ENVIRONMENTAL SUITABILITY FOR DEVELOPING
ENTREPRENEURSHIP WITH THE APPLICATION OF PEST
ANALYSIS IN BANGLADESH
A RESEARCH PROPOSAL ON
Environmental Suitability for Developing Entrepreneurship with
the application of PEST Analysis in Bangladesh
Md. Reaz Uddin
Fatema Khatun : 090349
Business Administration Discipline
Course Name: Course: Sessional of Business Research Methodology
Bangladesh became independent in the year 1971 after bloody war against Pakistanis. When the
country was independent, entrepreneurship among the local people was limited only two percent
of the total population. It was irony that the at that time non-Bangles largely controlled
entrepreneurship. But Bangladesh has a magnificent model of entrepreneurial activities from
ancient time period to till seventeenth century. At that time it had small and cottage industries,
shipping industries, gold and silver smithy, milk products, making of combs and buttons from
animal bones, treatment of raw hides, papermaking, sugar, salt industries etc. After seventeen
century this entrepreneurial activities turned to become darkness of shadow. Local people of the
country were inclined to work as entrepreneurial activities due to political and historical reason.
In Bangladesh lack of political commitments and absence of creation of healthy environment
required for entrepreneurial growth are the limiting factors in the process of adequate supply of
reasonable number of entrepreneurs. Small and Medium enterprises are the lifeblood of any
economy and are at the forefront of Govt. efforts to promote entrepreneurial activities,
innovation and increased productivity. The SMEs in Bangladesh face significant problems in
access to finance for their business activities. This relates to getting the right amount of fund at
the right time at reasonable rates with suitable repayment. The garments sector and micro-credit
scheme transformed the face of economy in the country especially for women. Over the several
years, the mobility of women, especially in urban sectors, has improved. As women became
more involved in business, they also changed the standard of living of their families. Women
have successfully played dual roles in both professional and personal lives. Women
entrepreneurs understand the way of doing business and have even diversified their business into
different sectors. In terms of MDGs, although Bangladesh has so far made considerable progress
in social issues, its achievement in economic issues is relatively not bad. (Ali, 2011)
Keywords: Political and historical reason, MDG, Mobility of women, Small and Medium
It is widely said that some society/culture is more favorable to entrepreneurship than others.
Entrepreneurs are creations of the environment. If favorable environment prevails
entrepreneurship will emerge and vice versa. The non emergence of entrepreneurship in
Bangladesh at a desired level might be attributed to the unfavorable environmental factors.
However, the study of environment for entrepreneurship faces the perpetual question of what
constitutes the environment. In fact, there is no consent among the researchers in this regard. A
number of researchers have approached this topic by identifying a set of elements to be the
constituents of the business environment of entrepreneurship development. It is included
political, economical, legal, and socio-cultural aspects as well as the role of state as the major
elements of entrepreneurial environment. Capital, labor, raw materials, technology, market size
and composition are considered as the opportunity conditions for the entrepreneurs. It is assumed
that the economic opportunity condition in Bangladesh is reasonably favorable. But
entrepreneurship has not treaded forward to take advantage of such favorable conditions. In this
aspect he recognized the adverse non-economic factors, like political, economical, legal and
socio-cultural factors that hinder the growth of entrepreneurship in the country. A business
student should also look it as a great opportunity. (Azim, 2009)
Scope of the study
Scope means the area of action. The scope has been clearly specified. The target is to find out
political, economical, social and technological problems and opportunities for developing
entrepreneurship in Bangladesh. So to make a good research proposal survey will be to
entrepreneurs, bankers, economists, University teachers and policy makers.
2.0 Literature Review
Entrepreneurship can be defined as the process of using private initiative to transform a business
concept into a new venture or to grow and diversify an existing venture or enterprise with high
growth potential. Entrepreneurs identify an innovation to seize an opportunity, mobilize money
and management skills, and take calculated risks to open markets for new products, processes
and services. For the development of our country in Economic sector, the importance and
necessary of the entrepreneurship development is a must. But the sorrowful matter is that a very
few research work is done on over it. So the growth the process of the development in the sector
is very sluggish. Researcher both in the sector of Government and the Public both need to
provide more attention in this important sector.
2.1 Definition of entrepreneurship
Entrepreneurship is more than simply “starting a business.” The definition of entrepreneurship is
a process through which individuals recognize opportunities, allot resources, and generate value.
