What Is a Macro Trend?

Understanding trends is a necessary part of any business forecasting activity. Trends are directional shifts or changes in a situation, which can be observed on a scale, ranging from very fine-grained to global in scope. The duration of a trend also affects its scale. Macro trends, as the name implies, are major in scope and long lasting. They affect the environment in which businesses operate, even if the business itself doesn’t seem related to the subject area of the trend.

Definition

Macro trends are directional shifts that involve large populations and last five to 10 years or more. Some examples might be the aging of a population, the development of global connectedness through social media, and the advances in technology as manifested in smart homes and the “Internet of things.”

Hierarchy of Trends

Macro trends don’t exist in a vacuum, but rather they arise out even broader, longer-lasting directional shifts known as mega trends. Macro trends, in turn, generate micro trends, which are smaller in scope and typically last three to five years. Then there are fads, which are even more ephemeral than trends and affect a smaller population, such as a defined age group.

A phenomenon can arise at one level of the hierarchy and expand or contract to encompass other levels. For example, when Facebook originated in 2004, it was shared among a small group of students in the Cambridge, Massachusetts area. With this small beginning, it may have been considered a fad, or at best a micro trend. Over time, the adoption of Facebook by a growing user base moved it to the level of a macro trend. Facebook, along with other social media platforms that have since developed, now propels the mega trend of global connectedness. This mega trend, in turn, produces such macro trends as crowd action, net culture and social software.

The Macro Environment

Every business lives within an environment of forces beyond its control. The DESTEP model describes these forces as Demographic, Economic, Political, Ecological, Socio-Cultural and Technological. For example, climate change is an ecological force, with worldwide implications that will undoubtedly last for decades, if not centuries. Within the umbrella of climate change, there are macro trends that operate on a smaller scale. Some operate regionally, such as the increased risk of flooding in coastal areas, or forest fires in mountainous regions. Other related trends might operate within a business sector, such as raw materials scarcity or interruption of delivery schedules due to severe weather events.

These climate-related challenges are also accompanied by emerging macro trends that create opportunities. Some examples are the rise of ethical business models, the trend towards ethical consumption and the growing consumer preference for renewable energy sources. While a business alone may not be able to alter macro-environmental forces, understanding and responding effectively to these large-scale directional shifts will help businesses survive and even thrive, despite the challenging nature of the macro trend.