Environmental Scanning

Name : DEBOLINE MITRA

Registration No. : 211630700910019 of 2021-22
Roll No. : 16300921006
MASTER OF BUSINESS ADMINISTRATION Semester : SEM3

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 An organization works in an
extremely dynamic
environment that keeps
changing constantly. So, an
organization’s future also has a
changing tendency that requires
close monitoring of the
organization’s ever-changing
environment through
Environmental Scanning.

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components of both internal and external business environment
The detailed and continuous process by which an
organization monitors its internal and external
environment is termed as ‘Environmental
Scanning’. The process is aimed at identifying
the risks and opportunities that can affect an
organization’s prospect or direction.
In a more detailed form, Environmental
Scanning is related to examining and
interpreting different economic, social,
technological, political trends, and events that
affect an organization or industry or the whole
market.
Different factors or components of both
internal and external business environment The internal environment consists of strengths and
can affect an organization or business in both weaknesses of an organization, wherein the external
positive (opportunity) or negative (threat) environment is related to threats and opportunities which
way. That’s why these are required to be are outside components of the organization’s
constantly monitored in which Environmental environment.
Scanning plays a vital role. These components
are:
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 Purpose of Environmental Scanning

• The basic purpose of

environmental scanning is
data collection related to
competitors, employment
trends, technological
advancement, industry
trends, political, economic
conditions, etc.

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Following are the different aims of environmental scanning process:
• Environment awareness: Environmental Scanning includes the study of the business
environment of any business which helps in gaining knowledge of changing the business
environment. To remain competitive in the market, business owners must have awareness about
the current environment in which they operate their business. This facilitates predicting the

Different aims prospects of business in such an environment, and also they can plan their business strategy well
in advance.
• Information for decision-making: One of the important aims of the business environment

of study through Environmental Scanning is to provide necessary information which is required for
conducting right and better decisions. With the help of the study, businesses can know their
stakeholders and competitors much better. So, it’s easier to make decisions related to different

Environmental aspects like sales & purchase, costing, perks, etc.

• Facilitates policy-making: Good business polices demand a thorough knowledge of different

Scanning
business environment i.e. economical, social, legal, political, etc. By providing such knowledge,
environmental scanning contributes to drafting better business policies.
• Planning related to technology: Businesses work in today’s rapidly changing technical

Process
environment. It’s necessary for them to cope-up with the technological advancements of their
industry by knowing the technological environment. It helps in making effective technical
planning for businesses.
• Business survival through forecasting: At the time of recession or losses, organizations bear
limited sales while unlimited production may be there. In that scenario, business survival much
depends on the fact that all such situations have been predicted well in advance through
Environmental Scanning.

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 The main characteristics of the entrepreneur are due to their sociological
and psychological factors. Some of those characteristics are mentioned
below:

Entrepreneurs are vision-oriented people

Entrepreneurs have a high need in achievement

Characteristics Entrepreneurs do not rely on fate or luck, however they try to control

of an their own lives

Entrepreneur
Entrepreneurs undertake moderate risks, which is why they look for high
earning on their investments

Entrepreneurs have the abilities to deal with several ambiguous

situations in their ventures. They face these ambiguous situations and
circumstances regularly because they do certain jobs and tasks which are
entirely new by nature.
Entrepreneurs have the tendency to be productive and efficient with in a
given period of time. However, at times, they might be seen as inflexible
individuals in team-work.
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 Factors to be considered while Environmental Scanning
•Events: Different occurrences that are specific and occur in different business environments play an important role in the functioning or
growth of the business. These events take place in any business environment i.e. internal or external. These can be observed and tracked
by the businesses.
For example, The government revises the minimum wages of employees or workers from time to time, and an organization is required to
keep track of these revised minimum wages as its mandatory for them to incorporate these new wages in the salary structure of employees.
•Trends: Trends are general tendencies that are connected with events. It is also considered as a group of related events. Trends are also
an important factor of Environmental Scanning as it helps organizations in identifying the frequency of different events to make changes in
the respective field. These trends can be both positive trends or negative trends.
For example, An organization having different products and markets needs to identify the product that is not making profits in a particular
market. For this, it will analyze the previous 4-5 years of sales trends of that product in different markets. If trends are negative, i.e. the sale
is decreasing on a ‘year on year’ basis then it may decide to change the marketing strategy of that particular product.
•Issues: There might be some concerns or issues that can arise along with events and trends. To take corrective actions, the identification
of emerging issues is required. Identifying emerging concerns that are both burning and cold is a little difficult as it demands change in the
values of the concerned area.
For example, While analyzing an organization’s product sales trend of the last 4-5 years, it is found that sale is declining for that product in
a particular market. So, it has raised an issue or concern of the wrong marketing strategy or loss to the organization due to the failure of the
product in that market.
•Expectations: Different people can demand certain things based on the concern of their issues. These demands are considered as
expectations.
For example, Employees who have issues or concerns with their current salary; may expect or demand better salary hikes in their yearly
appraisal.
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 •Systematic approach: This approach demands a systematic collection
of information for scanning an environment. Different types of information
related to market, competitors, customers, regulations, etc. may have a
direct impact on the organization’s business. So these are required to be
closely monitored regularly to determine relevant facts and figures. This
type of approach is best suitable for strategic management activities and
operational tasks.
•Ad-hoc basis approach: In this approach, organizations conduct special
Approaches surveys on an ad-hoc basis related to certain environmental issues. These
studies or surveys may be considered while initiating new projects or to
for update current strategies.
•Secondary information approach: This approach consists of the use of
Environment processed form information which is collected from different internal and
external environment i.e. government agencies, educational institutes, etc.
al Scanning So, in this approach, information is obtained from secondary resources

