The Entrepreneur & Entrepreneurial Behavior

Chapter 6:
ENVIRONMENT SCANNING & BUSINESS
OPPORTUNITY IDENTIFICATION

THE SWOT ANALYSIS

Strengths Are the “internal positives” of the organization, the assets or valuable
resource of the enterprise

Weaknesses Are the exact opposites of strengths. These are the things that may be
considered as “internal negatives.”

Opportunities Are the “external positives” of the enterprise. These are possible occasions to
improve the organization’s resources, quality and productivity.

Threats Are the “external negatives” that may inhibit or prevent the organization
from reaching its goals.

EXERCISE:

Select an existing business enterprise for evaluation. Below is a SWOT Matrix you can use to
analyze the business enterprise. Provided are columns (strengths, weaknesses, opportunities
and threats) to be filled with activities, traits, situations, characteristics, strategies, etc. In the
last column, identify actions you think are needed to improve the business enterprise you have
chosen. To be submitted next meeting.

Business Activity Strengths Weaknesses Opportunities Threats Actions to Take

Organization &
Management

Sales and
Marketing

Production & Layout

Finance

Accounting

Research and
Development

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The Entrepreneur & Entrepreneurial Behavior
CREATIVE PROBLEM SOLVING is a method for obtaining new ideas focusing on the
parameters.

There are fifteen (15) Creativity and Problem-Solving Techniques that can be used:

No. SPECIFIC TECHNIQUES MEANINGS

1 Brainstorming An unstructured process for generating all possible ideas about a

problem within a limited time frame through the spontaneous
contribution of the participants.
2 Reverse Brainstorming Is similar to brainstorming, except that criticism is allowed.
3 Synectics A creative process that force individuals to solve problems through
one of four analogy mechanisms: personal, direct, symbolic and
fantasy.
4 Gordon Method Method for developing new ideas when the individuals are unaware
of the problem.
5 Checklist Method New ideas are developed through a list of related issues or
suggestions.
6 Free Association A word or phrase related to the problem is given, then another and
another, creating a chain of ideas ending with a new product idea
emerging.
7 Force Relationships Tries to force relationships among some product combinations.
8 Collective notebook Developing a new idea by group members regularly recording ideas.
method Problems and presented with a solution, prioritized then select the
best.
9 Heuristics Involves locating all relevant concepts that could be associated with
a given product area and generating a set of all possible
combinations of ideas.
10 Scientific Method Developing a new idea through inquiry and testing.
11 Value analysis Developing a new idea by evaluating the worth of aspects of ideas.
Regularly scheduled times are established to develop, evaluate and
refine ideas.
12 Attribute listing Developing a new idea by looking at the positive and negative
attributes.
13 Matrix charting Developing a new idea by listing important elements on two axes of a
chart.
14 Inspired (big-dream)
Developing a new idea by thinking about constraints.
approach
15 Parameter analysis Developing a new idea by focusing on parameter identification and
creative synthesis

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The Entrepreneur & Entrepreneurial Behavior
CONDUCTING A COMPETITOR ANALYSIS

In competitor analysis, there is a need to further scrutinize

business opportunities:

1. Who are the competitors? (in the case of new product, the
entrepreneur must know if there are any other products
available for the market that may become a potential
competitor?

2. Among these competitors, who are my direct competitors (enterprises selling the same
category of products to my target market)?

3. Among these competitors, who are my indirect competitors (enterprises selling products to
fulfil the same need I intend to fulfil, but not in the same category of products I intend to
sell)?

4. At what prices do my competitors sell their products?

5. How do they distribute their product to make these accessible

to their customers?

6. What is their relative size and market share?

7. Is there still a portion of the

market I can make as target
market? Is there a “neglected”
part of the market my competitors
don’t offer products so that I can
make my target market?

8. What can make my intended

products different from those of
my competitors?

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The Entrepreneur & Entrepreneurial Behavior
CONDUCTING AN INDUSTRY ANALYSIS

THE FIVE FORCES MODEL

By Michael Porter

1. The Threat of Entry by New Competitors

 Are there government policies existing

that may enhance or hamper my entry
into this industry?
 What cost disadvantages will I
encounter in the operation of my
business?
 What costs will I encounter due to distribution?
 What costs will I encounter in encouraging my customers to switch from their current
brand to mine?
 How much capital do I need to make my product different from the other brands?
 How much products do I need to produce to reach economies of scale? Do I have the
advantage in increasing this scale?

2. The Intensity of Rivalry among Existing Competitors

 How many rivals are there in the industry – few or

numerous?
 Is the rivalry equally balanced or does it tend to favour
some over the others?
 What is the growth scenario in this industry? Do
competitors grow slowly or at a rapid pace? What do I
expect with the growth of my business enterprise?
 How high or how low are the fixed costs of rival firms?
Could I be at par with them?
 How differentiated are products in this industry?
 Could my product be any different?
 How high or how low are switching costs? Could I afford these costs?
 What is the standing of these firms in terms of incremental production capacity?
 How many competitors will my firm really have? How diverse is this competition?
 How high or how low are the stakes or risks in this industry? Could I afford to take
these risks?
 How easy or difficult is it to leave or exit this industry?

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The Entrepreneur & Entrepreneurial Behavior
3. Pressure from Substitute Products

 How many close (direct)

substitutes does the industry have
for the product I am considering?
 How many not-so-close (indirect)
substitutes does the industry have
for the product I am considering?
 How differentiated are these
substitutes?
 What advantages or disadvantages will my product have over these substitute
products?
 How different will my product be from these substitutes?

4. The Bargaining Power of Buyers

 How concentrated or dispersed is the

bargaining power of buyers?
 Do buyers buy in volume or in smaller
quantities?
 Do buyers prefer standardized or differentiated
products?
 Do buyers experience high or low switching
costs?
 Does the industry experience low profit margins
from these buyers?
 How important is the product to the buyers?
 How much relevant information do the buyers
have regarding the product?

5. The Bargaining Power of Suppliers

 Is the industry dominated by a few or many suppliers?

 How concentrated or dispersed are these suppliers
compared to the buyers?
 Are there or are there no substitutes for these supplies?
 How many important customers do suppliers have?
 Is the supplier’s input or contribution critical to the
industry?
 How high or how long are switching costs of enterprise if
they switch from one supplier to another?

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