BUSINESS ENTERPRISE SIMULATION Ex: Sales Force Intelligence

 One of the specialized Subject for SHS  Is always 'in the market.
under Academic Career Track & ABM  They are speaking to customers and meeting
learning strand. with prospects.
 Sales people are in position to learn about
INTRO competitor's activities, customer
 Before setting foot in real world, teams go requirements, and other market changes.
through intense simulations to learn basic
skills on how to respond crisis situation. The key is to:
Structure an incentive that makes it worth the
BUSINESS SIMULATION salesperson's time to capture information about a
 business unit or process-uses real-world competitor's activities.
competitive dynamics
 places leaders in a context where they step CUSTOMER FEEDBACK
out of their normal day-to-day roles and  Capturing a customer feedback is one of the
gain exposure to the big picture. easiest
 Participants make decisions in a risk-free  most often overlooked methods of capturing
environment, allowing them to experience market information.
critical interdependencies, execute best  Clearly the first step is to understand how
practices, and test the levers they can use to you are doing by capturing customer
optimize their company's key performance satisfaction feedback through response
indicators cards and online customer feedback forms.

(from Wikipedia) SCANNING THE MARKET

 Simulation used for business training,  The entrepreneurial process-or simply, the
education or analysis process of venturing into business-formally
 Can be scenario based / numeric-based begins with a scan of the market
 Most Business simulation are used for  Scan of the market uses to find the business
business acumen training and opportunities from macro environmental
development sources and within the realms of the
 Learning Objectives: entrepreneur's community or locality.
> Strategic thinking  The first step is for the new entrepreneur to
> Decision Making list down, ideally, five business
> problem solving opportunities which he or she can possibly
> Financial analysis venture into.
> Market Anakysis  Then the entrepreneur, using a systemized
> Operations criterion must reduce these five
>Teamwork and leadership opportunities to one only.
 The entrepreneur must focus on a
MARKET SCANNING business idea that he or she thinks is most
 Process of continually and actively viable and with the least number of risks.
monitoring the external environment in order  Thereafter, the entrepreneur must devote
to identify customer needs, anticipate his or her time establishing, growing, and
competitive actions, and, identify managing his chosen business.
technological changes which will provide
new market opportunities/disruptions. EXTERNAL SOURCES OF BUSINESS
OPPORTUNITIES.
Companies must constantly be probing and exploring There are numerous external sources of business
the external environment to identify significant opportunities.
changes and explore competitive activity. These external sources are the external forces in the
budding entrepreneur's environment.
HOW TO SCAN THE MARKET?
(Does continually surveying customers and potential Among them are the following
customers require a massive marketing research
budget? )
 Sociocultural factors
> NO  Technological advancement
>While market research should be an integral part of  Economic growth or decline
any strategy development effort, there are many  Politics and legal factosrs
methods of scanning the market in addition to  New discovery or new knowledge
traditional large scale surveys.
 Futuristic or unexpected opportunities
  Consumer preferences, including
preferences of digital customers There are two types of the firm's environment.
 Competitors 1. Internal Environment
 Societal problems or irritants in the  Consists of elements that have a direct
marketplace impact on the business operations.
 Physical location of the entrepreneur  These include the employees, the board of
The entrepreneur must not be overwhelmed by these directors, and the managers.
external factors– he/she must choose the most viable  The elements are directly controlled and
business opportunities in the environment. can be freely modified by the firm itself.

In scanning the external market 2. External Environment

 Entrepreneur must look at the environment  Consists of factors that have indirect but
or locality where she wants to intend the significant influence on the operations of the
business. business.
 Focusing on 1 locality helps simplify the  These factors, cannot be controlled by the
external scanning opposing to doing an firm.
extensive scan of the surrounding locations.
 Entrepreneur can also perform an external There are two types of environment:
scan on a national or international scale, A. Microenvironment
including the digital behavior of potential  also known as the "operating
customers (A scan of such scope is made environment'.
possible by technology)  It consists of the customers,
suppliers, regulatory agencies, and
It is important in external scan to list down all competitors.
potential business which you think might flourish with  The factors have a direct
the external factors present. It is at this point where relevance to the business
the entrepreneurial traits of being sharp-eyed to operations but are uncontrollable
business opportunities kicks in. to a certain extent.

