ENTH311 – MIDTERM EXAMINATION
Session 7: MICRO AND MACRO
ENVIRONMENT
What is the Micro-Environment?
Micro-environment
– basically, the environment that has a
direct impact on your business.
– It is related to the particular area where
your company operated and can directly
affect all of your business processes.
– They have the ability to influence your
daily proceedings and general performance
of the company.
Examples of Micro-Environment
• Customers
• Suppliers
• Resellers
• Competitors
• The General Public
Customers – The kind of customer base that
your company attracts.
– The reasoning behind purchasing your
product.
– Highly affect the way business create
marketing campaigns.
Examples: can be B2C, B2B, international,
local, and etc.
Suppliers – if a supplier of a particular
product is the largest, or even the only one,
they are certainly going to have a BIG
INFLLUENCE on how successful your
business is.
Resellers – If you decide to sell your
product via a third-party reseller, or
middlemen such as wholesalers and
retailers, then the success of your
marketing is going to be highly dependent
on them.
Competitors – Businesses that sell the same
or a similar kind of product as you.
– Their sale and marketing tactics matter to
you a lot.
The General Public – Every step that
businesses take needs to be viewed from
their perspective.
– It is extremely important how your
actions affect others because their opinion
can be the one thing that either pushes you
towards success or pulls you down from the
pedestal.
Macro-environment
– It is the environment in the economy
itself.
– It has an effect on how all business groups
operate, perform, make decisions, and form
strategies simultaneously.
– It is quite dynamic, which means that a
business has to constantly track its changes.
– It consists of external factors that the
company itself doesn’t control but is
certainly affected by.
Examples of Macro-Environment
• Economic Factor
• Demographic Forces
• Technological Factors
• Natural and Physical Forces
• Political and Legal Forces
• Social and Cultural Forces
Economic Factors – The environment of the
economy can have an effect on two
essential aspects – your company’s levels of
production and the decision-making
process of your customers.
Examples:
➢ Interest rates
➢ Exchange rates
➢ Recession
➢ Inflation
➢ Taxes
➢ Demand / Supply
Demographic Forces – These are age,
education level, cultural characteristics,
country and region, lifestyle, and so on.
Technological Factors – These factors are
related to skills and ability that are
implemented into production.
– All the materials and technology that a
particular product requires to be made.
Examples:
➢ Automation
➢ Internet connectivity
➢ 3D technology
➢ Speed/power of computer
calculation
➢ Engine performance and efficiency
➢ Security in terms of cryptography
➢ Wireless charging
Natural and Physical Forces – Every
business must also take into account the
very planet and its resources.
– There are those that can be renewed,
such as forests and agricultural products,
and those that cannot, such as coal,
minerals, oil, and the like.
Examples:
➢ Climate change
➢ Pollution
➢ Weather
➢ Availability of both non-renewable
and renewable resources
➢ Laws that regulate the environment
➢ Survival of particular biological
species
Political and Legal Forces – This means that
every business needs to be up to date with
such forces worldwide in order to be able to
make the right decisions.
Examples:
➢ Copyright law
➢ Employment law
➢ Fraud law
➢ Discrimination law
➢ Health and Safety law
➢ Import/Export law
Social and Cultural Forces – The product
that you bring to the market can have a
strong impact on society. For example, your
production needs to eliminate every
practice that is hazardous to society, and
show that it is socially responsible.
Examples:
➢ Purchasing habits
➢ Level of education
➢ Religion and beliefs
➢ Consciousness about health issues
➢ Social classes
➢ Structure and size of a family
➢ Growth rate of the population
➢ Emigration and immigration rates
➢ Life expectancy rates and age
distribution
➢ Different lifestyles
“TOOLS IN ANALYSING THE COMPETITIVE
ADVANTAGE OF BUSINESS”
The SWOT analysis (Strengths, Weaknesses,
Opportunities, and Threats) is useful both
for understanding the micro and the macro
factors.
 • New product materials or
ingredients, new packaging solutions
PEST Analysis
• Improved production processes or
POLITICAL business models
• New ways of transacting business
• Political stability
• New machinery or software
• Regulation and de-regulation
• Statutes, laws, codes of conduct
• Government funding, subsidies,
support for specific industries
• Fiscal/monetary policy
• Tax rates
• Trade agreements
ECONOMIC

