UNIT 2 The Environment of the Entrepreneurial Venture

Physical Environment
 It is composed of the natural elements that are inherent in the
Earth.It is divided into climate, physical resources and wildlife.

Climate
 The entrepreneur must consider the prevalent climatic condition
of the area where he/she intends to open the business to
determine whether it can withstand or is fit to the climatic
condition in the local area.

Physical Resources
 The entrepreneur must critically assess the availability of raw
materials in the locality before opening a business. He/She must
evaluate if the available raw materials to be used for the proposed
business are sufficient for a long-term operation.

Wildlife
 The entrepreneur must ensure that his/her business contributes
to the preservation and not the destruction of the ecological
system of the local community and our country in general.
 It is also an entrepreneur’s task to become a model of social
responsibility and environmental awareness.

2. Societal Environment
The societal environment is generally
composed of social, political,
cultural, economic, legal and
technological forces.
It is highly advised that the
entrepreneur should critically evaluate
the effects of the changes in all the
forces of the societal environment.
Social forces
 are elements in society resulting from human interactions that can
influence the thoughts, behavior, attitude, actions, and even the
beliefs and customs of the people.
 values
 traditions
 literacy level
 consumer psychology
 time orientation
 lifestyle patterns
 professional career roles

Political forces
 are the various elements usually comprising of the political
parties, political systems, and other related political groups that
substantially influence the political stability of the country.
 Trade regulations
 Taxation
 Government stability
 Unemployment
 Workers benefits
 Election practices

Cultural forces
 Culture basically refers to the integrated characteristics of a group
of people or ethnic groups in a particular society.
 religion
 language
 beliefs
 customs
 education

Economic forces
 These are factors that are primarily caused by changes or
movements in the Philippine economy that have direct or indirect
effects on the entrepreneurial venture.
 Interest rates
 Inflation rates
 Monetary policies
 Income
  Exchange rates
 Employment

Legal forces
 These are the elements and bodies that are directly involved in the
legislation and interpretation of laws and ordinances directly
affecting the business.
 Product control
 Health and safety of the workers
 Advertising and promotion
 Exercise of profession
 Education administration and fees

Technological forces
 These refer to the trends and developments in computer and
information technology that have impact on business.
 -internet
 -social media
 -E-commerce
 - technological advancement
 -technological infrastructure

The Industry Environment

 It is the external environment layer where the trends and changes
are easily and immediately felt by the business. The industry
environment is considered the immediate environment of the
business where it conducts its various operational activities.

The Industry Environment forces include the following:

Government
 refers to the system that handles the affairs of a particular country.
Since the government usually has jurisdiction over the major
activities happening within its territory, including international
trade relations, the type of government system operating in a
particular country highly influences the business.

Suppliers
 refer to the individual persons or companies that provide the
required materials, parts or services to the business.They play a
crucial role in the production of goods or services.
  They can adversely affect the production process by delaying the
delivery of the required raw materials and supplies or services, or
by providing defective materials.

Customers
 are the buyers of goods and services produced or rendered by the
business.

Competitors
 are the forces existing in the industry environment that produce,
sell, or render products or services which are similar to those of
the business.

Employees
 are the workers of the business who are highly responsible for
the production of goods or delivery of services to the consumers.
They help ensure the quality and quantity of products or services
provided to the customers.

Creditors
 refer to banks, financial institutions, and financial intermediaries
engaged in the lending of money to the borrower usually for a fee
or charge in the form of interest.