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 An environmental scanning is affected by different factors which are given
below:

Organizational factors: Different characteristics of the organization such as

its size, complexity, nature of its business, market and products/services, age,
Factors that etc. affect its environment.

influence
Environmental Environmental factors: Different factors related to the nature of the
environment like its complexity, flexibility, diversity, etc. also affects the
Scanning process of environmental scanning.

Factors related to strategist: Different strategists have an important role in

the strategy formulation of an organization. The characteristics of these
strategists i.e. qualification, experience, motivation, ability to cope-up with
stress, interpersonal skills, etc. make an impact on the organizational
environment.

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 Importance of Environmental Scanning
• SWOT Analysis: Environmental Scanning is both a complex and important process.
The study of both internal and external environment provides valuable information
about an organization related to its strengths, weakness, opportunities, and threats
(SWOT).
• Strengths: Environmental scanning provides useful insights into an organization’s
strengths by analyzing its internal environment that offers a competitive advantage
to its business. This information can be used to strengthen these strengths to
maximize their profits.
• Weakness: Internal environmental scanning also helps in determining the
weaknesses of the organization. The timely corrective measures are required for
these weaknesses to achieve growth and stability in an organization.
• Opportunity: Environmental scanning also analyzes external environment factors
that facilitate identifying different opportunities for businesses in the external
market and to grasp these opportunities, different strategies can be made well in
advance.
• Threats: Identification of different threats whether its competitors or any other
factor of the external market is equally important for business growth and its
smooth operation. Environmental scanning helps in analyzing such threats so that
organizations can develop strategies to either remove or minimize the effects of
these threats.
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 Process of Environmental
Scanning
• Environmental Scanning process consists of following steps that
are inter-related to each other:
• The environmental scanning process starts with the identification
of requirements and concerns that have created the reason for
which organization decides for environmental scanning. Different
factors that are considered before initiating the process include the
scanning purpose, participants of the process, the resource
allocation and duration of environmental scanning.
• The next step of the scanning process includes collecting the
information. The organization’s requirements are defined in the
necessary information that is beneficial in the scanning process.
• Further, all collected information of the organization is analyzed.
While analyzing, different trends or concerns are highlighted that
may influence the organization.
• The fourth step includes communicating results that are derived
from the information analysis.
• After obtaining all relevant information from the above steps, the
next step is related to making decisions using all information.
Different appropriate measures are taken by the organization to
strengthen its position in the current business environment. 11
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 Information Sources used in
Environmental Scanning
• There are two types of information sources that are being used in
knowledge gaining and understanding the current business environment of
the organization i.e. internal and external sources of information.
• Different external information sources are as under:
• Personal links
• Magazines or Journals
• Books and newspapers
• Conferences or meetings
• Colleagues at a professional level
• Consumers
• Internet or other media like television, radio, etc.
• However, internal information sources are organization specific. This
includes:
• Sales personnel
• Managers and employees
• Internal reports and memoranda
• Internal databases

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 Environmental • Different techniques or methods are being
Scanning used to scan a business environment. The
selection of the right technique is based on
Techniques different aspects like required data and its
source, relevance and cost of information,
and the availability of information as well as
its quantity and quality, etc. These techniques
can be statistical or mathematics-based.
These techniques are categorized as:
• SWOT analysis
• ETOP analysis
• QUEST analysis
• PEST analysis

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 Conclusion

So, Environmental Scanning is considered as an

important tool for future prediction and helps
organizations to be prepared for an unpredictable and
changing business environment. How frequently
Environmental Scanning should take place, depends on
the organization’s requirements. If an organization
belongs to an industry that his highly affected by
technological innovations then it requires more close
and constant monitoring of its environment.

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