Principles of Management IIB (Entrepreneurship) by ProfessorBurgerQueen
Strategic Entrepreneurship
- Strategy, defined by Johnson and Scholes, is the direction and scope of an
organisation over the long-term which achieves an advantage through its
configuration of resources within a challenging environment, to meet the
needs of markets and to fulfil stakeholder expectations
Components Of The Strategic Planning Process
- Initial assessment – creating vision and mission statements
- The vision is a statement of where your small business strives to be,
stretched target, and achievement in a perfect world;
- The mission statement defines the core purpose of your business and the
approach you will take to achieve your objectives;
- Strategic Analysis
- Once the business has completed its vision and mission it must assess its
current situation in the market;
- This includes evaluating an organisation’s external (macro) environment, the
market environment, including analysing its competitors and the internal
environment;
- In scanning the three (3) environments:
External environment analysis
- Entrepreneurs must address the impact of the key external forces which are factors
which are factors that the business does not have any control;
- The PESTEL framework represents all the macro-environment factors that
influence the business in the business environment;
- P - political - tax policy, labour law, tariffs
- E - economic - interest rates, economic prospects
- S - social - demographics, population changes
- T - technology - developments
- E - environmental - pollution
- L - legal - consumer law, employment law
, Principles of Management IIB (Entrepreneurship) by ProfessorBurgerQueen
Market environment analysis
- This includes the assessment of competition as well as a set of partially
uncontrollable external forces that influence the business
- The important purpose of a market analysis is to establish how attractive a market is
to current and future participants
- Market attractiveness is measured by participants receiving long-term return on their
investments
- In conducting a market analysis, the entrepreneurial business should assess
attractiveness of the market, the relative strength and weaknesses that the business
displays in comparisons to other market participants
- In conducting a market analysis, the following should be considered:
1) Size and growth
2) Profitability
3) Cost structure
4) Distribution system
5) Market tends
6) Key success
- In order to understand an industry segment, it is advisable to research what key
success factors (KSFs) would be for that entrepreneurial enterprise;
- The “Three Cs” as proposed by Ohmae are an easy way to help identify industry
KSFs:
- Customers: How are your customers grouped demographically and what do
they really want and need?
- Competitors: How can the organisation compete against customers on price,
value, product range and quality?
- Company: What resources, skill and technologies does the company
possess to achieve its goals and differentiation from its competitors?
- Porter’s Five Forces is a model that identifies and analyses five competitive
forces that shape every industry and helps determine an industry's
weaknesses and strengths
1) Competition in the industry
2) Potential of new entrants into the industry
3) Power of suppliers
4) Power of customers
5) Threat of substitute products
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