ENVIRONMENTAL SCANNING

DEFINITION

• Environmental scanning is a process of gathering, analyzing, and dispensing

information for tactical or strategic purposes.
•

• Careful monitoring of an organization's internal and external environments

 for detecting early signs of opportunities and threats that may influence its 
current and future plans. In comparison, surveillance is confined to a
specific objective or a narrow sector.
•

• It is monitoring and interpreting sweep of social, political, economic,

ecological, and technological events to spot budding trends that could
eventually impact industry
 PURPOSE OF ENVIRONMENTAL
SCANNING
•

• Effective utilisation of resources

• Constant monitoring of resources
• Strategy formulation
• Identification of threats and opportunities
• Useful for the managers
• Prediction of future
 FACTORS TO BE CONSIDERED FOR
ENVIRONMENTAL SCANNING
External environment of business

Events

Expectations of people
 APPROACHES TO ENVIRONMENTAL
SCANNING
•
SYSTEMATIC APPROACH
•
information for environmental scanning collected systematically
•
Information pertaining to business and industry could be collected
continuously to monitor changes
•
Continuous updating necessary not only for strategic management but also
for operational activities
•
In this approach information is collected relating to mkt customers,changes
in legislation govt. policy have a direct impact on organisation.
•
ADHOC APPROACH
•
Organisations conduct special surveys and studies to undertake special
projects, evaluate existing strategies or devise new strategies
•
Changes and unforeseen developments may also be investigated
•
PROCESSED FORM APPROACH
•
Information used is supplied by govt agencies or private instituitions
•
Secondary data available from external and internal sources may also be
used
 FACTORS AFFECTING ENVIRONMENTAL
APPRAISAL
•
Factors relating to nature of ➢
Factors relating to the
environment Strategies
•
Complexity •
This is master level stretgy:- corporate
•
Flexibility level strategy to achieve corporate
•
Hostility objective.
•
Diversity •
Sub level strategy:-for specific purpose
•
Factors relating to the organisation and to help master stretgy.
•
Nature of the business •
Functional level strategy:-how the
•
Age of the organisation stretgy is translated into functions like
•
Size of the organisation marketing,finance, production and R
•
Nature of the markets AND D.
•
Nature of the products •

➢
Factors relating to strategists:
•
Age , education and experience
•
Motivational level
•
Ability to withstand pressure and strain
•
Interpersonal relations
 STRUCTURING THE ENVIRONMENTAL
APPRAISAL
• Two most important techniques of
environmental appraisal are:
• ETOP(environmental threats and
opportunities) Analysis
• SWOT(strengths, weaknesses,
opportunities and threats) analysis
 ETOP

Steps involved in the preparation of

ETOP:
• Dividing the environment into different sectors
• Analysing the impact of each sector on the organisation
• Subdividing each environmental factor into sub factors
for a comprehensive ETOP
• Analysing the impact of each subfactor on the
organisation in the form of a statement
• Preparing a summary to show the major factors for the
sake of simplicity
 Importance of ETOP
• Provides a clear picture to the strategists
of the sectors and the different factors in
those sectors
• Helps the organisation in knowing where
it stands with respect to its environment
• Helps the organisation in formulating
appropriate strategy to take advantage
of the opportunities and threats in its
business
 SWOT Analysis
• SWOT stands for Strengths, Weaknesses,
Opportunities and Threats
•

• Identification of the threats and opportunities in

the external environment and strengths and
weaknesses in the internal environment of the
firms are the cornerstone of business policy
formulation.
• It is the SWOT analysis which determines the
course of action to ensure the growth / survival
of the firm.
 Strengths

Strengths—internal to the unit; are a unit’s resources and capabilities that can
be used as a basis for developing a competitive advantage; strength should be
realistic and not modest.
The list of strengths should be able to answer:
•
What are the unit’s advantages?
•
What does the unit do well?
•
What relevant resources do you have access to?
•
What do other people see as your strengths?
•
What would you want to boast about to someone who knows nothing about this
organization and its work?
•

