EMT 301

LECTURE 2

THE NIGERIAN ENTREPRENEURIAL

ENVIRONMENT
Introduction

The environment in which all organisations

operates, whether they are commercial, corporate
organisations, governments, public sectors or
charity organisations is never static, never entirely
predictable and has the capacity to influence the
market in which the organisation operates.
The environment is the major means of survival
for entrepreneurial business and it creates
opportunities and present threats
 Overview of the Nigeria Business Environment

In contemporary Nigerian entrepreneurial

environment, performance of Nigerian
enterprises (Micro, Small and Medium) is
predicated on factors such as low-sales, high
cost of production, low capital utilisation, lack
of foreign exchange to source needed inputs,
poor power supply, and low quality of goods
and services, among others.
 BUSINESS ENVIRONMENT

This includes the surroundings within and

outside in which the business operates. It

determines the survival the business (in forms of

opportunities and threats).

 Types of Business Environment
1.EXTERNAL ENVIRONMENT-The environment changes and
continues to change in response to a variety of factors that is
beyond the control of the enterprise.

2.INTERNAL ENVIRONMENT- This is concerned with the

resources processes and policies an organisation manages in
order to achieve its pre-determined goals and the organisation
has direct influence on these elements.
 EXTERNAL ENVIRONMENT

P. E.S.T.E.L
P-Political
E-Economic
S- Social
T-Technological
E-Environment
L-Legal
 INTERNAL ENVIRONMENT

R.P.C.S.I
1. R-Resource

2. P-Processes

3. C-Competitors

4. S-Suppliers

5. I-Indirect service providers.

CONSTRAINTS ON BUSINESS GROWTH
Entrepreneurs generally perceive the following constraints
on business growth and development
• A business environment hostile to smaller enterprises.
• Have no influence on credit/discounts with supplies.
• Have no or little credibility with financial institutions.
• Believe they are overwhelmed by government regulation,
legislation, and policies.
• Are unaware of most direct (and indirect) government
assistance to support smaller enterprises.
• Reluctant to use (and pay) for professional external
private and/ public sector advice and support.
 ENVIRONMENTAL SCANNING

Environmental scanning is the process of gathering

information about a company external events and

relationships, in order to assist top management in its

decision making and so develop its future course of

action.
 Market Business Environment

The market business environment consists of

both the internal and the external environment
(macro- environment) with private and corporate
institutions such as banking section, insurance
sector, stock exchange market, pension
administrators constituting the major players
In order to effectively analyse the market
environment, PESTEL framework will be
employed which categorises environmental
influences into six main types namely:
• Political
• Economic
• Socio-cultural
• Technological
• Environmental
• Legal
 POLITICAL ENVIRONMENT

The political environment relates to the period

of interaction between business, society and

government before laws are enacted .

 ECONOMIC ENVIRONMENT

There is need for business enterprise to have an

understanding of the economic environment in which

they operate as a result of the direct impact of the

country’s economic circumstances have on the

activities of the organisations.

 SOCIO-CULTURAL ENVIRONMENT

Business enterprise needs to pay attention and

recognise changes in the socio-cultural environment

as a result of constant change in the consumer

lifestyle, taste and goods/services accordingly

 TECHNOLOGICAL ENVIRONMENT

Technology is vital for global competitive

advantage, and is a major driver of globalization

- falling price and increase efficiency of

communication, information and technology.

 ENVIRONMENT

For effective analysis of the business environment by the

enterprise, a SWOT (Strengths, Weaknesses, Opportunity and

Threats) analysis brings together the most essential external

and internal environment factors that are relevant to business

sector is of great important in achieving its objective.

 SWOT ANALYSIS
S .W.O.T. means

S-Strengths

W- Weaknesses

O-Opportunities

T-Threats
• Strengths: attributes of the organization that
positively impact its ability to achieve
business/project objectives.
• Weaknesses: attributes of the organization that
negatively impact its ability to achieve
business/project objectives.
• Opportunities: external conditions that potentially
assist the business in achieving the objective.
• Threats: external conditions that potentially
threaten the success, in the present or future, of a
business or project.
 Table 2: SWOT ANALYSIS

Strengths or Weaknesses Opportunities or Threats

 resources/technology prowess  changes in government policy

 customer service/loyalty  tax increases/decreases
 efficiency  currency fluctuations
 infrastructure  interest rates
 quality  industry mergers or joint ventures
 staff productivity  change in customer demographics
 corporate culture  strategic alliances
 management expertise or lack of expertise  expectations of shareholders/public
 delivery time  technology advances
 price point  closing of geographic markets
 capacity  changing customer tastes
 relationships with customers/suppliers
 brand strength
 multi-lingual capabilities
 ethics
 patents, licenses, permits
 exclusive access to natural resources
 distribution networks
 LEGAL ENVIRONMENT
This aspect refers to the Laws and regulations are enacted in most

countries ranging from transparency of pricing, the prevention of

restrictive trade practices, minimum wage and business taxes,

product safety, good practice in packaging and labelling, the abuse

of dominant market position, code of practice in advertising,

policy guidelines on registration of business etc.

END OF THE LECTURE