Part III – Developing the

Entrepreneurial Plan
Chapter 7 – Environmental Assessment:
Preparation for a New Venture
Chapter 8 – Marketing Research for
New Ventures
Chapter 9 – Financial Preparation for
Entrepreneurial Ventures
Chapter 10 – Developing an Effective
Business Plan

Copyright (c) 2004 by South-Western, a division of Thomson Learning. All rights reserved.
Chapter 7 – Environmental
Assessment:
Preparation for a
New Venture
The Environment for
New Ventures
 Environmental Scanning
• Refers to the efforts by which an owner-
entrepreneur examines the external and
internal environments before making a
decision.
– Task environment
– Societal environment
 Environmental Variables
SOCIETAL ENVIRONMENT
TASK
Sociocultural Economic
ENVIRONMENT
Forces (Industry) Forces

Stockholders
Supplies
Governments Employees/
INTERNAL Labor Unions
Special ENVIRONMENT
Interest Structure
Groups Culture
Resources
Competitors
Customers Trade
Creditors Associations

Political/Legal Communities Technological

Forces Forces
 A Macro View: The
Economic and Industry
Environments
Assessing the Economic
Environment
 Understanding the
Regulatory Environment
 Governmental Regulations Affect Smaller
Ventures in a Variety of Ways:
• Prices
• Cost inequities
• Competitive restriction
• Managerial restriction
• Mental burden
 Trends in Policy Formation
• The Regulatory Flexibility Act
• The Equal Access to Justice Act
• The Congressional Review Act
• The Small Business Regulatory Enforcement
Fairness Act
• The Paperwork Reduction Act
• The Unfunded Mandates Reform Act
Examining the Industry
Environment
 Elements of Industry – The Five Forces Model
New
Entrants

Threat of New Entrants

Bargaining Industry Bargaining

Power of Competitors Power of
Suppliers Buyers
Suppliers Buyers

Intensity of
Rivalry

Threat of Substitutes

Substitutes
Common Industry Characteristics
• Technological Uncertainty
• Strategic Uncertainty
• First-Time Buyers
• Barriers to Entry
• Competitive Analysis
 Components of Competitive Analysis
What the Competitor is Doing
What Drives the Competitor and Can Do
Future Goals Current Strategy

Competitor’s
Response Profile

Assumptions Capabilities
Held about itself and Both strengths and
the industry weaknesses
A Micro View:
The Community
Perspective
 Researching the Location
• Community Demographics
• Economic Base
• Population Trends
• Overall Business Climate
Determining Reliance
and Deservedness
 Reliance Versus Commitment:
Development of Exceptional
Community Support
Community’s “Reliance Exceptional Support Likely
(or Need) for the Venture
High

Some Support Likely

Exceptional Support Unlikely

Low Entrepreneur’s Willingness to Commit High

to Local Community (Loyalty)
 Deservedness vs. Identification:
Development of Exceptional
Community Support
Perception of Entrepreneur’s Exceptional Support Likely
Deservedness
High

Some Support Likely

Exceptional Support Unlikely

Low Community Identification with the Venture High

 Examining the Use of Incubators

Business incubator is a facility

with adaptable space that small
businesses can lease on flexible
terms and at reduced rents.
Types of Incubators
1. Publicly Sponsored
2. Nonprofit-sponsored
3. University-related
4. Privately sponsored
 How Does the Incubator Work?
Commercial
High Tech

Research &
Development

Service •Potential to grow

Business
•Ability to create jobs
Business
Light •Ability to pay op. Business
Well- Growth
Manufact. Expenses Entering Business
Established Requires
the Developing
•Business plan Incubator
Business Move Out
Wholesaler of Incubator
•Market analysis
•Cash-flow
Retailer statement

Mail Order

Import/
Export

Nonprofit