While creating
a business, I have discussed on the need to create an organizational direction
for your business. This means establishing the groundwork, path for your
business. Check here
The next thing
after Organizational Direction is to
conduct an Environmental Analysis. This basically means conducting a
review of the existing market your business is to dwell in and testing the
market to be sure of a sure shot of survival for your potential SME.
From my
experience, there are two aspects to Environmental Analysis:
1. SWOT Analysis: this
is important. It means evaluating your strengths against your weaknesses
(internal analysis) and the available opportunities against potential or
existing threats (external analysis). Conducting your SWOT analysis will score
you the following:
- A detailed understanding of your business field, existing competitors and even potential market share.
- Firsthand x-ray of existing or unexplored market or market strategies.
- Better understanding of the value your product or service will deliver to the market and how much it should be priced compared to its existing competitors’
- Determine your core strengths and weaknesses which you will need to harness to favour your endeavor.
2. Feasibility
Study: this should be carried before the business is established. It helps you
determine the viability and scalability of your business idea. It also helps
you determine if the business is viable, sell-able and how much it can
significantly impact on the people. Embarking
on this will:
- Help you in expunging all illusion in your business model
- Expose you to existing strategies, wants and primary needs you may not have discovered to cater for in your business.
Your
leverage would be those things you do better than your competitors (your core
competencies) found in areas such as service delivery, product quality, common
core values, corporate culture etc.
Environmental Analysis
helps the entrepreneur get reassurances of the workability of his idea in the
market. it helps the entrepreneur predetermine the best possible way to tailor
your SME, business model, product packaging, delivery means and, more
importantly, the best strategies to employ to exploit the markets not fully covered,
or to bite from the saturated ones.
CASE STUDY
Peak Milk was the milk of choice of the people. The strongest brand in
the market, it was mainly available in tins and to an elite market who could
afford it at N 90. This meant a larger chuck of the market were either cut off
their reach or were forced to buy the rather expensive product at the time.
When Cowbell was venturing into the market, it did a thorough
environmental analysis and found that a larger share of the market was largely
ignored. This called for tailoring the product to be available in packages
affordable particularly to this maligned market. Needless to say the market
share ignored was far larger than the one catered for by Primary Peak.
Cowbell thus targeted the very poor folks, providing satchel powdered
milk for N 10, affordable to all classes of people.
This move more than grossed them N
900,000,000 annually. This forced mighty Peak to start producing satchel milk!
This move was the lifeline for Cowbell, effectively breaking them into
the market with ease.
After analyzing
your business environment, you get on to creating or formulating strategies.
We
will discuss this soon. Stay tuned.
