BUSINESS

ENVIRONMENT
ASSESSMENT

CHAPTER 2

UniKLMIMET/IIIP/SNK_Ch.2
WBD10102 Introduction to Entrepreneurship
Business Environment Assessment

Component of Macro
Business Environment Microenvironment
Environment Influence Influence

Identification of Evaluation of
Business Business
Opprotunity Opportunity

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Learning Objectives

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Component of Business Environment
• External Environment –
consist of a set of forces and
conditions outside the
business that can potentially
influence its performance
Business
Environment
• Internal Environment –
consist of a set of key factors
and forces inside the
business which affect how
business operates

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Macroenvironment – forces that
typically influence the business’
external tasks environment
External such as, the business itself.
environment
Microenvironment – forces that
have a high potential affecting
the business on an immediate
basis.
UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship
The Variables of Business Environment

MACRO/GENERAL ENVIRONMENT
Political & Legislation

MICRO/INDUSTRIAL ENVIRONMENT
Socio-Cultural
Competitors

Customers

Financial Institution
INTERNAL ENVIRONMENT
Technology
Supplier
Structure Culture Resources
Government Agencies

Economy Non-Governmental Organisation

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Macroenvironment Component

i. Political & Legislation

Other example:
Government tend to Legislation regarding Trade barriers and
Also influence by the
Federal, state and regulate industries environmental and tariff, political risks,
political condition
local governments such as power safety concerns is trade agreements,
and general stability
influence what an supply, also a factors of taxation, acts and
of country in which
organisation can and telecommunications, increasing regulations
organisation
cannot do. postal services and importance in many
operates.
transport. industries.

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Macroenvironment Component (cont’)

ii. Economy

Current economic Structural

Economic cycle
condition changes

Changes
that
significantly
Eg: The shift
affect the
Level of Unemploym from
Interest rates Prosperity Recession Depression Recovery dynamics of
inflation ent level agriculture
economic
to industrial
activity
economy.
both in the
present and
the future.
UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship
 Macroenvironment Component (cont’)

iii. Socio-culture
Affect the
attitudes, beliefs,
norms, customs Demographic issues include the following:
and lifestyles of
people.

Population size
Age distribution Education levels Income levels
and distribution

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Macroenvironment Component (cont’)

iv. Technology
Technology is defined as the branch of
knowledge that deals with the
Forms of technological changes:
industrial arts, applied science, and
engineering

Also changing the nature of work, for

instance, enabling employees to work Breakthrough invention Process innovation
at remote location.

Creation of something new which is Any small changes made in design,

different from existing technology or product formulation and
creating products that will create a manufacturing, materials and
new platform for future research. distributions.
UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship
 Microenvironment Component
Financial
Suppliers
institution

Government
Competitors
agencies

Non-
Customer Microenvironment government
organization

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Microenvironment Component
Customer People and organizations in the environment that acquire goods or services from the organization

Customer taste can change, or they can become dissatisfied with the organization's product or service

Competitors Represented by other organizations in the same industry or another types of business that provide
goods or services to the same set of customers.

Every new product introduction, marketing promotion, and capacity expansion has implications for the
revenues, costs and profits.

Suppliers Refers to those provide equipment, supplies, component parts, and raw materials to the industries.

Also including labor and capital markets from which firms draw their employees and investment funds.

Raise their price  reduce profitability levels

UniKLMIMET/IIIP/SNK_Ch.2
WBD10102 Introduction to Entrepreneurship
 Microenvironment Component
Financial Institution that provides financial services for its clients or members.

Institution
Bank, credit card companies, insurance companies, consumer finance companies,
stock brokerages and investment funds

Government Malaysian has an open system of Government and economy, with investor-friendly
policies and a host of attractive incentive.
Agencies
Eg: MIDA, MARTRADE, MPC, HDC SME Bank ect.

NGO Such as consumer societies, political organizations religious groups, business

societies, environmental groups and others are among some of the interest groups .

May campaign against specific products or services or disseminate information

regarding certain products.
UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship
 The Internal Environment

Structure

Micro
environmental

Resources Culture

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Micro environmental

i. Structure
The hierarchical arrangement of tasks and people
which determines the following:
• The flow of information within the firm
• Tea areas of responsibility for specific departments
Organizational chart is using as pictorial display of the
• The seat of power for decision-making
official lines of authority and communication within
the firm

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Micro environmental

ii. Culture

Refers to a pattern of shared, basic assumptions

The organizational culture incorporates the
the firm has adopted from its dealing with
correct way for employees to perceive, think, and
external problems and internal integration of
feel, particularly in relation to handling problems.
values.

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Micro environmental

iii. Resources

The availability of resources and the way that

Refer to the people, information, facilities,
managers value the human and non-human
infrastructure, machinery, equipment, supplies,
resources will have their own impact on the firm’s
and finances at a firm’s disposal.
environment

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Definition of Business Opportunity

“A conversation of a business idea that can produce any service or

product which will contribute for financial profit.”

“Said to exist when there is room to

offer a product or service in a particular
Myzuka (2000) market which fulfils costumers’
demands and preferences.”

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 Analysis of Business
Opportunity

Product already available in the market, Product required in order to solve

but does not fully meet the demand and customer specific problems.
preference of the customers

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102Introduction to Entrepreneurship

 Identifying customers’ needs and wants

The Process of
Identifying, Environmental scanning, self-evaluation
and community values/norms
Evaluating,
and Selecting
Screening of business opportunities
a Business
Opportunity
Selecting the best opportunity

UniKLMIMET/IIIP/SNK_Ch.2
STEP 1: Need – something that is basic in
life (food, clothing and shelter)
Identifying
Customer’s
Needs and
Wants Wants – the craving for something
that is far better than basic items.
(shaped by one’s lifestyle, level of
education, purchasing power and
personality)

The various human needs and Product – something that possesses a

wants can be categorized into; physical form that is required to fulfill
human wants directly or indirectly.
Service – does not possesses a physical
form but could fulfill a costumer’s wants.

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

 STEP 2: Environmental Scanning Macro and micro perspective
Environmental
Scanning, Self-
evaluation and
Community Consideration of certain factors
Values/norms

Self Evaluation Experience

Knowledge and skill
Financial situation
Interest
Networking

Value/Norms of the Community What is perceived as useful and beneficial

to the community

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship

STEP 3: Legality
Screening of
Business
Opportunities
Monopolistic Power
and Level of
Competition

Capital
Requirement

Risk Business Risk Transferable risk

Controllable risk
Uncontrollable risk
Financial Risk Liquidity level
Loans
Credit
Foreign exchange
UniKLMIMET/IIIP/SNK_Ch.2
WBD10102 Introduction to Entrepreneurship
 Identify and Evaluate the Opportunities
Step 4: Selecting the Best of
Develop the Business Plan
Business Opportunities
Resources Required

UniKLMIMET/IIIP/SNK_Ch.2 MPU 2222 Introduction to Entrepreneurship

 • Explain the components of the business
environment
• List out the major components of macro
Revision environment
• Describe the major components of
microenvironment
• Explain the major factors of internal elements

UniKLMIMET/IIIP/SNK_Ch.2 WBD10102 Introduction to Entrepreneurship