VENTURE ENVIRONMENT ASSESSMENT Chapter 4 Villa College.
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Transcript of VENTURE ENVIRONMENT ASSESSMENT Chapter 4 Villa College.
VENTURE ENVIRONMENT ASSESSMENT
Chapter 4
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Chapter Outline
The components of Ventures’ EnvironmentMacro EnvironmentMicro EnvironmentOrganizational Internal EnvironmentIdentify Business OpportunityEvaluation of Business Opportunity
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The meaning of Venture
‘A venture is a major undertaking, synonymous with adventure’
‘A business project or activity, especially one that involves taking risks’
- Oxford Business Dictionary
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Entrepreneurial Ventures
‘Organizations that are pursuing opportunities’
Are characterised by Innovative practices Growth and profitability as main goals
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The Environment
The term Environment refers to; ‘institutions or forces outside the organization that potentially affect the organization’s performance’
The conditions that affect the behaviour and development of somebody, something; the physical conditions that somebody / something exists in
- Oxford business dictionary
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The Ventures’ Environmental Scanning
Environmental scanning refers to the efforts by which an entrepreneur examines the external and internal environment before taking a decision
Often entails evaluating the three environmental components
General (External Macro / Micro & Internal environments)
Industry Competitor
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The components of Ventures’ Environment
The Components of Ventures’ Environment
External
Macro
Political & legal
Socio-cultural
(sociodemographic)
Economy
Technology
Ecology
Micro
Customers
Suppliers
Competitors
Financial Institutions
Govt. agencies
NGOs
Internal
Organization structure
Culture
Resources
External-Macro Environment
Political & Legal
Economy
Socio-Cultural
(sociodemographical)
Technology
Ecology
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Political & Legal
The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses
Should consider issues such as:
1. How stable is the political environment?
2. Will government policy influence laws that regulate or tax your business?
3. What is the government's position on marketing ethics?
4. What is the government's policy on the economy?
5. Does the government have a view on culture and religion?
6. Is the government involved in trading agreements such as EU, NAFTA,
ASEAN, or others?
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The political & legislative segment of Macro Environment
Global National State & region
Trade barriers Taxation Taxation
Trade agreements Regulations Licensing
Tariffs & duties Patent protections Incentives
Political risks Government spending
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Economy
Economic Factors that need to consider the state of a trading economy in the short and long-terms
Should consider
1. What is the present state of the economy?
2. How sustainable is economic growth?
3. What is driving economic growth?
4. How accurate are the relevant economic indicators?
5. If real economic growth is likely, will this mean that GDP per head will also rise?
6. What will happen to exchange rate & inflation rate?
7. What about the interest rates?
8. What is the condition of the labour market?Villa College
Socio-Cultural
The social and cultural influences on business vary from country to country
The factors should be considered
1. What is the dominant religion?
2. What are attitudes towards various products and services?
3. Does language impact upon the diffusion of products onto markets?
4. How much time do consumers have for leisure?
5. What are the roles of men and women within society?
6. How long are the population living?
7. Are the older generations wealthy?
8. Do the population have a strong/weak opinion on green issues?Villa College
Technology
Technology is vital for competitive advantage, and is a major driver of globalization
Should consider the following points:
1. Does technology allow for products and services to be made more cheaply and to a better standard of quality?
2. Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc?
3. How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc?
4. Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management (CRM), etc? Villa College
Ecology
The ‘bottom-line’ issues
Issues such as pollution, waste disposal, recycling, protection of wild-life, workplace safety etc.
Entrepreneurs should be a part of ‘sustainable development’
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Micro/Industrial Environment
Customers
Competitors
Suppliers
Financial Institutions
Governmental Agencies
NGOs
Consumers
Customers Vs. consumers?????
The factors should be considered
1. Who are the consumers / customers? What are their characteristics?
2. What do consumers / customers want?
3. How do consumers / customers make their decisions?
4. What are their spending patterns?
5. How much money do they have to spend?
6. How do other companies in the sector see consumer / customer base & how much are they able to sell to them in reality?
7. How difficult / easy is to reach potential consumers / customers?
8. What are the most effective ways to promote the product?
9. What kind of advertising / promotion works best?Villa College
Competitors
Are the businesses that fulfill the same customer needs or have the potential to serve these customers
The factors to be considered
1. Which competitors are already operating in the market?
2. How strong are competitors that are already there/
3. How many people do they employ & what is their organizational structure?
4. Are other competitors entering or planning to enter the market?
5. What do customers / consumers think about competitors & their products / services?
6. If competitors failed / succeeded, why?Villa College
Financial Institutions
Are one of the sources for external funding to initiate a new business venture or expanding an existing business
The factors to be considered 1. Is it possible to finance operations locally?