INTERNAL SOURCES OF BUSINESS B. Macroenvironment

OPPORTUNITIES.  is also known as the "general
These are also various internal sources-the environment'.
entrepreneur's strengths or assets that drive him or
her to pursue a potential business-of business
 It consists of the economic, political,
social, legal, and technical
opportunity.
environment of the business
organization.
These internal sources are the following:
 Talents, hobbies, skills, expertise, or  The factors are beyond the control
of the firm but are important
academic background
determinants of success.
 Financial capacity
 A successful business understand
 Process/operational capacity the changes in its external
 Leadership and people management skills environment to take advantage of
 Entrepreneurial attitude/character opportunities provided by these
 Vision strategy changes. Companies gather
information on the external
Identifying business opportunities form internal environment by conducting
sources is easier to accomplish because environmental scanning and
 At the onset, the entrepreneur already knows strategic analysis.
his or her strengths, so they can list these
down without devoting too much time.

What matters in an internal scan is that you list down

all potential business that you think might flourish
considering the internal factors of your strengths as
an entrepreneur.

 Refers to the conditions and elements that

define its operations and determine its
success.
 Internal Environment
 Employees
 Board of Directors
 Managers

EXTERNAL

Microenvironment Macroenvironment
 Customers  General environment of the firm
 Suppliers
 Regulatory Agencies
 Competitors

ENVIRONMENTAL SCANNING  SWOT analysis is primarily used to analyze

 the actual monitoring and evaluation of the microenvironment
information from the external and internal  PEST analysis is conducted to address the
environment of a business organization. firm's macroenvironment.
 The information is then provided to the key
people to guide the organization in its A. SWOT ANALYSIS
business operations and in preparing for - SWOT Analysis is a technique that identifies the
target market operations. Strengths and Weaknesses of a company, as well as
the Opportunities and Threats it faces.
These are three modes of environmental scanning as - In conducting this analysis, it is imperative to note
follows: that strengths and weaknesses are part of the
company's internal environment, while
1. Ad hoc environment scanning opportunities and threats are part of its external
 is not often done and usually applicable only environment.
during a crisis situation.
 Use to determine whether a problem is either STRENGTHS (What does your company do better
external or internal. than others?)
WEAKNESSES (What aspects of your company need
2. Regular scanning to be improved?)
OPPORTUNITIES (What trends/conditions can
 is usually done at least once a year or at positively impact your company?)
regular intervals.
THREATS (What trends/conditions can negatively
impact your company?)
3. Continuous Scanning
 refers to the continuous collection of data on Strength
a broad range of environment factors.  include the company's attributes that give a
 It is also referred to as continuous learning competitive edge over others.
done to monitor the components of an  The strengths of a company contribute to its
organization's internal environment
good performance and a positive
reputation in the business scene.
STRATEGIC PLANNING: SWOT AND PEST
 Strengths may include being a market
 To adequately deal with the forces of the leader, having a good brand image,
external environment
providing quality products and services, and
 Managers, and decision-makers apply having a good reputation in the business.
certain techniques in gathering and  Other strengths include good credit standing,
analyzing information and subsequently
competent and highly skilled staff, excellent
conducting strategic planning.
distribution channels, outstanding
 Strategic planning— SWOT analysis and communication and network systems, and a
PEST analysis consider the elements of a good number of patents.
firm's internal and external environment in
formulating business plans and decisions.
2. Weaknesses company's internal environment aligns with
 attributes of a company that need to be the external environment.
improved or changed.  It also helps the company figure out its
 These attributes may hinder the company's advantage in the industry or market.
growth and performance.  This technique, however, is not very effective
 Examples of weaknesses are: Lack of when dealing with more complicated issues
access to technology, Limited distributions and factors that cannot be clearly assigned
channels, Poor location, Lack of facilities and to only one category. Such factors may be
equipment, Poor transportation system both considered a strength and weakness of
the company.

