Strategic Planning in the Small Business

Unit 2

HO 2-4 (continued)

sions.

Generally,

macro

economic

information

(perhaps

at the

national

or

state level)

is readily

available. However,

this

data

may

be of little

real value

to the small

business dealing

in more

isolated and

unique

markets. Therefore,

awareness

of eco­

nomic factors

within

the relevant

target market

becomes

crit­

ical. For

example, small

businesses

are concerijed

about

factors

such

as movements

of or

trends in

local interest

rates, unem­

ployment

levels, total

sales within

the community,

tax

rates, and

a' dilability

of capital.

Of course,

the influence

of

these factors

will vary

considerably

across firms

and industries.

NATURE
OF
THE INDUSTRY

After the broad

economic

factors

have been

considered,

the

industry should

be studied.

In order

to formulate

a reasonably

comprehensive

yet workable

'glimpse

of the

industry

and its

movements

and impact,

the small

businessperson

should

focus

on two

fundamental

areas of

concern. First,

one must

gain an

appreciation

of the

nature of

the demand

for industry

products

or services.

Is industry

demand

growing,

stabilizing,

or dimin­

ishing?

Many

factors, including

changes

in the

technological,

social and

demographic,

political,

and economic

variables

of

the general

environment,

may

affect this

outlook.

The relative

strength

of

the industry's

demand

can be drawn

by studying

volume

and profit

trends

for the industry

Secondly,

a more

difficult,

but perhaps

more

relevant

concern deals

with

the

stability

of demand.

The

industry may

be booming,

but

is it a

fad?

Will it continue?

Here,

the concept

of product

life cycle

may be a

useful an­

alytical tool.

Typically,

as noted

in Figure

1-1, products

are seen

as passing

through

four specific

developmental

stages.

Aware­

ness

of where a

product seems

to fall

on this continuum

may

critically

affect

the business

since each

stage is accompanied

by

a unique

series of

opportunities

and difficulties.

For

example,

ifa

company

has products

which are

in the latter

stages of

the

cycle (late

maturity

or decline),

significa.,t

future problems

may

arise.

This is

particularly

true if attractive

alternative

products

Chapter One

Environmental

Analysis

29

172