Strategic Planning in the Small Business

HO 2-4 (continued)

Unit

2

Despite such

bold efforts,

only six damper

units had been

sold

and installed.

Furthermore,

there was no

indication that

the

vent

damper business would

becomc stronger.

At the some time,

Lee had cleary

neglected the

furnace and oir-conditionin,

phases

of

his business.

Installation dotes

were being

missed and

orders

were behind

schedule.

Some

customers

hod

become

upset

m-d

had

cancelled their

orders. The

furnace and

air-conditioning

lines

were experiencing

their

worse financial

quarter in

the company's

seventeen-year

history.

In

addition

to these industry

demand

considerations,

the

nature

of industry

supply

miust also be

addressed.

If demand

is

strong and

supply is limited,

busiresses

can take

:isks and

exercise

considerable

flexibility.

However,

as supply

increases

relative

to demand,

efficiency

of operations

and control

ofcosts

become

critical.

Small firms

are then likely

to be adversely

af­

fected

or driver,

out of markets.

From

a supply side,

manage­

ment

must consider

the entry

and resultant

impact

of new

competition

in

the industry.

Who are

these competitors?

How

will

they affect

or modify

the existing

structure and

balance

of

the industry?

Most

notable

from the supply

perspective

is the

condition

where an

industry, dominated

by

small independents,

is modified

by the

entry of large,

national

chains or franchises.

Here,

the independents

must

recognize

that the entire

nature

of industry

composition

has been

radically affected

and

make

necessary

adjustments.

NATURE

OF THE

TASK ENVIRONMENT

The

task environment

is comprised

of those

external areas

with

which

the business

has the most

direct and

regular contact.

For

the small

business,

four components

of the

task environment,

customers,

suppliers,

sources of funds,

and competition,

should

be addressed.

Trade Area

and Target

Markets

A starting

point in understanding

the

customer

is to carefully

recognize the

trade area.

The trade area

represents

the geo­

32 Part

One The

Analysis Phast

175