• Economic trends
• Economic stability – inflation, wages
growth, GDP, GNP
• Exchange rates Session 8: Creating New Ventures
• Trade agreements
• Seasonality and economic cycles What is a BUSINESS?
• Consumer confidence It is any activity that provides consumers
• Consumer purchasing power – with good or services in order to make a
discretionary incomes profit.
SOCIAL Creating Ventures:
• Demographic changes – population WAYS OF OWNING A BUSINESS:
growth, age distribution, population
1. START FROM THE SCRATCH
density, geographic distribution
2. BUYING AN EXISTING BUSINESS
• Consumer attitudes – tastes and
3. FRANCHISE
preferences
• Social influencers – role models, FORMS OF OWNERSHIP:
opinion leaders
1. SOLE PROPRIETORSHIP
• Shopping habits – preferred
2. PARTNERSHIP
channels, channel switching, online
2.1 GENERAL PARTNERSHIP
& offline shopping
2.2 LIMITED PARTNERSHIP
TECHNOLOGICAL
Generating Business Ideas
• Innovation, breakthroughs or
technological developments
❖METHODS OF OWNING A BUSINESS: GETTING A FRANCHISE
STARTING A BUSINESS FROM SCRATCH ➢ is a business relationship in which
you (the franchisee) pay the owner
➢ is the most common and the most
of a business (the franchisor) for the
risky alternative.
right to market and distribute their
ADVANTAGES DISADVANTAGES goods or services over a fixed
✓ Freedom to  High risk of period.
implements one’s venture failure due ➢ Under this agreement, a franchisor
idea to large to lack of previous (a company that sells a franchise)
extent. experience. gives the franchisee (the
✓ Aligning the  Making wrong purchaser—you) the right use a
investment and choice of product brand name and to market its goods
resource or service. or services.
mobilization with
market conditions. ❖FORMS OF BUSINESS OWNERSHIP:
✓ Ease for entry  Difficulty in SOLE PROPRIETORSHIP
and exit with building customer
minimum & No inventory and ➢ It is a business owned by only one
dependence on sales record person.
outsiders. ➢ It’s the easiest and cheapest type of
business to form.
BUYING AN EXISTING BUSINESS ➢ Most small companies start as sole
proprietorship.
➢ less risky than starting one’s own
business. ADVANTAGES LIMITATIONS
✓ Easy to Start  Limited Capital
ADVANTAGES DISADVANTAGES
✓ Easy to Wind-Up  Unlimited
✓ having an  Need
Liability
immediate cash improvements in
flow. products ✓ Quick Decision &  Lack of
Prompt Action Continuity
✓ have a financial  Poorly located &
history badly managed ✓ Flexibility in  Limited Size
Operations
✓ easier to secure  Increasing
loans and attract competition ✓ Direct  Lack of
investors Maintenance of Managerial
Business Expertise
✓ acquire existing  Underperforming
customers, might need big
contacts, goodwill, investment PARTNERSHIP
suppliers, staff,
plant, equipment • It is a business owned jointly by two
and stock. or more people.
✓ established  Low staff morale
product & service
LIMITED PARTNER and GENERAL PARTNER CHARACTERISTICS OF PROMISING
BUSINESS IDEAS:
1. Fulfils a customer need – a problem
is solved
2. Innovative
3. Unique
4. Clear focus
5. Profitable in the long term

Session 9: THE CONCEPT OF INNOVATION

Invention vs. Innovation
PROS CONS
DEFINITIONS OF INVENTION
✓ Extra set of  Less
hands independence → It refers to the creation of a product or
✓ Additional  Potential conflict introduction of a process for the first time.
knowledge
✓ Reduced  Divided profits →It refers to the first occurrence of an idea
financial burden for a new product of process.
✓ Less paperwork  Lack of
DEFINITIONS OF INNOVATION
separation from
business → It refers to the application of new ideas
✓ Fewer tax forms  Individual or improvements to the products,
taxation processes, or other aspects of the activities
of a firm that lead to increased of “value.”
IDEA GENERATION → Drucker (1988), viewed innovation as a
✓ Business Idea purposeful and focused effort to achieve
change in (an organization’s) economic or
✓ = It is a concept that can be used for social potential.
financial gain that is usually focused on a
product or service that can be offered for The Core Concept Of Innovation As Applied
money. In Any Organization

