Page 97 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Entrepreneurship and Small Business Management

Notes 3. Data collection through questionnaires/schedules etc. from consumers, existing companies,
dealers, retailers
4. Invitation of ideas through advertisements, mails and the Internet

5. Value addition to the current products/services
6. Market research
7. Commercializing inventions
8. These days, even contests are being organized to identify business ideas like ‘business
bazigaar’ on Star TV, which invites participation in the contest and rewards the best
business plan.

Screening of the new ideas should be done so that promising new ideas are identified and
impractical ideas are eliminated.

7.3.3 Environmental Scanning

Once a promising idea emerges through, idea generation phase the next step is environmental
scanning, which is carried out to analyze the prospective strengths, weakness, opportunities and
threats of the business enterprise. Hence before getting into the finer details of setting up
business it is advisable to scan the environment both external and internal and collect the
information about the possible opportunities, threats from the external environment and strength
and weaknesses from the internal environment. The different variables to be scanned are in
terms of socio-cultural, economic, governmental, technological, demographic changes taking
place in the external environment and availability of raw material, machinery, finance, human
resource etc. with the entrepreneur. The various sources for gathering the information are
informal sources (family, friends, colleagues etc.) and formal sources (bankers, magazines,
newspaper, government departments, seminars, suppliers, dealers, competitors). The objective
of a successful environmental scanning should be to maximize the information and hence the
entrepreneur should collect information from as many sources as possible and then analyze
them to understand whether the given information would be supportive/obstructive to the
business venture. The more supportive the information, the greater is the confidence regarding
the success of the business.
However, few errors can also occur while carrying out this process like mechanical errors
(wrong interpretation of facts, misrepresentation of facts), inability to record fast changing
variables like technology, lack of farsightedness, etc. Also culture is varied so deep understanding
is required.

External Environment
Following are the components of external environment:

Socio-cultural Appraisal: It assesses the social and cultural norms of a society in a given period
of time. The variables that are appraised are values, beliefs, norms, fashions and fads of a
particular society. It can help in understanding the level of rigidity/flexibility of a given society
towards a new product/service/concept.

Example: The socio-cultural norms of United States and United Arab Emirates. Americans
are experimenting and adventurous whereas Arabs are conservative. If an entrepreneur wishes
to introduce an innovative product like bungee jumping, its acceptability would be more in
America than in the UAE.

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