Identify and explain, give examples when appropriate, of key areas that should be investigated when conducting an environmental analysis.

Question

What will be an ideal response?

Answer 1

Economy. The entrepreneur should consider trends in the GNP, unemployment by geographic area, disposable income, and so on.

Culture. An evaluation of cultural changes may consider shifts in the population by demographics, for example, the impact of the baby boomers or the growing elderly population. Shifts in attitudes, such as "Buy American," or trends in safety, health, and nutrition, as well as concern for the environment, may all have an impact on the entrepreneur's business plan.

Technology. Advances in technology are difficult to predict. However, the entrepreneur should consider potential technological developments determined from resources committed by major industries or the U.S. government. Being in a market that is rapidly changing due to technological development will require the entrepreneur to make careful short-term marketing decisions as well as to be prepared with contingency plans given any new technological developments that may affect his or her product or service.

Legal concerns. There are many important legal issues in starting a new venture; these were discussed in Chapter 6. The entrepreneur should be prepared for any future legislation that may affect the product or service, channel of distribution, price, or promotion strategy. The deregulation of prices, restrictions on media advertising (e.g., ban on cigarette ads or requirements for advertising to children), and safety regulations affecting the product or packaging are examples of legal restrictions that can affect any marketing program.