This creation of value is often through the recognition of unmet needs or through the
identification of opportunities for change. (sirpoils, 1998)
So we can say that entrepreneurial success is simply a function of the ability of an entrepreneur
to see these opportunities in the marketplace, initiate change and create value through solutions.
2.2 Factors require for developing entrepreneurship
The emergence and development of entrepreneurship is not a spontaneous one but a dependent
phenomenon of economic, social, political, psychological factors often nomenclature as
supporting conditions to entrepreneurship development. For analytical proposes, these conditions
are grouped and discussed under tow categories, this areEconomic Factors
Form a strictly economic viewpoint, it can be said that there are some factors which promote
economic development through emergence of entrepreneurship. Some of these factors are
discussed in below•
Capital is one of the most important prerequisites to establish an enterprise. Availability of
capital facilities the entrepreneur to bring together the land of one, machine of another and raw
material of yet another to combine them to produce goods. Capital is, therefore, regarded as
lubricant to the process of production.
The quality rather quality of labor is another factor which influences the emergence of
entrepreneurship. It appears that labor problems can be solved more easily than capital can be
The necessary of raw materials hardly needs any emphasis for establishing any industrial activity
and, therefore, its influence in the emergence of entrepreneurship. In absence of raw materials,
neither any enterprise cab be established nor an entrepreneur can be emerged.
The fact remains that the potential of the market constitutes the major determination of probable
rewards form entrepreneurial function. Thus, it appears that weather or not the market is
expending and the rate at which it is expanding is the most significant characteristics of the
market for entrepreneurial emergence.
Sociologists and psychologists advocate that economic factors may be necessary conditions, but
they are not sufficient condition for the appearance of entrepreneurship. Some major noneconomic factors alleged to influence the emergence of entrepreneurship can be described below:
Legitimacy of Entrepreneurship
The proponents of non-economic factors give emphasis to the relevance of a system of norms
and values within a socio-cultural setting for the emergence of entrepreneurship.
Social mobility involves the degree of mobility, both social and geographical, and the nature of
mobility channels within a system. The opinion that the social mobility is crucial for
entrepreneurial emergence is not unanimous.
A group of scholars hold a strong view that social marginality also promotes entrepreneurship.
The two preceding factors - the legitimacy of entrepreneurship and social mobility-largely
determine the influence of marginality on entrepreneurship.
We also regard security to be a significant factor for entrepreneurship development. This is
reasonable too because if individuals are fearful of losing their economic assets or of being
subjected to various negative sanctions, they will not be inclined to increase their insecurity by
Many entrepreneurial theorists have propounded theories of entrepreneurship that concentrate
specifically upon psychological factors. We consider these theories separately for that reason•
To the best of our knowledge, the best known of primarily psychological theories is David
McClelland’s theory of need achievement.
Withdrawal of Status Respects
Hagen attributed the withdrawal of status respect of a group to the genesis of entrepreneurship.
This very fact led them to the technological progress entrepreneurial roles. (Kamruzzaman et al.,
2.3 Social and economic background of Bangladesh
The economic development of Bangladesh in the last three decades is the resultant effect of
structural change in the economy leading towards considerable growth of the manufacturing and
service sectors, various reforms of domestic economic policies, changes in international policies,
and in this process the emergence of a group of entrepreneurs. During this period, GDP growth
doubled from a mere 3.7% in the 1980s to more than 6% after 2000, with Bangladesh now
ranked 33rd out of 191 countries (in terms of GDP). However, because of its huge population
(150,448,340), Bangladesh is ranked 8th out of 191 countries (in terms of population), and is
consequently regarded as one of the poorer countries (150th out of 191 countries in terms of per
capita GDP). (Moazzem, 2008)
2.5 Entrepreneurship in Bangladesh
In our country, the term for an entrepreneur is a 'businessman,' which carries with it a set of
negative connotations. The assumption is that one goes into business if one cannot be a banker,
doctor, engineer, lawyer, professor or a corporate worker. In movies, businessmen are portrayed
as crude, immoral people. In day-to-day life, a businessman is only considered successful if he
can achieve conspicuous display of wealth.
Despite our negative views of 'business', the private sector has a crucial role to play in growing
the economy and providing employment opportunities. The private sector is the engine of
innovation in all sectors of the economy. Entrepreneurship in Bangladesh currently thrives in two
sectors of the economy -- among the poorest of the poor (14 million households) and among the
well-off (about 2.5 million households). The reason for this is that both of these sectors have
access to institutional financing.
