Macroeconomics of Entrepreneurship

1. The Macro environment for
Entrepreneurship
Fahim akhtar

2. Historical context

3. Industrial revolution to world war II
• New production technologies
• In and after 1901 mass production started
• Low price production on need

4. Post war era
• Mass marketing era
• R & D gained momentum

5. Post industrial age
• 1970 Arab oil role
• Revolutionary development
• IT impact

6. Entrepreneurial choice model
• Help to analyze the venture
• One element is kept constant

7. Resources controlled and controllable

8. Resources controlled and controllable

9. Processes of business environment
analysis
• Scanning
• Monitoring
• Forecasting
• Assessing

10. Scanning
• By looking around
• Detect change that is already underway
• The Wall Street Journal, Business Week, Bloomberg
and the Economist
• Business recorder, business plus

11. Monitoring
• Process of tracking the evolution, development, and
sequence of critical events that affect the future business’
survival and profitability
• Specific trends and events are monitored in real time
• Monitoring is less general and therefore more focused
than scanning

12. Forecasting
• Develop plausible projections for the future.
• projections for elements such as price level, the direction of
interest rates or future scenarios for cause and effect

13. Forecasting (stepwise process)
• Choose the macro environmental variables that are critical to the new
venture. These will probably relate to the firm’s resource base. For
example, if a business generally hires low-wage, entry-level people, the
minimum-wage costs and payroll taxes are critical variables.
• Select the sources of data for the forecast. These will probably be those the
entrepreneur has been monitoring. Data sources can be found in many
places, including the local university or library. Internet searches can also
produce forecasts.

14. Forecasting
• Evaluate various forecasting techniques. Forecasters use different
techniques and therefore sometimes produce different forecasts. For
example, a firm might see a forecast that says the stock market is going
up, and therefore conclude that this is a good time to go into business. But
just how closely linked are the stock market and the firm? And is the stock
market a leading indicator (the economy will be getting better) or a
lagging indicator (the economy has already topped and may now be
heading down)?
• Integrate forecast results into a plan for the creation of the new venture.
These results will probably include resource levels, resource availability,
and sales forecasts. If sales are predicted to go up 5 percent to 6 percent,
the firm must also plan on increased costs.
• Keep track of the critical aspects of the forecast, meaning compare actual
results with forecasted results

15. Assessing
• Entrepreneur has to answer that most difficult of questions:
What does it all mean?
• Entrepreneurial insight or vision

16. New venture
• A venture is a risky undertaking
• Start-up entity developed with the intent of profiting
financially. A business venture may also be considered
a small business. Many ventures will be invested in by
one or more individuals or groups with the expectation
of the business bringing in a financial gain for all.

17. New venture environment
New Venture Environment

18. New venture environment

19. Political and governmental analysis
• Different interest groups compete for attention and resources
to advance their own interests, establish their own values,
and achieve their own goals.
• Politics is the art of the possible.
• Group of entrepreneurs can influence the political sector.

20. Stakeholders

21. Stakeholders seven dimensions
• Resource capability
• Extent of influence
• Degree of organization
• Nature of interest
• Duration
• Degree of manifestation
• Bases of influence

22. Global issues
• Trade barriers and tariffs
• Political risk
• Trade agreement

23. National issues
• Taxation
• Regulation
• Anti trust regulation
• Patent protection
• Government spending

24. State, regional and local issues
• Licensing
• Security and incorporation law
• Incentives

25. Technological analysis
• Pure inventions. creation of something that is radically
different from existing technologies or products.
• Process invention. After an invention has been
successfully commercialized, the second type of
technological change, process innovation, becomes
dominant.

26. Stakeholders analysis
• Demographics
• Social trends and value

27. Ecological analysis
ecology pertains to such issues as pollution and waste
disposal, recycling of usable materials, protection of wildlife
and wilderness preserve areas, workplace safety and hazards,
and overall quality of life.

28. Elements of industry structure