SPE3002 Entrerpeneurship - Venture Environment Assesemant w1

SPE3002/SPK5002 COMMERCE AND ENTREPRENEURSHIP
WEEK 10 11 - 17 SEPTEMBER 2006
Mohd. Khata Bin Jabor
email: drhamka@yahoo.com
slide 1
AGENDA Venture Environment Assesement
slide 2
LEARNING OUTLINE
Business Venture Environment Component? Evaluating Business Segment Macro Environmental Influence Micro Environment Influence Internal Influence
Mohd. Khata Bin Jabor email: drhamka@yahoo.com slide 3
Macro
External
BUSINESS VENTURES ENVIRONMENT COMPONENTS
Internal
Micro
slide 4
Economy
Technology
Political & legislation
Macro
Socio-Cultural
External
Internal
Financial Institution
Micro
Customers
NGO Government Agency Competitors

email: drhamka@yahoo.com slide 5
Porters 5 Forces Model
Suppliers
THE FIVE FORCES MODEL EVALUATING BUSINESS SEGMENTS
Organizations use Porters Five Forces Model to determine the relative attractiveness of an industry
slide 6
Michael Porter 5 Forces Model
Further readings

http://www.themanager.org/Models/p5f.htm http://en.wikipedia.org/wiki/Porter_5_forces _analysis
slide 7
Economy
Technology
Political & legislation
Macro
Socio-Cultural
External
Internal Culture Resources
Financial Institution Micro Customers NGO Government Agency Suppliers

Organizations Structure
Competitors
slide 8
MACRO ENVIRONMENTAL INFLUENCE
SOCIO-CULTURAL
ECONOMY
POLITICAL AND LEGISLATION

TECHNOLOGY
slide 10
Trade Barriers
A trade barrier is a general term that describes any government policy or regulation that restricts international trade, the barriers can take many forms, including: Import duties Import licenses Export licenses Quotas Tariffs Subsidies Non-tariff barriers to trade
Trade Barriers Import Duties

Import duties a schedule of duties imposed by a country on imported goods. It is paid at a border or port of entry to the relevant government to allow a good to pass into that government's territory. In medieval and ancient times, such tariffs were even collected by local governments. Now this is very rare. Typically they are collected by national governments or, in a customs union, by the regional authority.
Trade Barriers - Quota
A quota is a time-measured goal for production or achievement. An assembly line worker might have a quota for the number of products made; a salesperson might have a quota to meet for weekly sales; a police officer might have a quota for tickets issued or arrests made.
Trade Barriers - Quota
In trade, a quota is a form of protectionism used to restrict the import of something to a specific quantity (Sawyer & Sprinkle, International Economics, 2nd Edition , 2003, p 157). The number of cars imported from Japan may have a quota of 50,000 vehicles per annum to protect auto manufacturers in the United States.
Trade Barriers -Tariff
A tariff is a tax on imported goods. When a ship arrives in port a customs officer inspects the contents and charges a tax according to the tariff formula. Since the goods cannot be landed until the tax is paid it is the easiest tax to collect, and the cost of collection is small. Smugglers of course seek to evade the tariff.
List of tariffs http://en.wikipedia.org/wiki/List_of_tariffs
Trade Barriers -Subsidy
A subsidy is generally a monetary grant given by government to lower the price faced by producers or consumers of a good, generally because it is considered to be in the public interest. Subsidies are also referred to as corporate welfare by those who oppose their use.
The term subsidy may also refer to assistance granted by others, such as individuals or nongovernment institutions, although this is more usually described as charity.
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A subsidy normally exemplifies the opposite of a tax, but can also be given using a reduction of the tax burden. These kinds of subsidies are generally called tax expenditures or tax breaks. Subsidies protect the consumer from paying the full price of the good consumed, however they also prevent the consumer from receiving the full value of the thing not consumed in that sense, a subsidized society is a consumption society because it unfairly encourages consumption more than conservation.
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slide 19
ASEAN FREE TRADE AGREEMENT
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ASEAN FREE TRADE AGREEMENT (AFTA)

The ASEAN Free Trade Area was established in January 1992 to eliminate tariff barriers among the Southeast Asian countries with a view to integrating the ASEAN economies into a single production base and creating a regional market of 500 million people. The Agreement on the Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area requires that tariff rates levied on a wide range of products traded within the region be reduced to no more than five percent. Quantitative Restrictions and other non-tariff barriers are to be eliminated.
Link : http://www.aseansec.org/12025.htm
slide 21
ECONOMIC
What is the current state of the economy? What is the condition of the future outlook? Are the interest rates favorable? What is the currency value and the exchange rate?
slide 22
ECONOMIC
How many firms are there in the industry? Do the firms serve only the domestic market? Is there any opportunity to go international? What is the competitive nature of the business?
SOCIO - CULTURAL
Demography -the study of human population and its structure and change. Distributions of values within a demographic variable, and across households, are both of interest, as well as trends over time. Demographics are primarily used in economic and marketing research.
SOCIO - CULTURAL
Demographic variables
Marketers and other social scientists often group populations into categories based on demographic variables. The most frequently used demographic variables are:

