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MODULE 1

ENVIRONMENTAL SCANNING AND


EVALUATING VENTURE IDEAS
Entrepreneurship and
Innovation
Process Ability to
of doing create
new something
things new
Identifying Business
Opportunities
Environment
Needs and wants
Market segmentation
Socio-cultural
Technology
Nature and political environment
Demand and supply analysis
Product Substitution
Peoples skills
Government Assistance Program
THINK
OUTSIDE
THE BOX
In developing new ideas, it is best to ask
questions.

Is there a way to do it
Easily?
Quickly?
Safely?
Healthfully?
Comfortably?
Cheaply?
Cleanly?
Smartly?
Attractively?
Can it be made
Useful?
Adaptable?
Value enhanced?
Combined with an existing product or tool?
Disposable?
More improved?
Selecting an
Entrepreneurial
Undertaking
A. Availability of Raw Materials

B. Availability of Market

C. Availability of Technology

D. Availability of Skills

E. Government Priority

F. Strategic Fit

G. Ease of Implementation

H. Risk Exposure

I. Profitability

J. Field of Interest
Availability of Market
a) Existing demand is not at present adequately served by existing
suppliers;
b) Existing demand is presently served by imports;
c) Existing demand is presently not served at all;
d) The projects product has significant uniqueness or unique
selling features (in the case of a service) such as more desirable
features, better quality, more durable, better taste, superior
after sales service, free delivery, etc;
e) Supply of the product/service is not reliable;
f) Demand for the product/service is expected to increase
significantly or substantially in the future;
g) Supply of the product is presently served through smuggling
Availability of Raw Materials
a) Raw materials are available in adequate quantity
locally;
b) There is reliability of supply whether local or
imported source;
c) Seasonality, perishability, quality and variability of
raw materials have been considered and found to
be satisfactory;
d) Price of raw materials is reasonable;
e) Increase in the price of raw materials in the
future is perceived reasonable and predictable;
Availability of Technology
a) The technology or technologies to used have
been proven;
b) Reasonably priced technologies to be used have
been proven;
c) Technology is appropriate for the level of
production, level of investment and desired
product quality;
d) The project will not suffer from technology
obsolescence which will render the project not
viable;
Availability of Skills
a) Different skills (conceptual, managerial, technical
and manual) needed by the project are available;
b) Supply of skills is relatively steady and stable so
as not to jeopardize the project in case of sudden
or unforeseen labour changes, unusual turnover,
or unexpected problems;
c) Cost of labour is projected to be fairly steady and
predictable;
Government Priority
a) The project is listed under the governments list of
priorities for promotion or investment;
b) The project receives government incentives whether
fiscal (e.g. tax exemption or reduction, tariff
protection, import privileges, etc.) monetary (priority
lending status, reduced interest rate), or other
support assistance (e.g. marketing, technical or
consultancy services);
c) The project falls under the governments priorities of
import substitution, export promotion, employment
generation, rural industrialization programs,
technology development/transfer, etc.;
Strategic Fit
a) Proposed project fits well within the competence
and expertise of the entrepreneur or key staff;
b) Proposed project fits well within the existing
product line, technology, marketing set up,
production system, facilities and resources of the
entrepreneur or the firm;
c) Project complements and enhances the existing
set up, viability or growth of the firm through a
positive synergy;
Ease of Implementation
a) Project can be easily implemented because the
inputs are readily available;
b) Project can be implemented within a short
gestation period or reasonable preparatory
period (e.g. 3 months to 1 year)
c) Project can start operation within one year from
the completion of the training
d) Any unforeseen difficulties can be controlled by
the entrepreneur or management;
Risk Exposure
a) The product or service can be readily copied or imitated if
the project is found very profitable by others;
b) Competitors who have more resources and expertise may
effectively fight back if threatened by the project;
c) Changes in customers and consumers lifestyle, buying
habits, and consumption and spending pattern, etc. may
take place anytime before the project can serve the
market;
d) The project may suffer from unforeseen factors such as
weather condition, availability of raw materials,
technology obsolescence, change in government policies,
priorities or programs;
e) Dependency of the project on imported inputs whether
raw materials, technology, skills or other resources
Profitability
Profitability can be evaluated in terms of
determining the firms profitability ratios. These
ratios will include gross and net profit margins,
return on assets, return on investments, and return
on equity.
Field of Interest
This will include you personal interest and own
experience(s) in relation to the proposed project.
STRENGTHS, WEAKNESSES,
OPPORTUNITIES, THREATS
Strengths
Strengths are within the control of the entrepreneur
and they occur at present. Strengths should be
capitalized and harnessed to make the weaknesses
redundant.

Cheap raw materials Comparatively cheap price


Technical expertise New improvements of product
Good network with customers Good packaging
Managerial experience Superior technology
Distribution systems Product features
Weaknesses
Weaknesses are within the control of the
entrepreneur; they occur at present. They are lack
of, missing, or weak points. Weakness should
be eliminated as fast as possible.

No control over raw materials availability Limited product life


Technological obsolescence Poor design of product
Inexperienced managers/owners Weak selling effort
Lack of working capital No technical expertise of owner
Low levels of stocks in times of peak sales High price of raw materials
Lack of promotion
Opportunities
Opportunities are positive or favourable factors in
the environment which the entrepreneur should take
advantage of or which make his project idea
potentially viable.

Few and weak competitors Low interest on loans


Rising income of target market No such products in the market
Growing demand Scarcity of product in the locality
Similar products making profit Favourable government policy
Technical assistance available Favourable government programs and
priorities
Threats
Threats are negative or unfavourable external factors
in the environment and normally beyond the control
of the entrepreneur. They affect adversely the
business if not eliminated or overcome.

Rising raw material costs Too much competition


Government bureaucracy Restive labor force
Raw materials shortages Piracy of skilled labor
Natural disasters Insufficient power
Graft and corruption Poor infrastructure
Changing government regulations Smuggling
Coverage of SWOT Analysis
Financial Aspects
Physical Aspects
Management, Supervisory and Operator Capabilities
Market
Management Information
Supply of Raw Materials
Social Environment
Production Process
SWOT
Analysis Framework