number of passengers of a
selected base year. Then growth is computed using the
formula:
𝒀𝒆𝒂𝒓 𝟐−𝒀𝒆𝒂𝒓 𝟏
Growth rate= 𝒙 𝟏𝟎𝟎
𝒀𝒆𝒂𝒓 𝟏
 Other formulas:
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒗𝒆.𝑷𝒓𝒊𝒄𝒆
index=𝑩𝒂𝒔𝒆 𝒀𝒆𝒂𝒓 𝑨𝒗𝒆.𝑷𝒓𝒊𝒄𝒆
Real number of 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝑫𝒐𝒎𝒆𝒔𝒕𝒊𝒄 𝒑𝒂𝒔𝒔𝒆𝒏𝒈𝒆𝒓𝒔
domestic passengers=
𝑰𝒏𝒅𝒆𝒙

Real growth of domestic passengers=

𝒀𝒆𝒂𝒓 𝟐 𝒐𝒇 𝑹𝒆𝒂𝒍 𝑵𝒐. 𝒐𝒇 𝑫𝒐𝒎𝒆𝒔𝒕𝒊𝒄 𝑷𝒂𝒔𝒔𝒆𝒏𝒈𝒆𝒓𝒔 − 𝒀𝒆𝒂𝒓 𝟏 𝒐𝒇 𝑹𝒆𝒂𝒍 𝑵𝒐. 𝒐𝒇 𝑫𝒐𝒎𝒆𝒔𝒕𝒊𝒄 𝑷𝒂𝒔𝒔𝒆𝒏𝒈𝒆𝒓𝒔
𝒀𝒆𝒂𝒓 𝟏 𝒐𝒇 𝑹𝒆𝒂𝒍 𝑵𝒐. 𝒐𝒇 𝑫𝒐𝒎𝒆𝒔𝒕𝒊𝒄 𝑷𝒂𝒔𝒔𝒆𝒏𝒈𝒆𝒓𝒔
INFLATION
Is an uninterrupted increase in prices of goods and
services for a period of time.
Types:
a) Cost Push Inflation- a continue increase in the
prices of production cost
Ex: price of oil in the market
b)Demand Pull Inflation- comes from an excess
demands
Ex: When arctic countries tend to order more fuel
whenever there is an increase of cost.
In the 2015 National Conference of the
Council of Economics Educators, the
Department of Tourism discussed the
increase in the volume of tourists,
especially local tourists.
For example:
International Trade (Exports and Imports)
Trading started with barter where merchants
and traders merchandise for other merchandise
depending on their trade value.
COMPARATIVE ADVANTAGE
-basis of trade among firms in the country and is true
for two countries producing two products. Company
A has an advantage in making product 1 and is not
efficient in making product 2. Company B has an
advantage in making product 2 and is not efficient in
making product 1.
MERCHANDISE EXPORT PERFORMANCE (JULY 2015)
In a recent preliminary release of figures from the Philippine Statistics
Society, merchandise which saw an increase in export performance
includes electronic productsand woodcrafts and furniture. Exports
losers, on the other hand, were other mineral products, machinery and
transport equipment, articlesand clothing accessories, metal
components, chemicals, coconut oil, ignition wiring sets used in vehicles,
aircrafts and ships, and other manufactures. An increase in exports
increases our Gross Domestic Product and this is a very good signal for
foreign investors to open their businesses here.
TRADING PARTNERS
The country's trading partner is Japan, getting a 19.3% share
of total exports, followed by People's Republic of China with
a 16.3% share, USA including Alaska is 3rd on the ist with
14.8% share, Hong Kong ranked 4th with 9.8% share, and
Singapore placed 5th with 5.6% share. Maintaining strong
ties with other nations give us a steady oppurtunity to
export our products which enables us to experience a
positive GDP.
KEY POINTS TO REMEMBER
The macro environment refers to the condition of the
company as a whole. It refers to every industry and other
factors that contribute to the economy's growth.
As of 2009, the agricultural sector compromised 19% of
the country's GDP and provided work for 34% of the labor
force. However, among ASEAN 6 countries, the Philippines
scored the lowest in exports.
KEY POINTS TO REMEMBER
To improve the performance of agriculture, the industry
must penetrate the export market for poultry and hog-
raising. The government also supports agriculture by
providing free education for college students who are
employed in a farm management. The National Food
Authority is the government agency that buys the produce
of farmers and ensures that farmers gain profit from their
livelihood.
KEY POINTS TO REMEMBER
In manufacturing, the garments industry showed a
decline in employment because countries chose to invest in
other countries that have low production costs. In the
electronics sector, there are about 1,000 firms in the
country that employ 400,000 Filipinos. They outsource the
assembly parts, accessories, and computer components to
the Philippines. Good business prospects in this industry
include automotive parts and services and home detector.
KEY POINTS TO REMEMBER
In international trade, the Philippines has posted
increased export figures in electronic products and
woodcrafts and furniture. The country's top trading
partners are Japan, followed by China, the United States,
Hong Kong, and Singapore.