Age Sex / Gender Race/ Ethnicity Location of residence Socioeconomic status (SES) Religion Nationality Occupation
Education Family size Marital status Ownership's (home, car, pet, etc.) Language Mobility Life cycles (fertility, mortility, migration)
slide 25
SOCIO - CULTURAL
Social Trends relate to the modes and manner in which people live their lives. Lifestyle reflects the peoples tastes and preferences. The variables that need attention are household formation, work modes and labor force participation rates, education levels, patterns of consumption and patterns of leisure.
slide 26
PROCESS INNOVATION
TECHNOLOGICAL
PURE INVENTION
Small changes in design, product formulation and manufacturing, materials and distribution.
Creation of something new that is different from existing technology or products

slide 27
MICRO ENVIRONMENT
Consumers Competitors Suppliers Financial Institutions Government Agencies
slide 28
Consumers
The bargaining power of customers buyer concentration to firm concentration ratio bargaining leverage buyer volume buyer switching costs relative to firm switching costs
slide 29
Consumers
The bargaining power of customers buyer information availability availability of existing substitute products buyer price sensitivity price of total purchase
slide 30
Competitors
A resource-based competitive analysis grid can be used as a tool to analyze and rank the competitors in the industry. Entrepreneurs can also identify the strengths and weaknesses of competitors using this tool and help them to position new ventures.
slide 31
Competitors
The resources-based competitive analysis. On a scale of 1 through 7 evaluate the competitors resource base. 1= the firm has absolutely no advantage in the resource area; 4 = the firm possesses about the same resource capabilities as the other industry participants; 7 = the firm possesses an absolute advantage in the resource category.
Suppliers
The bargaining power of suppliers supplier switching costs relative to firm switching costs degree of differentiation of inputs presence of substitute inputs supplier concentration to firm concentration ratio
slide 33
Suppliers
The bargaining power of suppliers threat of forward integration by suppliers relative to the threat of backward integration by firms cost of inputs relative to selling price of the product importance of volume to supplier
slide 34
Financial Institutions and NGOs

Functions
Lists
Examples
slide 35
INTERNAL ENVIRONMENT
Resources Structure Culture
slide 36
Resources
Human resource Financial resource Special skills, technology
slide 37
Structure
Business set up Type of business
slide 38
Culture
Organizational culture Surrounding culture
slide 39
Opportunities - business concept that, if turned

into a tangible product @ service offered by a business enterprise, will result in financial profit Social change Economic change
Opportunity
Development of new Market & Distribution Channels
Ready Availability of established, non-proprietary technology
slide 40
New knowledge
Change in perception The unexpected
Demographics
Sources of Opportunity
The incongruous
Industry & market structures The process need
slide 41
slide 42
BUSINESS OPPORTUNITY EVALUATION
slide 43
Magnitude of Opportunity
Depends on
The value that the entrepreneurs want to create The size Economics factors Business orientation
slide 44
Magnitude of Opportunity
Comes
in 3 situations
Creation -Original opportunities lead to other opportunities Skill development Implementation
slide 45
Sources of Opportunity
slide 46
Opportunities and New Firms
slide 47
Opportunities and New Firms
slide 48

SPE3002 Entrerpeneurship - Venture Environment Assesemant w1

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SPE3002/SPK5002 COMMERCE AND ENTREPRENEURSHIP

WEEK 10 11 - 17 SEPTEMBER 2006

Mohd. Khata Bin Jabor

AGENDA Venture Environment Assesement

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor email: drhamka@yahoo.com slide 3

BUSINESS VENTURES ENVIRONMENT COMPONENTS

Mohd. Khata Bin Jabor

BUSINESS VENTURES ENVIRONMENT COMPONENTS

NGO Government Agency Competitors

Porters 5 Forces Model

THE FIVE FORCES MODEL EVALUATING BUSINESS SEGMENTS

Mohd. Khata Bin Jabor

Michael Porter 5 Forces Model

http://www.themanager.org/Models/p5f.htm http://en.wikipedia.org/wiki/Porter_5_forces _analysis

Mohd. Khata Bin Jabor

BUSINESS VENTURES ENVIRONMENT COMPONENTS

Internal Culture Resources

Financial Institution Micro Customers NGO Government Agency Suppliers

MACRO ENVIRONMENTAL INFLUENCE

POLITICAL AND LEGISLATION

MACRO ENVIRONMENTAL INFLUENCE

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Trade Barriers Import Duties

Trade Barriers - Quota

Mohd. Khata Bin Jabor

Trade Barriers - Quota

Mohd. Khata Bin Jabor

Trade Barriers -Tariff

Mohd. Khata Bin Jabor

Trade Barriers -Subsidy

Mohd. Khata Bin Jabor

Trade Barriers -Subsidy

Mohd. Khata Bin Jabor

Trade Barriers -Subsidy

Mohd. Khata Bin Jabor

MACRO ENVIRONMENTAL INFLUENCE

Mohd. Khata Bin Jabor

ASEAN FREE TRADE AGREEMENT

Mohd. Khata Bin Jabor

ASEAN FREE TRADE AGREEMENT (AFTA)

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor email: drhamka@yahoo.com slide 24

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Creation of something new that is different from existing technology or products

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Financial Institutions and NGOs

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Mohd. Khata Bin Jabor

Opportunities - business concept that, if turned

Development of new Market & Distribution Channels