Chapter 4
VENTURE ENVIRONMENT
ASSESSMENT
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Chapter Outline
 The components of Ventures’ Environment
 Macro Environment
 Micro Environment
 Organizational Internal Environment
 Identify Business Opportunity
 Evaluation 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
Internal
External
Macro
Micro
Political &
legal
Customers
Organization
structure
Culture
Suppliers
Economy
Resources
Competitors
Technology
Financial
Institutions
Govt. agencies
Socio-cultural
(sociodemographic)
NGOs
Ecology
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External-Macro Environment
Political &
Legal
Ecology
Technology
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Economy
SocioCultural
(sociodemo
graphical)
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?
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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?
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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?
Does technology offer companies a new way to communicate with
consumers e.g. banners, Customer Relationship Management
(CRM), etc?
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4.
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
NGOs
Competitors
Governmental
Agencies
Suppliers
Financial
Institutions
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?
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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?
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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?
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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?
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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
Current
Strategy
Future Goals
Competitor’s Response Profile
Is the competitor satisfied with
position?
its current
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?
Assumptions
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Capabilities
Internal Environment
Organizations’
Structure
Resources
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Organizational
Culture
Organizational Structure
 ‘The formal framework by which job tasks are
divided, grouped & co-ordinated’
 What type of organization design????
 2 generic models
 contingency factors
 Contemporary organizational designs
 Team based
 Matrix & project
 Autonomous 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’????
 Stories
Language
 Rituals
Material symbols
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Formal Control Orientation
Stable
Flexible
Types of Organizational Cultures
Clan
Entrepreneurial
Bureaucratic
Market
Internal
External
Forms of Attention
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 & creativity
 There 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
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
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Organizational Resources
Financial
resources
The
Entrepreneur
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 opportunity
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Work
experience
Hobbies
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 Distribution
Route
New Product
New Service
Improved Service
New Means of
Production
Relationship
building
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Recognition of an opportunity
 Sources of Opportunity
The unexpected
2. The incongruous
3. The process need
4. Industry and market structure
5. Demographics
6. Change in perception
7. New knowledge
1.
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Recognition of an opportunity
 Sources of Opportunity
The unexpected
2. The incongruous
3. The process need
4. Industry and market structure
5. Demographics
6. Change in perception
7. New knowledge
1.
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Seeing the Business Opportunity
Economic
Change
Development
of new market
& distribution
channel
Social Change
OPPORTUNITY
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Ready
availability of
Established,
Non propritery
technology
Sizing the Business Opportunity
 Not all opportunities are equally valuable!!!!
 Key decisions in screening & selecting opportunities
relates to
 Size of
the opportunity
 The investment necessary to exploit it
 The 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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