Entrepreneurship: Business Environment and SWOT Analysis

• Entrepreneurship

Objectives

• Describe types of business environment
• Recognize the importance of SWOT analysis in coming up with a business venture
• Relate and apply the factors in scanning the environment for a better business enterprise

Types of Business Environment

• Internal or micro environment
• External or macro environment

Internal Environment

• Events or situations that occur within an organization
• Management method
• Management of Marketing Mix including product, price, promotion distribution
• Financial issues or changes

External Environment

• Events that take place outside of the organization and are challenging to predict or control
• External environmental factors can be more dangerous due to their unpredictable nature
• Social Factor
• Political/Legal Factor
• Economic Factors
• Environmental/Ecological Factor
• Technological Factor

SWOT Analysis

• SWOT Analysis is a strategic tool that matches internal organizational Strengths and Weaknesses with external Opportunities and Threats
• Strengths: What do you do well?
• Weaknesses: Where do you need to improve?
• Opportunities: What are your goals?
• Threats: What obstacles do you face?

Strengths

• Advantages or the internal attributes that support a positive result, or the edge that you have over the competitor
• A company's capabilities and resources that are used to generate economic value and competitive advantage

Weaknesses

• The disadvantage or internal characteristics that work against a successful outcome compared to competitors
• Lack of resources or capabilities that can stop it from creating economic value or gaining a competitive advantage

Opportunities

• Current external factors or trends that can be used to be taken advantage
• A factor that enhances organizational performance if taken advantage of by the company
• Some opportunities may be projected, others may occur unpredictably

Threats

• Current external factors that may cause problems or a negative impact that can jeopardize the business
• Threats can be an individual, group, or organization external to the company that intends to diminish the level of the company's performance
• Every company faces threats in its environment

McDonald's SWOT Analysis - Strengths

• McDonald's is the market leader in both the domestic and international markets
• The company's outlets are located in areas that are highly known for visibility, traffic volume, and ease of access

McDonald's SWOT Analysis - Weaknesses

• Looming market saturation makes it difficult to add new outlets
• There is also an increasing price competition
• Lack of product innovation is another weakness of McDonalds

McDonald's SWOT Analysis - Opportunities

• To increase profitability, the company has slowed expansion of McDonald's restaurants
• McDonald's still has plans for more international expansion

McDonald's SWOT Analysis - Threats

• The company's aggressive international expansion
• Foreign currency fluctuation
• McDonald's keeps up with competitors

McDonald's SWOT Analysis

• Largest fast food market share in the world
• Brand recognition valued at $40 billion
• $2 billion advertising budget
• Locally adapted food menus
• Partnership with best brands
• More than 80% of restaurants are owned by independent franchisees
• Children targeting (kids are the star)

McDonald's Weaknesses

• Negative Publicity
• Unhealthy food menu
• Mac Job and high employee turnover
• Low differentiation

McDonald's Opportunities

• Increasing demand for healthier food
• Home meal delivery
• Full adaptation of its new practices
• Changing customer habits and new customer groups

McDonald's Threats

• Saturated fast food markets in the developed economies
• Trends toward healthy eating
• Local fast food restaurant chains
• Currency fluctuations
• Lawsuits against McDonald's