2. How stable is the banking system? How high is the risk of collapse?
3. How efficient is the banking system?
4. Are banks willing to lend to local private individuals, small & medium-sized enterprises?
5. What other potential sources of funding (development banks, government agencies etc.) can be tapped in to?Villa College
Governmental Agencies
Government’s involvement on developing entrepreneurship through various policies & institutions
Some factors to be considered
1. Does the government allow a level playing field?
2. To what extent do local special-interest groups have influences to businesses?
3. Does the government protect intellectual property?
4. Does the government encourage free trade?
5. To what extent does the government interfere with pricing?
6. What is the quality of public administration & government bureaucracy?
7. Who are the key government players who can make or brake plans for a business?Villa College
Industry Environment Analysis
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Competitor Intelligence Analysis
Who are they???
What are they doing???
How will they act in future???
What they are doing affect us??
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Competitor Analysis
Components of a competitor analysis
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Competitor’s Response Profile
Is the competitor satisfied with its current position?
What likely moves or strategy shifts will the competitor make?
Where is the competitor vulnerable?
What will provide the greatest & the most effective retaliation by the competitor?
Future GoalsCurrent Strategy
Assumptions Capabilities
Internal Environment
Organizations’ Structure
Organizational CultureResources
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Organizational Structure
‘The formal framework by which job tasks are divided, grouped & co-ordinated’
What type of organization design????2 generic modelscontingency factors
Contemporary organizational designsTeam basedMatrix & projectAutonomous internal units
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Boundryless Organizations
Learning organizations
Organizational Culture
‘The spirit, attitude, the behaviour of the organization’
Culture is formed through; Vision / mission of the founder Behaviour of the senior management Recruitment & training of employees
How the culture is ‘learned’????StoriesRituals
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LanguageMaterial symbols
Types of Organizational Cultures
ClanEntrepreneu
rial
Bureaucratic
Market
Internal External Forms of Attention
Form
al
Con
trol
Ori
en
tati
on
Sta
ble
Fle
xib
le
Bureaucratic Vs. Entrepreneurial cultures
Bureaucratic culture : Organization that values formality, rules, standard
operating procedures & hierarchical coordination Task responsibilities & authorities for all employees are
clearly defined Everyone believes that they have to “go by the book”
Entrepreneurial culture – High level of risk taking, dynamism & creativityThere is a commitment to experimentation, innovation &
being on the leading edge Individual initiative, flexibility & freedom foster growth and
are encouraged & well rewarded Innovation and entrepreneurship are valued
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Organizational Culture
Bureaucratic Culture vs. Entrepreneurial Culture
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Dimension Traditional Entrepreneurial
Strategy Status quo, conservative
Evolved, futuristic
Risk Averse, punished Emphasized, rewarded
Opportunity Absent Integrated
Leadership Top-down, autocratic Culture of empowerment
Power Hoarded Given away
Decision making Centralized Decentralized
Structure Hierarchical, mechanistic
Organic
Creativity Tolerated Priced, worshiped
Organizational Resources
The Entrepreneur
Financial resources
Human Resources
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What is a ‘Business Opportunity’????
A business concept that, it turned into a tangible product or service offered by a business enterprise, will result in financial profit
- Myzuka (2000)
Related with
3 S’s of opportunityVilla College
Work experienc
eHobbies Hobbies
Opportunity and Entrepreneurship
An opportunity is a gap in the market.
It represents the potential to serve the customers better than they are being served at present
The entrepreneur is responsible for scanning the business landscape for unexploited opportunities or possibilities that something important might be done both differently & better!!!
The improved way of doing ‘it’ is the innovation that the entrepreneur presents to the market
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Types of Business Opportunity
New Produ
ctNew Servi
ceNew Means of
Production
New Distributio
n RouteImpro
ved Servi
ce
Relationshi
p buildi
ng
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Recognition of an opportunity
Sources of Opportunity1.The unexpected2.The incongruous3.The process need4.Industry and market structure5.Demographics6.Change in perception7.New knowledge
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Recognition of an opportunity
Sources of Opportunity1.The unexpected2.The incongruous3.The process need4.Industry and market structure5.Demographics6.Change in perception7.New knowledge
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Seeing the Business Opportunity
OPPORTUNITY
Social Change
Economic Change
Development of new market &
distribution channel
Ready availability of Established,
Non propritery technology
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Sizing the Business Opportunity
Not all opportunities are equally valuable!!!!
Key decisions in screening & selecting opportunities relates to
Size of the opportunityThe investment necessary to exploit itThe rewards that will be gained The risks likely to be connected
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Seizing the Business Opportunity
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Opportunities and new Firms
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