External Factors. (Macro). - ✔✔ Consider a company that produces luxury food items in tough economic times or a manufacturer that suddenly finds its
... [Show More] food supply is no longer available due to environmental concerns.
These factors that relate to the macro-environment are generally outside the manufacturers control and must be considered in proper decision making process:
- Economic Environment.
- Political Environment.
- Ecological Environment.
- Technological Environment.
Economic Environment. - ✔✔ A great new food product idea may work well when consumers have a high income level and the economic outlook is prosperous, but the idea may fail in tougher economic times.
Recession:
A recession is a downturn in the economy, resulting in less disposable income as well as a lower capacity to pay for goods and services, especially imported items.
Decreased employment and increased reliance on social services mean that people spend less money. Business running costs increase and profits decline; some companies go bankrupt and close down.
Expansion:
The economy grows in terms of production, employment opportunities and introduction of new products.
The economic climate improves during expansion while unemployment, interest rates and inflation decrease.
Boom:
A boom occurs when consumers spend more money, eat at better restaurants and try more new products. New businesses appear and unemployment rates are low; a country's economy grows too fast.
Contradiction:
Occurs in the economic cycle with effects similar to, but less severe than those during periods of recession.
Disposable income, consumer spending, business activity and new product development are all adversely affected during contradiction.
Specifically, the following economic factors may affect food product development:
- Change in inflation rates.
- Changes in interest rates.
- Exchange rates.
- Tax rates.
- Import and export tariffs.
- Wage agreements and
salary levels.
- Level of unemployment.
- Drought.
- Natural disasters
Political Environment. - ✔✔ Australian manufacturers, producers and distributors of food are all subject to regulations made by federal, state and local governments.
At the federal level, the most prominent regulatory body is Food Standards Australia New Zealand (FSANZ), which in principle, coordinates and oversees food regulation throughout Australia and New Zealand.
Local government deals specifically with local issues relating to foods, such as zoning laws, planning permits and health inspection matters.
Other political influences arise from non-government sources such as lobby groups; the Australia Consumers Association and the National Farmers' Federation (NFF) are good examples.
The NFF represents a broad cross-section of Australian agriculture and lobbied the government to extensively to work more closely with farmers to deal with the drought and adopt strategies to ensure enough water for their crops in the future.
Ecological Environment. - ✔✔ The ecological environment includes the air we breathe, the food we eat, our waterways, biodiversity in both plant and animal species, and the land itself.
Today there is a concern about endangerment of species and environmental damage because of tissues such as pollution, land degradation, inadequate waste disposal and conservation of natural resources.
Environmental quality and its conservation are addressed by many international conventions and treaties, such as the Kyoto Protocol, which Australia signed in 2007. [Show Less]