The change in mindset can perhaps be attributed to the realization that notwithstanding advances
in scientific, social, political and economic systems, the gap between rich and poor is widening.
With many social problems continuing to plague societies and some even worsening, concern
regarding the effectiveness and sustainability of governmental and welfare-based approaches to
social problems has increased. This in turn has directed greater attention to the work of
entrepreneurs. (Shams, 2009)
2.6 Entrepreneurship friendly environment across the globe
While the notion of entrepreneurship applies to both those who create new startups and those in
larger firms who bring new ideas, innovations, and businesses to market, the challenges are very
different. If we look at the world, we can see that most of the successful people in the world are
entrepreneurs. Mary Kay Ash, Richard Branson, Michael dell, Bill gates, Henry ford’s all are
popular as a successful entrepreneur. Bill Gates ranked as the world richest person from 19952006. (Amabile, 2008). According to GEM report "most entrepreneurial activity is carried out by
25 to 34 years old, regardless of the level of income in their countries (GEM Executive Report,
2004). Empirical research supports links between entrepreneurial activity and economic growth
(Van Praag and Verssloot, 2007).
Bill Gates was a college drop out. He started the largest computer software company, Microsoft
Corporation. Today Microsoft is one of the most popular companies in the world.
2.7 Effectiveness of PEST analysis for evaluating environmental conduction in an economy,
PEST analysis is concerned with the key external environmental influences on a business.
The acronym stands for the Political, Economic, Social and Technological issues that could
affect the strategic development of a business.
Identifying PEST influences is a useful way of summarizing the external environment in which a
business operates. However, it must be followed up by consideration of how a business should
respond to these influences.
The table below lists some possible factors that could indicate important environmental
influences for a business under the PEST headings:
Political / Legal
(overall; by industry
(change in distribution on research
of disposable income;
Monetary policy (interest Demographics (age
structure of the
industry focus on
family size and
nature of occupations)
(overall level; specific
Labor / social mobility New discoveries and
Consumer protection Policy towards
Lifestyle changes (e.g. Speed of technology
Home working, single transfer
Attitudes to work and
Taxation (impact on
income, incentives to
invest in capital
Rates of technological
Exchange rates (effects Education
organization / attitude on demand by overseas
customers; effect on cost
of imported components)
Energy use and costs
Inflation (effect on costs Fashions and fads
and selling prices)
Changes in material
Stage of the business
cycle (effect on shortterm business
Health & welfare
Impact of changes in
Economic "mood" consumer confidence
2.8 Condition of women entrepreneurs in Bangladesh
Ten years ago, a majority of the women workers in Bangladesh worked in the informal sector.
They were mostly unpaid and did not contribute directly to formal economic activities. However,
the demographic structure of the labor participation in Bangladesh is witnessing a remarkable
change. An increasing number of women are working in the formal sector as entrepreneurs and
paid workers, a situation that was not seen in the past. This gradual transformation of women’s
participation from the informal to the formal sectors has resulted in an upward mobility in the
social and economic status of women, especially that of poor women in the country.
In order to gain an understanding of the current situation, it becomes important to trace the
factors that are contributing towards a progressive transformation in the status of women in the
country. Since the early 1990s, the growth of manufacturing industries provided women an
opportunity to enter the formal labour market. A large number of rural women migrated to cities
at a very young age, thereby reducing women labour in agriculture in rural areas. A new
generation of women workers emerged in the country that was financially independent and lived
alone in urban areas without male supervision. (Suryanarayanan, 2011).
The types of enterprises operated by women are
(3) Household or Family Trade;
(4) Labor intensive;
(5) Export oriented;
(6) Industries with modem technology. (Hossain, 2007)
2.9 Entrepreneurship Development Process
Major assistance requirements of the new entrepreneurs are worth mentioning while discussing
the entrepreneurial development as a tool of economic growth of a nation. They need multiple
assistance which may be offered in a package form. To set up an enterprise and run it
successfully an entrepreneur need these types of assistance. These three groups of assistance
form an Entrepreneurship Development Cycle. The groups of assistance are-
The stimulatory activities comprise entrepreneurial education, provision of entrepreneurial
opportunities and guidance in selecting industries are needed to help emergence of
entrepreneurship in the Society. This support ensures a good supply of entrepreneurs to start a
new venture and develop potentiality to succeed in a venture.
The support activities refer to those which enable the entrepreneurs in setting up and running the
enterprises successfully. They help in mobilizing resources and assistance.
