{"iconType":"icon","icon":"plus","color":"#31683c","hotspots":[{"position":{"x":81.35011441647598,"y":2.6139889123304836},"alwaysFullscreen":false,"content":[{"params":{"text":"

Use an appropriate tool like the PESTEL model to assess both the current situation and the likely changes as they may affect you.<\/li>\n<\/ul>\n\n
Political factors \u2013 federal & provincial & municipal government policy, nature of political decisions, potential political changes, infrastructure plans, etc.<\/p>\n\n
- Economic factors \u2013 interest rates, inflation rates, exchange rates, tax rates, GDP growth, health of the economy, etc.<\/li>\n\t
- Social factors \u2013population characteristics like age distribution and education levels, changes in demand for types of products and services, etc.<\/li>\n\t
- Technological factors \u2013 new processes, new products, infrastructure, etc.<\/li>\n\t
- Environmental factors \u2013 effects of climate\/weather, water availability, smog and pollution issues, etc.<\/li>\n\t
- Legal factors \u2013 labour laws, minimum wage rates, liability issues, etc.<\/li>\n<\/ul>\n\n
  - Assess the impact these trends have upon the venture:\n\t
    - Do the trends uncover opportunities and threats?<\/li>\n\t\t
    - Can opportunities be capitalized on?<\/li>\n\t\t
    - Can problems be mitigated?<\/li>\n\t\t
    - Can the venture be sustained?<\/li>\n\t<\/ul>\n\t<\/li>\n<\/ul>\n"},"library":"H5P.Text 1.1","metadata":{"contentType":"Text","license":"U","title":"Untitled Text"},"subContentId":"e434b7a3-3a44-49d0-87bc-a45a09131b83"}],"header":"Analyze Societal-Level Trends"},{"position":{"x":81.23569794050344,"y":30.797951176481426},"alwaysFullscreen":false,"content":[{"params":{"text":"
      - Use an appropriate tool like the Five Forces Model (Porter, 1985) to analyze the industry in which you expect to operate.\n\t
        \n\t\t
        Horizonal relationships - threat of substitutes, rivalry among existing competitors, threat of new entrants<\/li>\n\t\t
        Vertical Relationships - bargaining power of buyers, bargaining power of suppliers<\/li>\n\t<\/ul>\n\t<\/li>\n<\/ul>\n"},"library":"H5P.Text 1.1","metadata":{"contentType":"Text","license":"U","title":"Untitled Text"},"subContentId":"9b16dd89-9849-4b0b-b1b7-861551ace01f"}],"header":"Analyze Industry-Level Trends"},{"position":{"x":86.95652173913044,"y":45.89229079912294},"alwaysFullscreen":false,"content":[{"params":{"text":"
        \n\t
        Use an appropriate method like a market profile analysis to assess the position within the industry in which you expect to operate.\n\t
        \n\t\t
        Determine the answers to questions like the following:\n\t\t
        \n\t\t\t
        How attractive is the market?<\/li>\n\t\t\t
        In what way are competitors expected to respond if you enter the market?<\/li>\n\t\t\t
        What is the current size of the market and how large is it expected to be?<\/li>\n\t\t\t
        What are the current and projected growth rates?<\/li>\n\t\t\t
        At what stage of the development cycle is the market?<\/li>\n\t\t\t
        What level of profits can be expected in the market?<\/li>\n\t\t\t
        What proportion of the market can be captured? What will be the cost to capture this proportion and what is the cost to capture the proportion required for business sustainability?<\/li>\n\t\t<\/ul>\n\t\t<\/li>\n\t<\/ul>\n\t<\/li>\n<\/ul>\n\n
        Prior to a new business start-up, the customers that the new business wishes to attract either already purchase the product or service from a competitor to the new business\u2014or they do not yet purchase the product or service at all. A new venture\u2019s customers, therefore, must come from one of two sources: they must a) be attracted away from existing (direct) competitors or b) be convinced to make different choices about where they spend their money so they purchase the new venture\u2019s product or service instead of spending their money in other ways (with indirect competitors). An entrepreneur must decide from which source they will attract their customers, and how they will do so. They must understand the competitive environment.<\/p>\n\n
        According to Porter (1996), strategy is about doing different things than competitors or doing similar things but in different ways. To develop an effective strategy, an entrepreneur must understand the competition.<\/p>\n\n
        To understanding the competitive environment, entrepreneurs must do the following:<\/p>\n\n
        \n\t
        determine who their current direct and indirect competitors are and who the future competitors will be<\/li>\n\t
        understand the similarities and differences in quality, price, competitive advantages, and other factors their proposed business and the existing competitors<\/li>\n\t
        establish whether they can offer different products or services\u2014or the same products or services in different ways\u2014to attract enough customers to meet their goals<\/li>\n\t
        anticipate how the competitors will react in response to the new venture\u2019s entry into the market<\/li>\n<\/ul>\n"},"library":"H5P.Text 1.1","metadata":{"contentType":"Text","license":"U","title":"Untitled Text"},"subContentId":"47ce18ef-e211-436e-8398-c63317ac84ad"}],"header":"Analyze Market-Level Trends"},{"position":{"x":87.4141876430206,"y":69.59512098780219},"alwaysFullscreen":false,"content":[{"params":{"text":"
