Business Environment

Successful entrepreneurs have one thing in common. They have a thorough understanding of: 
  • their role as an entrepreneur; 
  • their products and services; 
  • their customers; 
  • and their business environment
If you don't want to be surprised by your customers, partners, competitors or rule makers, you need to really understand your business environment. You do that by first mapping out your business environment by using some analytic tools and right after that you start moving around, interacting with relevant people and asking questions to verify your assumptions about your business environment. 

Actually you need to make a (mind)map of everyone and everything that influences your business either directly and indirectly. To keep the overview, we reason from the inside out and we divide our business environment in three levels:
 


The Micro environment, that's our business and everyone that is directly involved and/or has a stake in the business: 
  • entrepreneurs, personnel, investors and their families; 
  • customers, partners, suppliers, distributors and financiers; 
  • tax office, chamber of commerce, trade or industry association; 
  • i.e. people that you do business with on a regular basis and that have a direct interest in the success of your business. 
The Meso environment, that's your direct business environment:
  • potential customers, partners and investors; 
  • potential suppliers, distributors and financiers; 
  • local society and environment; 
  • competitors, local rules and other stakeholders. 
The Macro environment, everybody and everything else that might have an influence on your business:
  • (technological and demographic) trends 
  • infrastructure, politics and legislation 
  • crime and war 
  • the economy, society and the environment 

When the bushiness environment is clear, I propose to use the following model to make a stakeholders analysis.
Stakeholder Canvas
Stakeholder's IdentityStakeholder's MissionStakeholder's Need & WantProvides OpportunityProvides
Threat
Interest
High/Low
Power
High/Low
Strategy*
Stakeholder 1
Stakeholder 2
Stakeholder 3
Stakeholder 4
Etcetera...
(c) ndw
*notify, inform, consult, involve, collaborate, empower, avoid or fight.
  • Stakeholder's mission is the reason why it exists;
  • Stakeholder's need and want relates to obstacles in achieving it's mission or current ambitions (value proposition);
  • Provides opportunity, how can this stakeholder benefit you;
  • Provides threat, how can this stakeholder threaten you;
  • Interest, does the stakeholders have any interest is you, could you be a significant opportunity or threat to them;
  • Power, does the stakeholder have the power to influence the success of your business either in a positive or in a negative way;
  • Strategy, how will you deal with this stakeholder.
Analysis of the micro environment helps you find your strengths and weaknesses for the SWOT. Analysis of the meso and macro environment can help you to find opportunities and threats for your SWOT
The Business Environment is not really in the Business Model Canvas, although, when you have a proper understanding of your business environment, you will have a better understanding of:

Key Partners
Key Activities
Value Proposition


Customer Relationships
Customer Segments


Key ResourcesChannels
CostsRevenues

As an entrepreneur you need to carve out your space in the business environment. You can do that using the supply chain or value web analysis.

A Value Web (enhanced supply chain) does not only contain the steps in the supply chain from raw material to end product, but also contains (when relevant):
  • price levels between each step;
  • volumes/throughput for each step;
  • value added during each step;
  • costs to add value in each step;
  • capacity, capacity restrictions and utility of capacity during each step;
  • Inflow and outflow (import/export and waste) from the system;
  • GAPs in the system that might provide you with business opportunities.
The Value Web is so important because it helps you understand your business environment.

(c) 2014 - Nils de Witte