Social Biz Nuts and Bolts Environment Analysis General / External / Internal

Business Environment

Internal Environment EmployeesResources Organization of the firm

Internal Environment: SWOT Model StrengthsWeaknesses OpportunitiesThreats

Task/Micro Environment: Porter’s 5 Forces Model Bargaining Power of Suppliers Threat of Entry Threat of Substitutes Bargaining Power of Buyers Intensity of Rivalry

Threat of Entry Barriers to entry – factors that might make it costly for potential competitors to enter an industry and compete with firms already in the industry Economies of scale – cost reduction associated with large output Brand loyalty – the preference of consumers for the products of established companies

Power of Buyers Buyers are most powerful when:  They are few in number and purchase large quantities  They can choose between equivalent products from many different firms  They can switch easily between the offerings of different firms Buyers are least powerful when:  They are plentiful and purchase in small quantities  They have little choice  They cannot switch easily between the offerings of different firms

Power of Suppliers A firm has greater power over suppliers when:  The firm purchases in large quantities  It can choose between multiple suppliers  The costs of switching between suppliers is low  The firm is not dependant on any single supplier for important inputs

Threat of Substitutes The goods or services of different businesses or industries that can satisfy similar customer needs The existence of substitutes is a strong competitive threat because it limits the price that companies in one store can change If there are few substitutes, firms have the opportunity to raise prices

Intensity of Rivalry The nature of the product  The intensity of rivalry depends on how close the product is to a commodity (a product that is difficult to differentiate from those produced by rivals). Demand and supply conditions  If demand is growing the industry will appear favorable.  Demand trends are influenced by economic growth & rising income levels

General/Macro Environment Technological Forces Sociocultural Forces Demographic Forces Macroeconomic Forces Political & Legal Forces International Forces

The Environment of Managers

Market Analysis (Ch4) New ventures will be at the product development and introduction stages of the product life cycle. Use segmentation to identify target audiences. Initial marketing should target early adopters, identified by self-reporting or reports from others (reputations).

Policy Field Analysis (Ch4) When social entrepreneurs deal with social issues, they need to understand how public policy directly or indirectly influences their environments. Analysis will likely involve various levels of government and other private organizations. Policy field includes the organizations involved in a given substantive public policy or program area in a particular place and the relationships among these organizations.

Policy Field Analysis (Ch4)

Resource Analysis (Ch4) Start with an assessment of the capabilities needed to bring about the desired results. Determine the resources needed to acquire these capabilities.

Risk Assessment (Ch4) Should be aware of risks and attempt to manage them Considers these types of risk: financial, organizational/operational, venture/enterprise, and external environmental Calculates total risk as the sum of:  “Sinking the boat” risk: launching a venture that does not work  “Missing the boat” risk: not launching a venture that would have worked