Banking
Enviromental Analysis

This will the help  to analyse the external environs of the intended start-up in order to have a knowledge  of the situation within that locality.

PEST ANALYSIS


While considering starting up a business, it is worth noting that the Political , Economic ,social and technological  situation of the area for the business has to be scanned and taken into consideration before actually starting the business.

In PEST Analysis , we have the following;

Political Factors

    * ecological/environmental issues
    * current legislation home market
    * future legislation
    * European/international legislation
    * regulatory bodies and processes
    * government policies and stability
    * government term and change
    * trading policies

 ECONOMIC FACTORS

    * home economy situation
    * home economy trends
    * overseas economies and trends
    * general taxation issues
    * taxation specific to product/services
    * seasonality/weather issues
    * market and trade cycles
    * specific industry factors
    * market routes and distribution trends
    * customer/end-user drivers
    * interest and exchange rates

 SOCIALFACTORS

An  entrepreneur starting a business will have to consider the issues mentioned below which affect the lives of their prospective consumers and find out if they can effectively relate to them when they start their business in whatever chosen location.

    * lifestyle trends
    * demographics
    * consumer attitudes and opinions
    * media views
    * law changes affecting social factors
    * brand, company, technology image
    * consumer buying patterns
    * fashion and role models
    * major events and influences
    * buying access and trends
    * ethnic/religious factors
    * lifestyle trends
    * demographics
    * consumer attitudes and opinions
    * media views
    * law changes affecting social factors
    * brand, company, technology image
    * consumer buying patterns
    * fashion and role models
    * major events and influences
    * buying access and trends
    * ethnic/religious factors

 

TECHNOLOGICAL

 The business starter would have to examine the technological competence of his intending  business and how it could stand the present competition .

The assessment includes;

    * competing technology development
    * research funding
    * associated/dependent technologies
    * replacement technology/solutions
    * maturity of technology
    * manufacturing maturity and capacity
    * information and communications
    * consumer buying mechanisms/technology
    * technology legislation
    * innovation potential
    * technology access, licencing, patents

 You have to  make sure that most of the aforementioned variables are in the positive light for you before commencement.Also worthy of mention is the Porters 5 Forces which highlight the extent of competition and various threats that the new business may be exposed to.

 It includes the following:


    * The threat of new entrants

    * The bargaining power of suppliers

    * The bargaining power of customers

    * The intensity of rivalry between competitors

 Put another way, the Porter Industry analysis strategic planning method addresses the following business issues:


     * What powers do our customers have?

    * What powers do our suppliers have?

    * What are the substitutes for our products and services?

    * What is our competitors’ power in the market?

    * What barriers prevent us from entering this market, such as financial, and required human resources?     

    * What powers do our customers have?         

    * What powers do our suppliers have?         

    * What are the substitutes for our products and services?         

    * What is our competitors’ power in the market?         

    * What barriers prevent us from entering this market, such as financial, and required human resources?        

You would have to determine the following;

Bargaining Leverage


    * Buyer concentration versus firm concentration
    * Buyer volume
    * Buyer switching costs relative to firm switching costs
    * Buyer information
    * Ability to backward integrate
    * Substitute products
    * Pull-through

Price Sensitivity

    * Price / total purchases
    * Product differences
    * Brand identity
    * Impact on quality / performance
    * Buyers profits
    * Decision makers’ incentives

IS YOUR IDEA FEASIBLE?

The above shows Porter’s 5 Forces which helps identify the bargaining power of  suppliers ,buyers substitutes

1. Identify and briefly describe the business you plan to start.

2. Identify the product or service you plan to sell.

3. Does your product or service satisfy an    unfilled need?

4. Will your product or service serve an

   existing market in which demand exceeds

   supply?

5. Will your product or service be

   competitive based on its quality,

   selection, price or location?

Answering yes to any of these questions means you are on the

right track; a negative answer means the road ahead could be

rough.
 
Investments Incentives

The government has provided a lot of investment incentives designed to  promote investment and employment,they are as follows:

Pioneer Status

  • 100 % tax free period for 5 years for pioneer industries that produce products declared as “pioneer products” under the Industrial Development (Income Tax Relief) Act No. 22 of 1971 as amended in 1988.

Local Raw Materials Utilisation

  • 30 % tax concession for five years to industries that attain minimum local raw materials utilization.

Labour Intensive Mode of production

  • 5 % tax concession for five years. The rate is graduated in such a way that an industry employing 1,000 persons or more will enjoy the 15 % tax concession while an industry employing 100 will enjoy only 6 %, while those employing 200 will enjoy 7 % etc.

           Local Value Added

  • 10 % tax concession for five years. This applies essentially to engineering industries, where some finished imported products serve as inputs. The concession is aimed at encouraging local fabrication rather than the mere assembly of completely knocked down parts.

