Final answer:
The immediate environment surrounding a firm, such as suppliers, customers, and competitors, is part of the microenvironment. The competitiveness of this environment is determined by the market structure, which is influenced by globalization and advancements in technology.
Step-by-step explanation:
The immediate environment surrounding a firm, which includes suppliers, customers, rivals, and new entrants, is often referred to as the microenvironment. It is a part of the broader concept known as market structure, which is a multidimensional concept assessing how competitive an industry is. The market structure encompasses various factors such as the level of market power held by each firm within the industry, how much competition exists, both locally and globally, and the impact of new entrants on the existing competitive landscape.
Due to globalization and advancements in communications and information technology, the competition has intensified. Firms must now consider competitive pressures not just from local rivals, but from across the globe. This expanded competitive arena can influence business strategies, leading to movements and counter-movements among businesses as they seek to capture market share and distinguish themselves through variables like price, service, and product distinction.
Moreover, the advent of new technologies stirs a debate over the size of firms in the future, raising questions about whether technology will lead to a market dominated by a few large entities or a plethora of small, nimble competitors. The trajectory of firm size and market domination remains a point of interest to economists, businesspeople, and policymakers alike, as companies adapt to managing operations more efficiently and reaching broader markets through digital means.