        There are several tools available for firm-level analysis, and usually several of them should be applied because they serve different purposes.<\/p>\n\n
        \n\t
        Use an appropriate tool like a SWOT Analysis\/TOWS Matrix to formulate and evaluate potential strategies to leverage organizational strengths, overcome\/minimize weaknesses, take advantage of opportunities, and overcome\/minimize threats. You will also need to do a financial analysis and take into account the founder fit and the competencies a venture should possess.\n\t
        \n\t\t
        SWOT analysis \u2013 identify organizational strenghts and weknesses and external opportunities and threats<\/li>\n\t\t
        TOWS matrix \u2013 develop strategies to:\n\t\t
        \n\t\t\t
        leverage strengths to take advantage of opportunities<\/li>\n\t\t\t
        leverage strengths to overcome threats<\/li>\n\t\t\t
        mitigate weaknesses by taking advantage of opportunities<\/li>\n\t\t\t
        mitigate weaknesses while minimizing the potential threats or the potential outcomes from threats<\/li>\n\t\t<\/ul>\n\t\t<\/li>\n\t<\/ul>\n\t<\/li>\n<\/ul>\n\n
        For analyzing a firm\u2019s strategy, apply a VRIO Framework analysis.<\/p>\n\n
        \n\t
        While conceptualizing the resource-based view (RBV) of the firm, Barney (1997) and Barney and Hesterly (2006) identified the following four considerations regarding resources and their ability to help a firm gain a competitive advantage. Together, the following four questions make up the VRIO Framework, which can help assess a firm\u2019s capacity, determine what competencies a venture should have, and determine whether competences are valuable, rare, inimitable, and exploitable.\n\t
        \n\t\t
        Value \u2013 Is a particular resource (finanical, physical, technological, organizational, human, reputational, innovative) valuable to a firm because it helps it take advantage of opportunities or eliminate threats?<\/li>\n\t\t
        Rarity <\/em>\u2013 Is a particular resource rare in that it is controlled by or available to relatively few others?<\/li>\n\t\t
        Imitability \u2013 Is a particular resource difficult to imitate so that those who have it can retain cost advantages over those who might try to obtain or duplicate it?<\/li>\n\t\t
        Organization \u2013 Are the resources available to a firm useful to it because it is organized and ready to exploit them?<\/li>\n\t<\/ul>\n\t<\/li>\n<\/ul>\n\n
        Assess the financial attractiveness of the venture:<\/p>\n\n
        \n\t
        Analyze similar firms in industry.\n\t
        \n\t\t
        Comparative ratio and financial analysis (see Vesper, 1996, p. 145-148) can help determine industry norm returns, turnover ratios, working capital, operating efficiency, and other measures of firm success.<\/li>\n\t<\/ul>\n\t<\/li>\n\t
        Project market share.\n\t
        \n\t\t
        Analyze the key industry players\u2019 relative market share, and make judgments about how the proposed venture would fare within the industry.<\/li>\n\t\t
        Use information from market profile analysis and key industry player analysis.<\/li>\n\t<\/ul>\n\t<\/li>\n\t
        Analyze Expected Margins.\n\t
        \n\t\t
        Involves projecting expected margins from venture<\/li>\n\t\t
        Useful information might come from financial analysis, market profile analysis, and NAICS (North American Industry Classification System) codes (six digit codes used to identify an industry\u2014first five digits are standardized in Canada, the United States, and Mexico\u2014is gradually replacing the four digit SIC (Standard Industrial Classification) codes)<\/li>\n\t<\/ul>\n\t<\/li>\n\t
        Analyze break-even point.\n\t
        \n\t\t
        Involves using information from margin analysis to determine break even volume and break- even sales in dollars<\/li>\n\t\t
        Is there sufficient volume to sustain the venture?<\/li>\n\t<\/ul>\n\t<\/li>\n\t
        Analyze Pro forma.\n\t
        \n\t\t
        Forecasting income and assets required to generate profits<\/li>\n\t<\/ul>\n\t<\/li>\n\t
        Analyze Sensitivity.\n\t
        \n\t\t
        What will be the likely impact if some assumed variable values change?<\/li>\n\t<\/ul>\n\t<\/li>\n\t
        Project Return on Investments (ROI).\n\t
        \n\t\t
        Projecting the ROI from undertaking the venture<\/li>\n\t\t
        What is the opportunity cost of undertaking the venture?<\/li>\n\t<\/ul>\n\t<\/li>\n<\/ul>\n"},"library":"H5P.Text 1.1","metadata":{"contentType":"Text","license":"U","title":"Untitled Text"},"subContentId":"9bb0218f-27d2-4306-b7d5-01c3b9b6465c"}],"header":"Analyze Firm-level Trends (organizational analysis)"}],"hotspotNumberLabel":"Hotspot #num","closeButtonLabel":"Close","image":{"path":"images\/image-612c59d7cef0c.png","mime":"image\/png","copyright":{"license":"U"},"width":668,"height":644},"backgroundImageAltText":"Image of the PESTEL Model"}

Levels of Analysis and Examples of Tools Appropriate to Each Level of Entrepreneurial Market Analysis

Workforce Development Curriculum Team