AC 1.2 Evaluate Micro-and Macro-Analysis Tools that can be used in Human Resource practice to Investigate an Organisation’s Micro and Macro Environment and How those Discovered can be used to Diagnose Future Issues, Challenges, and Opportunities.
Internal and external factors affect every organisation. These aspects are all part of the broader organisational environment, and their effects on the firm should be evaluated. In people practice, various tools are employed, including strategy reviews, future state analyses, SWOT analyses, Ansoff matrix analyses, and Fishbone analyses.There are various ways to evaluate an organisation’s micro and macro environments, they include : Observations, interviews, job analysis, work sampling, and the use of questionnaires.
The micro-environment of an organisation refers to the primary factors or environment in which it operates. These elements or environments include suppliers, consumers, competitors, and stakeholders (Summer, 2019). These are internal factors that can have an effect on an organisation. Microenvironments can be evaluated using microanalysis methodologies such as Porter’s five forces analysis. On the other hand, the macro-environment refers to the broader forces that affect enterprises (Summer, 2019). Macro-environments are external elements that have an effect on an organisation’s activities and production but are beyond its control. Economic difficulties, political forces, technical breakthroughs, ecological and physical phenomena, and legal factors contribute to the macroenvironment. The PESTLE analysis tool is an illustration of a tool used to analyse macro-environmental factors.
The SWOT analysis tool assesses both internal and external issues affecting an organisation. SWOT analysis is a strategic planning technique that identifies a company’s strengths, weaknesses, opportunities, and threats (Summer, 2019). While strengths and weaknesses are concerned with the organisation’s internal workings, threats and opportunities are concerned with external issues that may affect the organisation. The SWOT analysis is a straightforward process that can be utilised by businesses entering new markets.
Michael Porter developed Porter’s five analysis method for assessing and evaluating a business’s competitive strength (Bruijl, 2018). The approach is based on five concepts and can be used to evaluate an organisation’s microenvironment. Porter identified five forces: negotiating power of buyers, the threat of entrance, bargaining power of suppliers, competition from rivals, and threats from replacements.
As the acronym implies, the PESTLE study examines political, economic, social, technical, legal, and environmental concerns (Downey, 2007). Political variables such as trade restrictions and policies and diplomatic difficulties are likely to affect an organisation’s performance. It is critical to note that organisations are governed by laws and regulations developed by trade unions and other regulating agencies in the UK. As a result, the human resources department is responsible for ensuring that the organisation adheres to all applicable requirements. Additionally, human resources should be kept up to date on regulatory developments that may affect an organisation.
The state of the economy is a significant external factor influencing any firm. Human resources should monitor changes in economic trends as a result of global financial instability. Organisations are directly affected by economic issues such as inflation, demand and supply, interest rates, and currency exchange rates (Friedman, 2013). Human resources should inform management of current economic trends in order to prepare them for future developments. The availability of a workforce can affect an organisation’s effectiveness on a social level. Human resources are accountable for developing a recruiting strategy that attracts the finest personnel to perform organisational functions. Technological factors include the influence of adopting new technology, which may need personnel reductions or recruitment. Human resources are responsible for advising management on essential modifications to ensure that technological advancements benefit the organisation and that the organisation retains a technologically savvy staff (Friedman, 2013).
Legal aspects include rules and regulations that affect how individuals conduct themselves. Human resource professionals should ensure that the organisation and its existing policies and procedures adhere to all applicable regulatory standards in the country (Friedman, 2013). The final ‘E’ in the PESTLE tool stands for environmental elements, which allude to a naturally occurring element that may affect how individuals behave. Global market forces are compelled to comply with sustainable development goals. The Human Resources department’s responsibility is to guarantee that the organisation complies with all applicable laws and incorporates environmental sustainability policies into daily operations.