B. PEST ANALYSIS
3. Opportunities
 method used in analyzing the Political,
 factors or events that can give a positive
Economic, Social, and Technological forces
impact to the company if properly
affecting the company.
addressed.
 This technique focuses on the factors that
 Opportunities come in different forms like
define the macroenvironment.
new markets, potential profits, additional
sources of raw materials, increased
1. Political Factors
purchasing power of consumers, better
location, and new users or customers.  Political factors include laws, regulations,
and restrictions that may intervene or affect
4. Threats the company's business course.
 external factors which may negatively impact  Significant political factors include tax
the company. policies, labor laws, environmental laws,
trade restrictions, and tariffs.
 These are trends, changes, or movements
over which the company has no control but  Business must comply with rules and
should be addressed to maintain its status in regulations imposed by the government, and
business. compliance requires managers to adjust their
operations accordingly.
 Some examples are: Increase in the price of
resources, Entry of new competitors, High  Companies are required by the government
inflation rates to comply with the Minimum Wage Law in
determining the wages of their employees.
Business also have to comply with the
required legal documents, pay fees and
secure permits before they begin their
operations. Another significant factor for
business are zoning restrictions.
2. Economic Factors
 Economic factors directly affect the capability
of business to generate profits.
 These include economic growth, interest
rates, exchange rates, and inflation rate.
 The increase in the prices of raw materials
and basic commodities is also an important
factor that affects business.
 The price of oil in the world market affects
 SWOT Analysis is a quick and easy the prices of the basic goods in the local
technique in analyzing business situations. market. Increased oil prices also result in
 It is a versatile tool that be applied at the increased cost of transporting goods such as
different levels of the company. vegetables and fruits from the farms to the
 One can conduct SWOT Analysis for the urban areas.
entire company, or just focus on one 3. Social Factors
department or business operation.  include demographic aspects such as age,
 SWOT Analysis is more effective if group affiliation, religion, civil status, and the
managers use clear and accurate data and economic status of customers.
analyze the factors in an objective manner.  Companies focus on information regarding
 Its main advantage is that it enables their target market, particularly its buying
managers to understand their business habits, attitudes, ethics, personalities, and
better, particularly in terms of how the values.
  Firms usually shape their products or  major limitation: PEST Analysis is that it does
services based on their target market. not consider the internal element of the
 Ex: company.
o Companies that sell instant noodles
target customers who are always
on the go or have limited time to
prepare home-cooked meals.
o Services such as laundry shops
cater to people who are unable to
do their laundry or who have no
helpers to do their laundry for them.

 Analyzing social factors can also help a

company implement changes and
improvements in its operations, products,
and services.
Ex: A company selling diapers, for example,
may conduct research focusing on the birth
rate within their target area and the financial
capabilities of their potential customers.
 A company can also look into the
characteristics and behavior of their
customers.
They may consider looking at the frequency
of using diapers, and the stores where they
usually buy diapers. Using these information,
the company may formulate a plan such as
introducing a new line of cheaper diapers
that target customers who have limited
budgets.
 They can also improve their distribution
channels to ensure that their product is
available in all stores in their area.

4. Technological Factors
 include research and development activities,
licensing, patenting, technological shifts, and
outsourcing decisions.
 Technological factor at present is the
Internet, which has greatly improved their
business functions are done.
 Social media has introduced new venues for
promotion, marketing products and services.
Purchasing, delivery, promotion, and
customer have been revolutionized by
technology.
 Production operations have greatly improve
through automation.
 Companies, therefore, need to keep track
of the latest technology and determine
ways that these can aid in their business
processes.

 PEST Analysis exclusively focuses on the

macroenvironment of the firm, it guide managers
to identify the reasons why their business is
growing or failing within a certain environment.
 It also helps the company identify new directions
for growth and expansion.