SLIDESMANIA.

COM
 Learning Outcomes

Particularly at the end of this chapter, student

should be able to:
 Perform environmental scanning;
 Analyze and evaluate the social, political,
economic, technological, and environmental
forces affecting country; and
 Identify external forces that may prove beneficial
or detrimental to an organization.
SLIDESMANIA.COM
 Environmental scanning – is the study and
interpretation of the forces existing in the
external and internal environments. The external
environment includes social, economic, political,
SCANNING technological, and environmental forces that
may influences an organization, an industry, or
THE any entity. The competitive environment covers
competitors, suppliers, customer, stakeholders,
ENVIRONMENT culture, and the government. Environmental
scanning is carefully monitoring the
surroundings with the end goal of ascertaining
early indications of prospects and challenges
that may influence the organization’s present
and future plans.
SLIDESMANIA.COM
 Conducting environmental scanning
is both easy and difficult. For informational
scanning, experience and expertise will
make help the process effortless and
straightforward. The competencies, skills,
and intelligence of individual will allow for
SCANNING easy scanning the environment. On the
other hand, environmental scanning can be
THE demanding, in that there is a need for
ENVIRONMENT comprehensive, as well as accurate
information. It will be mostly dependent on
the following: (1) the speed of the
organization to conduct scanning; (2) the
presence and availability of complete
SLIDESMANIA.COM

information; and (3) the physical and

financial capability to do so.
 SOURCE OF STRATEGIC
INFORMATION
Strategic information consists of the facts and data used by
organizations to assist them in achieving their vision, mission, and
goals. Strategic information can be drawn from both external and
competitive environments. Both external environments symbiotically
interplay and directly affect organizations information is either primary
or secondary. Primary data gathered through person experience,
observation, and experimentation while secondary information are data
SLIDESMANIA.COM

collected from reports, internet, sources, and other published materials.

 MODES OF ENVIRONMENTAL
SCANNING
Scanning the environment involves
processes. The first one is looking at or simply
viewing information, and the second one is
looking for or information. According to Aguilar
(1967). There are four ways of environmental
scanning. They undirected viewing, conditioned
viewing, informal search and formal search.
SLIDESMANIA.COM
 1. Undirected viewing 3. Informal Search

2. Conditional Viewing 4. Formal Search

SLIDESMANIA.COM
 In summary, entities possess
organizational intelligence. This mode of
thinking direct them to scan the
environment. The importance of
conducting environmental scanning
cannot be overemphasized as knowledge
of the business landscape is needed to
implement one’s strategies. There are
different modes of scanning the
environment and there are likewise
different approaches to benefit from it.
These searches will depend on the needs
of the organization.
SLIDESMANIA.COM
SLIDESMANIA.COM
 The SWOT matrix is a structured assessment tool
used to evaluate an organization, industry, a place or
even a person in terms of set parameters like strengths,
weaknesses, opportunities as external influences to the
organization.
SLIDESMANIA.COM
T
O
W
S
SLIDESMANIA.COM
 Humphrey’s 2x2 matrix model (2005)
suggests actions for issues arising from
the SWOT Analysis according to 4
different categories.
SLIDESMANIA.COM
 SWOT Analysis Matrix
STRENGTHS (Internal)
Strengths/Opportunities
 Obvious natural priorities
 Likely to produce greatest ROI
(Return on Investment)
 Likely to be quickest & easiest to
Opportunities implement
(External)  Probably justifying immediate
action planning, feasibility study, or
business plan
 Primary question : “If we are not
yet looking at these areas &
prioritizing them, then why we are
not?”
SLIDESMANIA.COM
WEAKNESSES(Internal)
Weaknesses/Opportunities
 Potentially attractive options
 Likely to produce good returns if
capability and implementation are
viable
 Potentially more exciting,
stimulating, & rewarding than S/O
due to change, challenge, surprise
tactics & benefits from addressing
& achieving improvements.
 Primary Question : “ What is
actually stopping us from doing
these things, provided they truly fit
strategically and are realistic &
substantial?”
 SWOT Analysis Matrix
Strengths / Threats
 Easy to defend and counter
 Only basic awareness, planning, and
implementation are required to meet
these challenges.
 Investment in these issues is generally
Threats safe and necessary.
(External)  Primary Question : “ Are we properly
informed and organized to deal with
these issues and are we certain there
are no hidden surprises?” and “Since
we are strong here, can any of these
threats be turned into opportunities?”
SLIDESMANIA.COM
Weaknesses/ Threats
 Potentially high risk
 Assessment of risks is
crucial.
 When risk is low, ignore
these issues and do not be
distracted by them
 When risk is high, assess
capability gaps and plan to
defend or avert in specific
controlled ways.
 Primary Question : “ Have
we accurately assessed the
risks of these issues and
when risks are high, do we
have specific controlled
reliable plans to
avoid/avert/defend?”
SLIDESMANIA.COM
 The external environment today is highly
complex. This fundamental paradigm
conspicuously characterizes the global scenario.
Nations possess different levels of growth and
development. For example, power relationships
have become dynamic, volatile, uncertain,
complex, and threatening. Multifaceted
EXTERNAL concerns. Although distinct, have become
primordial issues among countries, causing
ENVIRONMENT differences in policies and global
interrelationships. Often times, an atmosphere
of strategic negotiation, compromise, and
survival permeates. Consequently, knowledge of
the broad environment is considered an
advantage for organizations when managers
SLIDESMANIA.COM

