12

Entrepreneurship
Quarter 1 – Module 4:
Environmental Scanning
LEARNING COMPETENCY:

I. Recognize a Potential Market:

1.2. Determine the possible

product/s or service/s that will
meet the need
 LESSON 2: Environmental Scanning: SWOT Analysis
INTRODUCTION

There are rapid changes taking place in the environment that has a
great impact on establishing a business. As an entrepreneur, you need to perform
the environmental scanning to determine the possible position of the business by
considering the threats and possible barriers.

In this module, you will learn how to use the SWOT Analysis tool to be used in
scanning the internal environment of your business venture. Are you up for this new
learning? Then, let us get started and enjoy in doing the tasks given while learning.

LEARNING OUTCOMES

At the end of this lesson, the learner should be able to:

1. determine the importance of internal environment scanning;

2. identify internal environment scanning tools;
3. perform the SWOT Analysis scanning tool; and
4. determine the possible product/s or service/s that will meet the
need of the market.

EXPLORE!

Directions: Write TRUE if the statement is correct, otherwise write

FALSE.

________1. The strengths and weaknesses in SWOT analysis are external to the
business.

________2. Business opportunities and threats are controllable factors of the

entrepreneurial venture.

________3. Strengths refer to the strong attributes or capabilities of the business

that provide great advantage in exploiting the business opportunity.

________4. The micro or internal environment of the business, including the forces
operating on such environment, must be evaluated, and studied.

_______5. SWOT analysis must be applied in conducting the environmental

scanning.
 Hi! I am Teacher Mae! I wish to congratulate you!

Please check your answers at the answer key section.

If you got a perfect score of 5, you may skip the module
but if you got 4 or lower, I suggest that you take the
learning module seriously. ☺

REVIEW

The competing forces in the industry environment are the potential new
entrants, buyers, substitute products, suppliers, and rival firms in the business. The
entrepreneur performs environmental scanning to determine the possible position of
the business by considering the threats and the possible barriers. The environmental
scanning tools that may be applied are the forces of the competition model and the
competitive forces matrix.

All the forces in various macro environmental layers are interrelated. Hence the
environmental scanning procedures shall be conducted by considering such
relationships.

ACTIVITY 1

I. Get a clean paper and divide it into two columns and write down
your Strengths and weaknesses as a student.

STRENGTHS WEAKNESSES
1. 1.

II. Answer the following questions:

a. How will you use your “Strengths” as a student?

b. How will you overcome your “Weaknesses” as a student?
 KEEP THIS IN MIND

INTERNAL OR MICRO ENVIRONMENT

The other major division of the business environment is the internal or micro
environment. The internal environment in the entrepreneurial context simply refers to
the environment within business. Similar to the external environment, the different
forces within the micro environment are interrelated with other forces in the business
environment.

SCANNING OF THE INTERNAL ENVIRONMENT

The micro or internal environment of the business, including the forces

operating on such environment, must be evaluated and studied. In conducting the
internal scanning, the following tools may be applied:

1. SWOT analysis
2. BCG analysis matrix

SWOT Analysis
The SWOT, or sometimes called as TOWS analysis, is pioneered by two
Harvard Business School professors of business policy, George Albert Smith, Jr. and
Roland Christensen. It is a popular tool to evaluate the internal environment. SWOT
stands for Strengths, Weaknesses, Opportunities, and Threats.

Strengths refer to the strong attributes or capabilities of the business that

provide great advantage in exploiting the business opportunity. Weaknesses are poor
attributes or deficiencies that give disadvantages to the business. Both the strengths
and weaknesses in the SWOT analysis are within the business environment and are
thus within the control of the entrepreneur.

Opportunities are business situations in the form of products or services that

must be exploited because of their potential in terms of profit and growth. Threats are
possible external events in the environment that may provide harm to the business.
Both the opportunities and the threats in the SWOT analysis are outside the business
environment.

Using the SWOT analysis, the entrepreneur therefore must:

1. use the strengths to exploit the business opportunities; and

2. improve the weaknesses to avoid the threats.

By using the SWOT analysis model, entrepreneur must list down all the factors that
are considered strengths, weaknesses, opportunities, and threats affecting the
business.
 The strengths of the business may include the following:

1. Qualified working force

2. Complete and new physical facilities
3. Democratic leadership style
4. Motivated workers
5. Valuable intangible assets

The weaknesses of the business may include the following:

1. Autocratic form of leadership

2. Demoralized employees
3. Poor and dilapidated equipment and machineries
4. Unskilled workers
5. Poor technological structures

The possible business opportunities are as follows:

1. Innovative products introduced to the market

2. Increasing the market share because of market advantage
3. Providing services to new customers
4. New programs of the government

The business threats may include the following:

1. Possible entry of competitors

2. Stiff government regulations
3. Higher interest rates
4. Entry of cheaper products
5. Unstable peace and order situation
6. Shift of customers’ taste and preference

However, the mere listings of the strengths, weaknesses, opportunities, and

threats in the four columns of the SWOT Analysis does not present the total
perspective of the different business strategy to be adopted by the business.
The tabular presentation of the different forces can be improved if the SWOT analysis
is performed using the following matrix form.

