The Role of Situation analysis

3.03 BEntrepreneurship 1The Role of Situation analysisBusiness OpportunityIn the simplest terms, is a packaged business investment that allows the buyer to begin a business.

Business Threat Agents, factors, or forces in an organization's external environment that are out of its control, and can directly or indirectly affect is chances of success or failure.

Business EnvironmentThe combination of internal and external factors that influence a company's operating situation. The business environment can include factors such as: clients and suppliers; its competition and owners; improvements in technology; laws and government activities; and market, social and economic trends.

Economic DevelopmentProgress in an economy, or the qualitative measure of this. Economic development usually refers to the adoption of new technologies, transition from agriculture-based to industry-based economy, and general improvement in living standards.

Technological changeExternal factors in technology that impact business operations. Changes in technology affect how a company will do business. A business may have to dramatically change their operating strategy as a result of changes in the technological environment.

Economic ChangeA change in the demand of a good or service, induced by a change in the consumers' discretionary income.Any increase or decrease in price correspondingly decreases or increases consumers' discretionary income which, in turn, causes a lower or higher demand for the same or some other good or service. For example, if a consumer spends one-half of his or her income on bread alone, a fifty-percent decrease in the price of bread will increase the free money available to him or her by the same amount which he or she can spend in buying more bread or something else. It is one of the two effects caused by a price change; the other is substitution effect.

Environmental ScanningCareful monitoring of an organization's internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans. In comparison, surveillance is confined to a specific objective or a narrow sector.

Environmental MonitoringSupervising activities in progress to ensure they are on-course and on-schedule in meeting the objectives and performance targets.

Threats OR OpportunitiesFirms that manage threats successfully are motivated by the threat to act, but then focus on the opportunities for change in their competitive position.Examples: Apples revenue is upeven given the dismal economy. When the downturn hit, the firm didnt cut its marketing efforts. Instead, it enhanced its advertising plan. McDonalds went head-to-head with Starbucks by offering the McCaf. McCaf now offers a wide selection of low-cost, exclusive espresso coffee and gourmet cakes and muffins.Purpose of Environmental Scanning and MonitoringThe basic purpose of environmental scanning is to help management determine the future direction of the organization. 1. Irregular scanning systems: These consist largely of ad hoc environmental studies. 2. Regular Scanning systems: These systems revolve around a regular review of the environment or significant environmental components. This review is often made annually. 3. Continuous scanning systems: These systems constantly monitor components of the organizationalenvironment.

Internal EnvironmentInternal environment is composed of the elements within the organization, including current employees, management, and especially corporate culture, which defines employee behavior. The external environment can affect the employees of a company, just as they affect customers.