  In-Plant Training

  • 2 % tax concession for five years on the cost of facilities provided for training.

Export-oriented Industries

  • 10 % tax concession for five years. This concession will apply to industriesthat export not less than 60 % of their products. 
  • The emphasis is on the encouragement at the pre-establishment stage of export-oriented enterprises.

  Infrastructure

  • 20 % of cost of providing basic infrastructure such as roads water, electricity where they do not exist is tax deductible once and for all.

  Investment in Economically Disadvantaged Areas

  • 100 % tax holiday for 7 years, additional 5 % depreciation allowance over and above the initial capital depreciation.

  Research and Development

  • 120 % tax deductible expenses provided the research and development is carried out in Nigeria; and 140 % for R and D on local raw materials.

 Excise Duty

  • In order to boost local industries, stimulate trade and reduce cost, government abolished most excise duties with effect from 1st January, 1998.

Re-investment Allowance

  • This incentive is granted to companies engaged in manufacturing which incur qualifying capital expenditure for the purpose of approved expansion.

Investment Tax Allowance

  • Under this scheme, a company would enjoy generous tax allowance in respect of qualifying capital expenditure incurred within 5 years from the date of the approval of the project.

  Double Taxation Agreements

This  is to eliminate double taxation on investment income.

Incentives to Agriculture

Without prejudice to governments commitment to deregulation of the financial sector, banks have been enjoined to recognise differences in the gestation periods within each category of agricultural projects such as Crops, Livestock, Fisheries, Forestry and Wildlife.  Banks are enjoined to observe the grace periods on agricultural loans.
 
Investment Laws

INVESTMENT LAWS

Nigerian laws apply equally to domestic and foreign investors.

These include:

  • The Securities and Exchange Act of 1999
  • The Foreign Exchange Act of 1995
  • The Money Laundering Act of 2003
  • The Banking and Other Financial Institutions Act of 1991
  • The National Office of Technology Acquisition and Promotion Act of 1979
 
Swot Analysis

which is also needed for internal environmental analysis , is the analysis of Strength ,Weakness, Opportunities and Threat and helps to will help show you:

  •     How to find the strengths an organisation has that they can exploit against their competitors to win more customers.
  •     How to find weaknesses that need to be improved and ignore those that don’t require investment.
  •     How to find all the untapped market opportunities available for a business to exploit.
  •     How to ensure that any threats to the business are taken account of in all action plans a business develops.
  •     How to implement focused action plans based upon the analysis undertaken that ensures that any investment made in the business is targeted to pulling in additional profitable customers.
  •     How to use your new SWOT analysis as the foundations for your business plan.

Overall, you’ll now be able to show how to build a successful and sustainable business by understanding and focusing on those areas that bring immense success.

In  doing S.W.O.T  Analysis  for the newly started business ,you would need to ;

STEP 1:

Find unique strengths that need to be protected from competitors and communicated to customers

STEP 2:

Highlight the weaknesses that really matter that a company needs to develop

STEP 3:

Accurately pinpoint all market opportunities that have the maximum potential

STEP 4:

Mitigate any threats to the business in a few simple steps

STEP 5:

Pull it altogether and develop the right, targeted action plans from your analys
 
Modalities For Iimplementation Of The Scheme

Funds invested by participating banks shall be in the form of equity investment in eligible industries. Equity investment may be in the form of fresh cash injection and/or conversion of existing debts owed to participating banks into equity investment.

A participating company may obtain more funds by way of loans from banks in addition to equity investment under the scheme. Eligible industries may approach any bank including those they presently have a relationship with or the ones which they do not have a relationship with Banks may operate the scheme directly through their wholly-owned subsidiary venture capital companies floated by a consortia of banks. Prospective beneficiaries should seek the opinion of third party consultants like lawyers, Accountants and Valuers determining the value to be placed on the asset and the capital of their businesses to enjoy a fair price before and during negotiations with Banks.

Membership of recognised NGOs engaged in entrepreneurial development and promotion of small scale industries will also be an advantage The recommendations of industrial associations (e.g. MAN,NACCIMA, NASME, NASSI, etc) SUGGESTONS FOR THE SME PROBLEM Since SMEs require in the pre and post stages finance, BDS providers could play a key role in providing resources and elaborating programmes dedicated to increasing the knowledge and competencies of SMEs. Continuous enlightenment campaign by the CBN and the banking industry,and Pre investment exit arrangements included to Memorandum ofunderstanding(MOU)/Shareholders Agreement.

Nigerian entrepreneurs should be ready to institutionalize the company , separate it from self and be ready to be ‘helped’. Government has an important part to play by ensuring a conducive environment, capacity building, infrastructure, regulatory and legal framework.Government must ensure a stable political environment .
 
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