Salt Consulting LLC’s Environmental Scan
According to Business Dictionary, “environmental scanning is the careful monitoring of a firm’s internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans.” A major objective of Salt Consulting LLC is to predict accurately the influences of these internal and external factors. The long-term goal is to create a profitable organization that recognizes and predicts any assumptions of what the future will hold. In conducting an environmental scan, Salt Consulting LLC will explore factors in the industrial, societal, and political environments. The firm will study competition and the internal strengths and weaknesses of the firm. These studies will provide data to create sustainability and long-term growth for Salt Consulting LLC. Remote Environment
Remote environment factors are vital to evaluating a business model. As a tax consulting business, SALT Consulting, LLC must focus on the nature and direction of the economy. Washington State is experiencing budget shortfalls. Arun Raha has forecast an additional reduction in forecasted revenue of $80 million for the current fiscal year ending in June (Bloomberg Businessweek, 2011). Because of the economic environment facing state governments, increasing tax collections, and providing state auditors more tools to attack transactions helps in revenue generation for the state. Washington State introduced and passed legislation in 2010 that imposes business and occupation taxes on corporate directors, a temporary increase in the business and occupation tax rate on services, expressly identified three types of transactions as tax avoidance. It is imposing additional penalties on tax avoidance transactions, imposing new treatment of options to purchase entities, expanded the liability for real estate excise tax, a partial repeal of an exemption for amounts received by on-site property management, a new nexus standard for royalties and services, and a new apportionment system (Oregon Business Report, 2011). According to Martin Silver, PS Attorney at Law (2008), “As Washington State and federal governments more aggressively pursue tax revenue, audits, collections and compliance activities are on the rise”.
Industry environment factors are vital to identifying, and understanding the competition and the business environment. Industry competitors, suppliers, buyers, substitutes, and entrants must all be considered.
Determinants of entry are dependent on the clients pursued. Required capital costs are low for tax consulting businesses. Key factors that affect the capital requirements are the business model and how the business will operate. Businesses that provide outsourced tax compliance processing have higher capital costs due to required software, and hardware for processing tax returns. Businesses that focus on audits, and consulting engagements to help their clients operate in a compliant manner with existing laws and regulations have lower capital requirements. They can operate predominantly from their customer’s locations, and remotely out of a home office. Distinct and separate tax consulting projects offer low switching costs to customers due to the nature of the work. The key determinants of entry are due to the proprietary product differences primarily based on the knowledge and experience of the consultants on the project, rather than the business providing the consulting services.
Determinants of supplier power limit the tax consulting industry. Tax consulting businesses have access to free information provided by the various states. The scope of the business and the projects that will be entered are key determinants of the requirements of suppliers. SALT Consulting, LLC will focus on providing consulting services on Washington State taxes. Supplier power...