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The Role of Situation analysis. 3.03 B Entrepreneurship 1. Business Opportunity. In the simplest terms, is a packaged business investment that allows the buyer to begin a business.
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The Role of Situation analysis 3.03 B Entrepreneurship 1
Business Opportunity • In the simplest terms, is a packaged business investment that allows the buyer to begin a business.
Business Threat • Agents, factors, or forces in an organization's external environment that are out of its control, and can directly or indirectly affect is chances of success or failure.
Business Environment • The combination of internal and external factors that influence a company's operating situation. The business environment can include factors such as: clients and suppliers; its competition and owners; improvements in technology; laws and government activities; and market, social and economic trends.
Economic Development • Progress in an economy, or the qualitative measure of this. Economic development usually refers to the adoption of new technologies, transition from agriculture-based to industry-based economy, and general improvement in living standards.
Technological change • External factors in technology that impact business operations. Changes in technology affect how a company will do business. A business may have to dramatically change their operating strategy as a result of changes in the technological environment.
Economic Change • A change in the demand of a good or service, induced by a change in the consumers' discretionary income. • Any increase or decrease in price correspondingly decreases or increases consumers' discretionary income which, in turn, causes a lower or higher demand for the same or some other good or service. For example, if a consumer spends one-half of his or her income on bread alone, a fifty-percent decrease in the price of bread will increase the free money available to him or her by the same amount which he or she can spend in buying more bread or something else. It is one of the two effects caused by a price change; the other is substitution effect.
Environmental Scanning • Careful monitoring of an organization's internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans. In comparison, surveillance is confined to a specific objective or a narrow sector.
Environmental Monitoring • Supervising activities in progress to ensure they are on-course and on-schedule in meeting the objectives and performance targets.
Threats OR Opportunities • Firms that manage threats successfully are motivated by the threat to act, but then focus on the opportunities for change in their competitive position. • Examples: Apple’s revenue is up—even given the dismal economy. When the downturn hit, the firm didn’t cut its marketing efforts. Instead, it enhanced its advertising plan. • McDonald’s went head-to-head with Starbucks by offering the McCafé. McCafé now offers a wide selection of low-cost, exclusive espresso coffee and gourmet cakes and muffins.
Purpose of Environmental Scanning and Monitoring • The basic purpose of environmental scanning is to help management determine the future direction of the organization. 1. Irregular scanning systems: These consist largely of ad hoc environmental studies. 2. Regular Scanning systems: These systems revolve around a regular review of the environment or significant environmental components. This review is often made annually. 3. Continuous scanning systems: These systems constantly monitor components of the organizational environment.
Internal Environment • Internal environment is composed of the elements within the organization, including current employees, management, and especially corporate culture, which defines employee behavior. • The external environment can affect the employees of a company, just as they affect customers.