The sustaining activities include efforts which help the entrepreneurs sustain themselves against
the challenges of actual operation. (Kamuuzzaman, 2008)
2.10 Earlier researches on using PEST analysis for evaluating environmental condition
Earlier research was conducted on using PEST analysis for evaluating environmental condition
by the students of faculty of Business Administration and Management of potuakhali science and
Technology University. They prospected and suggested that contribution by an entrepreneur can
certainly made by the environment that is conducive to his taking and innovation.
Proper planning and government intervention is needed to come out from political
Bangladesh still needs goods export oriented strategies.
Sound fiscal and monetary policies are vital to the sustained growth of the private sector.
For rural entrepreneurship development government should take new decision for
agriculture and marketing program and should be operated strongly.
An efficient transport and communication network aids production and market
expansion. (Khan, 2010)
2.11 Problems associated with entrepreneurship development
As against the favorable factors, entrepreneurship development is faced with many problems. By
discussing with the entrepreneur of Bangladesh we find some problems which are needed to
reduce. The problems are discussed belowThe absence of clear cut policy decisions, particularly for the new entrepreneur.
Lack of adequate financial support to set up or proper maintenance o the business,
particularly the new one.
Lack of short term credit to maintain the business properly as well as fulfill the needs of
Poor judgment about the market condition as well as the demand of the customers.
Identification of suitable location is another problem to establishment of a new business.
Political problem is another problem for making the business smooth. (Kamruzzaman,
There are two types of objectives.
To find out political, economical, social and technological problems and opportunities for
developing entrepreneurship in Bangladesh.
Entrepreneurship development policy of Bangladesh
Entrepreneurship development process
Factors influencing entrepreneurship development
Importance of training to develop the entrepreneur
What types of political activity are to face our entrepreneurs?
Is our economic environment suitable enough for our entrepreneurs?
How can socio economic activity affect to make a good environment?
Are technical facilities available for our entrepreneurs?
It is the heart of the proposal. It includes
The research design will be exploratory. Focus group and personal interview will be used here to
collect correct interview.
Convenience sampling will be used here. Because survey can be conducted to any banker,
politician, university professor whom can be found very easily. Entrepreneur is a common topic
and most of the people know about it. So convenience sampling must be used here.
The most important thing of research proposal is questionnaire. There are only four variables and
those are simply four components of PEST analysis in the form of Political, legal, sociological
and technological environmental factors. The questionnaire has to be prepared which will
comprise these four variables and it will be open ended questions in total under those four
variables so that they can express their opinion easily.
These four variables and the relevant questions have to be asked to entrepreneurs, bankers,
economists, University teachers, policy makers. The questions will be asked for getting the data
necessary for qualitative analysis.
Collection of data is an important part for preparing any report. This study is also required
various data and information that will be collected from two sources. They are stated below:Primary Sources:
Questionnaire survey through focus group
In terms of exploratory research the sphere of data analysis is limited. Decision has to be taken
based on discussion of focus group and personal interview.
Rationale of the study
Lack of entrepreneurship growth is one of the main reasons for not raising the economy.
Entrepreneurship is the main way to develop the country. One -half of the total population is
women. But they are yet to get the equal opportunity and social empowerment regardless of for
last forty-one years there is some development. So this proposal is being undertaken and it will
be useful for study. In this study the problems and opportunities will be found out behind
Generally, limitation includes anything that creates hindrance in investigation and hardly can
control. To make the proposal few limitations have to be faced. These limitations are as follows: Unwillingness of the economists to give internal information.
In some cases, many people do not know the right information regarding this topic.
The bankers are too busy with their work and they do not have sufficient time to discuss
about my topic.
Since the policy makers are unwilling to give the right information, it will create
Every research proposal has some delimitation. In this study the delimitations are
In this study data are not being analyzed as it is exploratory study and it possesses open ended
Population is not mandatory here. Because Sample is not representing population.
Resources and Budgeting
Much money has to be spent for resources and budgeting. I have to also budget my time,
schedule e.t.c. I have to select my schedule where I will go and where I will not go for survey.
What should be the approach? The potential excellence and open scopes have to be kicked off to
investigate for people of all classes across the country. The government also needs to ensure that
people of small means should have access to facilities to undertake economic activities at
appropriate scales throughout the country. Once the overall framework is in place, mobilization
of more resources and more effective utilization of the available resources will be facilitated. If
all these factors work together under one umbrella, only then economic progress and
development, along with poverty alleviation target, can be achieved.