ACTIVITY 2

Instructions: In a one whole sheet of paper, write a 100-word-essay on

the “Importance of knowing the SWOT Analysis” and how are you going
to apply it in real-life situation.
APPLICATION

Instructions: Using SWOT analysis, plot the family strengths and

weaknesses and the opportunities and threats in your local community.
Write them on a short bond paper. Refer to the format that follows.
 ASSESSMENT

I. Choose the letter of the correct answer.

1. Which of the following SWOT elements are internal factors for a business?
a. Strength and weaknesses
b. Opportunities and threats
c. Strengths and opportunities
d. Weaknesses and threats

2. Which of the following could be a weakness?

a. Competitors with access to better channels of distribution
b. A developing market such as the internet
c. Poor quality of goods and services
d. Special marketing expertise

3. Which of the following is false regarding why a SWOT Analysis is used?

a. To counteract threats to a business
b. To build on the strengths of a business
c. To minimize the weaknesses of a business
d. To reduce opportunities available to a business

4. Which of the following could be a strength?

a. Weather
b. A price that is too high
c. The location of a business
d. A new international market
5. Which of the following could be a threat?
a. Changes in technology
b. Location of your business
c. Lack of marketing expertise
d. A market vacated by an ineffective competitor

II. Discuss the meaning of SWOT analysis, including its aims, and
how it is conducted. In your answer, refer to a organization or
business with which you are familiar. (25 points)
LEARNING COMPETENCY:

I. Recognize a Potential Market:

1.3. Screen the proposed solution/s

based on viability, profitability,
and customer requirements
 LESSON 3: Environmental Scanning: BCG Analysis Matrix
INTRODUCTION

This time we will be learning another type of environmental scanning.

There is some instance that a business has several products or services that are
produces or rendered. As an entrepreneur, you need to know how to consider growth
opportunities.

In this module, you will learn how to screen proposed solutions based
on viability, profitability, and customer requirements. Are you up for this new learning?
Then, let us get started and enjoy in doing the tasks given while learning.

LEARNING OUTCOMES

At the end of this lesson, the learner should be able to:

1. determine the importance of internal environment scanning;

2. identify internal environment scanning tools;
3. perform the BCG Analysis Matrix scanning tool; and
4. screen proposed solution/s based on viability, profitability, and
customer requirements.

EXPLORE!

Instructions: Write TRUE if the statement is correct, otherwise write

FALSE.

________1. The BCG Analysis matrix classifies the product or service as high,
moderate, and low in terms of its market share, profitability, stability,
and market growth.

________2. Business competency is no longer necessary if the entrepreneur has

entrepreneurial competency.

________3. A business may be able to have a distinctive competency without having

a core competency.

________4. The business core competency has a harmonious coordination of

competency in business resources and business structure only.

_______5. Entrepreneurial competency provides competitive advantage.

 Hi! I am Teacher Mae! I wish to congratulate you!

Please check your answers at the answer key section.

If you got a perfect score of 5, you may skip the module
but if you got 4 or lower, I suggest that you take the
learning module seriously. ☺

REVIEW

In a small business, the entrepreneur basically knows everything that

happens in the busines. As the business grows and the business structure becomes
more complex, the entrepreneur tends to know only the events that have major
implications in the business.

SWOT Analysis helped the entrepreneurs to evaluate the internal environment.

However, the mere listing of the strengths, weaknesses, opportunities, and threats in
the four columns of the SWOT Analysis does not present the total perspective of the
different forces of the micro environment.

ACTIVITY 1

Instructions: In a one whole sheet of paper, do the following:

1. List down at most five (5) community problems in your

community
2. Choose one problem that needs the most immediate solution
or action.
3. Based on your chosen problem, what are the opportunities
you have seen in it as an entrepreneur. Explain why.

KEEP THIS IN MIND

INTERNAL OR MICRO ENVIRONMENT

Business Resources

The business resources are assets or properties owned or controlled by the

business. The sources can either be tangible or intangible. Tangible resources or
assets of the business that have physical appearance and form. They can be touched
and seen. Examples of tangible resources or assets of the business are money in the
form of paper bills or coins, building, equipment, machinery, and human resources.
On the other hand, intangible resources are the assets of the business that do not
have physical appearance or form. They cannot be touched. Examples of intangible
resources of the business are copyright, patents, formula, computer software, and
goodwill.

Business Culture

The business culture, otherwise known as the organizational or corporate

culture, is another major force in the internal environment. It is a collection of beliefs,
principles, and expectations learned and shared by the employees, founders,
stakeholders, and members of the management. The culture of the business reflects
the overall image of the business to the community.