•
Examples: good reputation among customers, resources, assets, people, :
experience, knowledge, data, capabilities
•
Think in terms of: capabilities; competitive advantages; resources, assets,
people
•
(experience, knowledge); marketing; quality; location; accreditations
•
qualifications, certifications; processes/systems
 Weaknesses

Weaknesses—internal force that could serve as a barrier to maintain or achieve a

competitive advantage; a limitation, fault or defect of the unit;
It should be truthful so that they may be overcome as quickly as possible
•

The list of weaknesses should be able to answer:

•
What can be improved?
•
What is done poorly?
•
What should be avoided?
•
What are you doing as an organization that you feel could be done more
effectively/efficiently?
•
What is this organization NOT doing that you feel it should be doing?
•
If you could change one thing that would help this department function more effectively,
what would you change?
•

•
Examples: gaps in capabilities, financial, deadlines, morale
•
lack of competitive
 Opportunities

Opportunities—any favorable situation present now or in

the future in the external environment.
•

•
Examples: unfulfilled customer need, arrival of new
technologies, loosening of regulations, global
influences, economic boom, demographic shift
•

•
Where are the good opportunities facing you?
•
What are the interesting trends you are aware of?
•
Think of: market developments; competitor;
vulnerabilities; industry/ lifestyle trends;; geographical;
partnerships
 Threats

External force that could inhibit the maintenance or attainment of a

competitive advantage; any unfavorable situation in the external environment
that is potentially damaging now or in the future.
•

•
Examples: shifts in consumer tastes, new regulations, political or legislative
effects, environmental effects, new technology, loss of key staff, economic
downturn, demographic shifts, competitor intent; market demands; sustaining
internal capability; insurmountable weaknesses; financial backing
•

•
The list of threats should be able to answer:
•
What obstacles do you face?
•
What is your competition doing?
•
Are the required specifications for your job/services changing?
•
Is changing technology threatening your position?
•
Do you have financial problems?
•
Could any of your weaknesses seriously threaten your unit?
 Pest Analysis
• It is very important that an organization
considers its environment before
beginning the marketing process. In fact,
environmental analysis should be
continuous and feed all aspects of
planning. The macro-environment
consists of e.g. Political (and legal)
forces, Economic forces, Sociocultural
forces, and Technological forces. These
are known as PEST factors.
PEST

political

economic
 POLITICAL FACTORS

The political arena has a huge influence upon the

regulation of businesses, and the spending power of
consumers and other businesses. One must consider issues
such as:
•
1.How stable is the political environment?
•
2.Will government policy influence laws that regulate or
tax your business?
•
3.What is the government's position on marketing
ethics?
•
4. What is the government's policy on the economy?
•
5. Does the government have a view on culture and
religion?
•
6. Is the government involved in trading agreements
such as EU, NAFTA, ASEAN, or others?
 ECONOMIC FACTORS

Marketers need to consider the state of a

trading economy in the short and long-
terms. This is especially true when planning
for international marketing. One need to
look at:
• 1. Interest rates.
• 2. The level of inflation Employment
level per capita.
• 3. Long-term prospects for the economy
Gross Domestic Product (GDP) per capita,
and so on.
 SOCIO-CULTURAL FACTORS

The social and cultural influences on business vary from

country to country. It is very important that such factors are
considered. Factors include:
•
1.What is the dominant religion?
•
2.What are attitudes to foreign products and services?
•
3.Does language impact upon the diffusion of products onto
markets?
•
4.How much time do consumers have for leisure?
•
5.What are the roles of men and women within society?
•
6.How long are the population living? Are the older
generations wealthy?
•
7.Do the population have a strong/weak opinion on green
issues?
 TECHNOLOGICAL FACTORS

Technology is vital for competitive advantage, and is a

major driver of globalization. Consider the following
points:
•
1. Does technology allow for products and services to be
made more cheaply and to a better standard of quality?
•
2.Do the technologies offer consumers and businesses
more innovative products and services such as Internet
banking, new generation mobile telephones, etc?
•
3.How is distribution changed by new technologies e.g.
books via the Internet, flight tickets, auctions, etc?
•
4.Does technology offer companies a new way to
communicate with consumers e.g. banners, Customer
Relationship Management (CRM), etc?