SOURCES OF BUSINESS IDEAS ➢ It is the application of practical tools

• Consumers
• Existing product & services
• Distribution channels
• The federal government &
• Research & development
and techniques that make changes,
large and small, to products,
processes, and services that results
in the introduction of something
new for the organization that adds
value to customers and contributes
 to the knowledge store of the 9 TYPES OF INNOVATION
organization.
INCREMENTAL
IMPORTANCE OF INNOVATION:
➢ Small continuous improvements to
1. Improve productivity existing products, services and
2. Reduce costs processes.
3. Be more competitive
PRODUCT
4. Build the value of your brand
5. Establish new partnerships and ➢ Introduction of new or significantly
relationships improved product that generates
6. Increase turnover and improve new customer value.
profitability
PROCESS
DRIVERS OF RISKS OF
➢ Implementation of a new and
INNOVATION: BUSINESSES FAIL
TO INNOVATE: significantly improved production or
✓ Emerging  losing market delivery method.
technologies share to SERVICE
competitors
➢ Introduction of new of significantly
✓ Competitor  falling improved service that generated
actions productivity and new customer value.
efficiency
BUSINESS MODEL
✓ New ideas from  losing key staff ➢ New ways in which an organization
customers, creates, delivers, and capture value.
strategic partners,
and employees DISTRUPTIVE
➢ Innovations that displace
✓ Emerging  experiencing
changes in the steadily reducing established companies or industries.
external margins and profit BREAKTHOUGH
environment
➢ Innovations that generate a
 going out of paradigm shift in technology or
business science, for example transistors.
ORGANISATION
➢ New ways in which people manage
Most innovative firms, especially the
and share resources.
successful ones, put in play a conscious,
purposeful innovation strategy that OUTCOME DRIVEN
combines different innovation practices
 ➢ The jobs the customers in trying to
get done are used as input to the
innovation process.
INNOVATIONS IN HOSPITALITY AND
TOURISM INDUSTRY
1. Wearable Technology
2. Virtual Reality In Hotel Rooms
3. Facial Recognition
4. Cloud / SaaS (Software as a Service)
in Hospitality
5. Smart Hotels- Internet of
Things (IoT)
Examples:
- phone activated keys
- tablet to control the temperature
- Automated checkout services
6. Mobile Easy check-in
7. Keyless Entries- Smartphone
Operated Room
8. Voice Searches-Alexa and Siri
9. Free Wi-Fi in hotel rooms
10. Hotel Robots
11. RFID Wristbands
12. Chatbots
13. Located-Based Services
14. Contactless Payments
15. Artificial Intelligence (AI)
16. Guest Apps
17. Online Review Monitoring
Session 10: DESIGN THINKING IN
ENTREPRENEURSHIP
DESIGN THINKING
→ is an iterative process in which we seek
to understand the user, challenge
assumptions, and redefine problems in an
attempt to identify alternative strategies
and solutions that might not be instantly
apparent with our initial level of
understanding.
→ It provides a solution-based approach to
solving problems.
→ It is a way of thinking and working as
well as a collection of hands-on methods.
The 5 Phases of Design Thinking
1. Empathize – with your users
2. Define – your users’ needs, their
problem, and your insights
3. Ideate – by challenging assumptions
and creating ideas for innovative
solutions
4. Prototype – to start creating
solutions
5. Test – solutions
Step 1: Empathize with Users
• This is a discovery phase to gain
insights into users’ real needs.
• A team of experts meet the users
and try to find out their concerns.
• Observe, monitor or empathize with
users to understand their
expectations, feelings and pain
points.
Step 2: Define the Problem
• Put together all the gathers
information, analyze, observe and
synthesize it to define core
problems.
• Define the problem in a human-
cantered way to solve human
problems.
Step 3: Ideate New Solutions
 • Generate ideas and new solutions to customer is, what value you can create/add
the problems. for the customer and how you can do that
• Have as many as possible ideas to at reasonable costs.
begin with.
History of Business Model
• Using ideation techniques,
investigate or test the ideas to find ➢ It was proposed by Alexander
best possible solution. Osterwalder based on his earlier
book: Business Model Ontology.
Step 4: Prototyping ➢ According to the study, business
• Create conceptual prototypes of the model describes the logic how the
product to investigate possible company operates with its product
solutions. or service, deliver value to
• Investigate different aspects of the customers and receive a profit in
problem and explore how each return.
prototype would fix the problem. 9 Key Elements of Business Model
• Here, you will have better idea of
user’s behaviors, feelings and 1. Customer Segments
expectations. 2. Value Proposition
3. Channels
Step 5: Prototype Testing 4. Customer Relationship
• Test the selected prototypes with 5. Revenue Streams
real users and internal stakeholders. 6. Key Resources
• Observe how well they handle the 7. Key Activities
identified problems. 8. Key Partnerships
• By the end of this step, you would 9. Cost Structure
get an idea whether the solution is
accepted, needs improvement, re-
examines or completely rejected.