Business Structure

The business structure refers to the formal organizational arrangement of the

business in terms of hierarchy of positions, flow of communication, relationship of
functional areas, and production and marketing processes. The complexity of the
business structure depends on the type of business, nature of operation, capital base
requirement, leadership style, and scope of operation. A small business, therefore,
has a very simple business structure compared to a corporate entity that operates
nationwide.

BCG Analysis Matrix

Another internal environmental scanning tool is the BCG analysis matrix which
was developed by the Boston Consulting Group (BCG). This environmental scanning
tool is most appropriate when there are several products or services that are produced
or renders by the business. It is equally effective even when the business produces
only one line of product or service.

There are instances when the various business units of corporate business are
scanned using the BCG Analysis Matrix. The products or services are then classified
as stars, question marks, cows, and dogs.
 Stars represent products or services that have high market share but low
market growth. Products or services that are classified as stars have already matures
in the market. Because of their high market share, the products or services usually
provide enough cash for the business.

Cash cows are products or services that have high market share and high
market growth. The products or services provide the business with sufficient cash
which are usually applied to finance products or services under the question marks.

Question marks are products or services that are usually facing problems.
These are not usually moving in terms of market share and growth and are in need of
substantial capital support. The business may opt to discontinue products or services
considered question marks if such move is favorable.

Dogs are products or services that have low market and provide poor cash to
the business.

Products or services may move from one matrix to another depending on their
growth in market share. The entrepreneur must continually scan the internal
environment in order to determine the possible target market by considering the
strengths and weaknesses of the business by performing the industry analysis, he/she
then must identify the target market by scanning the internal environment of the
business.

BUSINESS COMPETENCY

It has been emphasized that a successful entrepreneur posseses competency

in handling the entrepreneurial venture. Competency is a combination od
entrepreneurial concepts and principles, entrepreneurial skills, and entrepreneurial
characteristics. Entrepreneurial competency is considered inherent in the
entrepreneur and provides competitive advantage. Without the required
entrepreneurial competency, the entrepreneur may find great difficulty in managing
the entrepreneurial venture.

The business has competency as well. It is the combined strengths in terms of

resources, culture, and structure that provide advantage to the business in the industry
environment. An entrepreneur venture may not have been created if it does not have
required and inherent strengths in terms of resources, structure, and culture.

The harmonious coordination of competency in business resources, business

structure, and business culture forms the business core competency. The
entrepreneur, therefore, must properly combine the strengths in business resources,
culture, and structure in order that the venture can do business in the industry
environment.
 ACTIVITY 2

I. Differentiate the following:

1. Entrepreneurial competency and business competency
2. Business core competency and distinctive business
competency

APPLICATION

Instructions: In a short bond paper, refer on your answer in Activity 1,

no. 3, choose one opportunity and perform the BCG Analysis Matrix on
scanning its internal environment, then identify its target market in the
end. (20 points)

Stars Question Marks

Low
High Market Share

Cash Cows Dogs

High High Market Share

Market ShareLow
Low
 ASSESSMENT

I. Choose the letter of the correct answer.

1. What is the function of BCG Matrix?

a. Produce a lot of money
b. The development cycle of product
c. To determine possible opportunities
d. Identify the relationship between products or services

2. In BCG Matrix, a business that has a low market share in the industry
characterized by high market growth is termed as
a. Stars
b. Question mark
c. Dogs
d. Cash cows

3. What are the characteristics of dogs in BCG Matrix? You can choose more
than one answer.
a. Low market share
b. High market share
c. Low market growth
d. High market growth

4. Who developed the BCG Matrix?

a. Boston Corporation Group
b. Boston Consulting Group
c. Boston Company Group
d. Boston Cooperative Group

5. Which of the BCG Model categories are being described here: “A fast growing
market leader.”
a. Star
b. Cash cow
c. Question mark
d. Dog

II. Identify the three common environmental forces in the internal

environment and explain the importance of knowing these
forces. (15 points)
 REFERENCES

Aduana, Nick L. 2016. Entrepreneurship in Philippine Setting for Senior High

School. Quezon City: C&E Publishing, Inc.

Sharma, Akshay. 2017. “LinkedIn.” 8 Impotant Needs and Importance of

Environmental Scanning. February 9. https://www.linkedin.com/pulse/8-important-needs-
importance-environmental-scanning-business-
sharma#:~:text=Environmental%20scanning%20is%20necessary%20because,strength%20weakness
%2C%20opportunities%20and%20threats.

Handlin, Amy. 2019. “bizfluent.” The Importance of the Target Market. July 30.
https://bizfluent.com/about-7369454-importance-target-market.html

DISCLAIMER

I do not own or license any copyright in the texts, images, photographs,

graphics, and other content provided in this module. This module is
solely for non- commercial, informational, and educational purposes.
There is no intention on my part to claim ownership as to the contents or
make profit out of this module.

Prepared by: Brenda S. Señara

Special Science Teacher I (SHS)
Mandaue City Comprehensive National High School