Session 11: DEVELOPING THE BUSINESS

MODEL
Business Model
✓ It's the company's plan to make a profit.
This defines the products or services that Customer Segments
the company will offer, the target audience
it has identified and the costs it anticipates. o Who are the customers? What do
they think? See? Feel? Do?
✓ According to Peter Drucker: A business
model is supposed to answer who your
 o Which classes are you creating
values for?
o Who is your most important
customer?
Value Proposition
o What core value do you deliver to
the customer?
o Which customer needs are you
satisfying?
o What’s compelling about the
proposition?
o Why do customers buy, use?
Channels
o How are these propositions
promoted, sold and delivered?
Why? Is it working?
o Through which channels that your
customers want to be reached?
o Which channels work best?
o How much do they cost?
o How can they be integrated into
your and your customers’ routines?
Customer Relationship
o How do you interact with the
customer through their ‘journey’?
o What relationship that the target
customer expects you to establish?
o How can you integrate that into
your business in terms of cost and
format?
Revenue Streams
o How does the business earn revenue
from the value propositions?
o For what value are your customers
willing to pay?
o What and how do they recently pay?
o How would they prefer to pay?
o How much does every revenue
stream contribute to the overall
revenues?
Key Resources
o What unique strategic assets must
the business have to compete?
o What key resources does your value
proposition require?
o What resources are important the
most in distribution channels,
customer relationships, revenue
stream…?
Key Activities
o What key activities does your value
proposition require?
o What activities are important the
most in distribution channels,
customer relationships, revenue
stream…?
o What uniquely strategic things does
the business do to deliver its
proposition?
Key Partnership
o What can the company not do so it
can focus on its Key Activities?
o Who are your key
partners/suppliers?
o What are the motivations for the
partnerships?
Cost Structure
o What are the most cost in your
business?
o Which key resources/ activities are
most expensive?
o What are the business’ major cost
drivers?
o How are they linked to revenue?
 ADVANTAGES Subscription = NETFLIX
1. Focus: Stripping away the 40+ pages
of ‘stuff’ in a traditional business
plan, improve their clarify and focus
on what’s driving the business (and
what’s non-core and getting in the
way).
2. Flexibility: It’s a lot easier to tweak
the model and try things (from a
planning perspective) with
something that’s sitting on a single
page.
3. Transparency: The team will have a
much easier time understanding the
business model and be much more Online Food Ordering = ZOMATO
likely to buy in to your vision when
it’s laid out on a single page.
POPULAR BUSINESS MODELS
Transportation = UBER
Search Engine = GOOGLE

IMPORTANCE OF A BUSIENSS MODEL

✓ Ensured the enterprises is properly
set up
✓ Has the ability to operate the
business
✓ Necessary when looking for
investors