constantly develop an audit “intelligence” of the

environment.
 SOCIAL POLITICAL Economic
FORCES FORCES Forces

Technologic
al Forces Environmental
Forces
SLIDESMANIA.COM
 Social forces refer to important issues
that are characteristics of global and local
societies. Society consists of individual,
families, communities, including their beliefs,
aspirations, traditions, and practices.
Significant societal factors in the environment
create varying impacts on organizations.
Some of the more critical social concerns
today are changing social structures, the
world’s aging population, the great demand
for health services, the evolving sophistication
in the lifestyles of people, and the cross-
cultural implications or mobility of peoples
SLIDESMANIA.COM

including migration, among others.

 1. Changing Social Structures. Social structure
refers to the network of social institutions
that includes the family the community.
2. Aging Population/Demand for Health
Services. There are more maturing and
aging individuals today.
3. Sophisticated Lifestyle of People. Compared
to the past, the lifestyle of people today
have dramatically changed, too.
4. Cross-cultural Diversity, Has become an
important organizational issue ; culture
SLIDESMANIA.COM

being a basic component of the global

environment.
 There are crucial concerns
confronting nations today.
Geopolitical issues have become the
focus of major political powers. Some
of these issues are political
independence, changing governments,
balance of power, terrorism, suicide
bombings, global alliances, and
chemical and nuclear warfare. These
critical problems are affecting the
global political balance.
SLIDESMANIA.COM
 1. Political Independence/ Changing Governments.
Political sustainability has become the focus and
concentration of developed and power-driven
countries.

2. Terrorism/ Suicide Bombings. The bloody and painful

transition toward equality of basic human rights and
the right to a better life have brought about critical
security problems like terrorism, kidnappings, suicide
bombings & hijackings.

3. Chemical & Nuclear Threats. Some countries go on

developing and producing weapons with the intention
of blackmailing and/or intimidating other countries.

4. Global Alliances. Politically, nations are aligning

SLIDESMANIA.COM

themselves for self-preservation & more so, for global

stability & strength.
 Economic realities have concomitantly
come to the forefront. Economic issues greatly
affect the growth and development of a
nation. Nations are strategizing to maintain
continuum of financial stability. Most often,
trade and investments are transacted to ensure
monetary security. Economic realities include
globalization of products and services, the
presence of aggressive competitors and
suppliers, the fail of large and “supposedly”
financially stable organizations, increasing oil
prices, economic trade agreements, the
emergence of new markets, and the rise of
SLIDESMANIA.COM

China as a major economic player in the world.

 Globalization. This is the one major determinant
of competition. Globalization can be viewed from
perspective: products, people, ideas, and money.
Before, simple and traditional goods were generally
accepted but today consumers demand flexibility and
versatility in the products they use.

People

Ideas Globalization Products and

services

Money
SLIDESMANIA.COM
 1. Competitors & Suppliers – Aggressive
competitors and creative suppliers compete
to get a larger slice of the market, both
energizing the industry and business
environments.
2. Fall of Financially Stable Organizations –
The corporate fiascos of Enron, World.Com,
and the Lehman brothers are but a few
examples of the more widely talked-about
financial catastrophes.
3. Increasing Oil Prices – The never ending in
oil prices have been creating economic
SLIDESMANIA.COM

instability in global communities.

 4. Economic Trade Agreements -- Economic
trade agreements among nations have
likewise become a vital bargaining power
in a country’s economy.
5. Emerging Markets -- Closely interrelated
to the political, social, and economic
growth and development of a country is
the emergence of different markets.
6. Rise of China -- China is a market for
other countries’ products and services. As
a supplier, the country is capable of
providing goods and services to the world
SLIDESMANIA.COM

market.
 We live in a digital world. Another
important catalyst of competition is technology.
In the 1980’s information technology began its
journey toward radical communication and
technology growth. Significant changes
happening in the world today have been the
result of rapid developments in the information
technology. These technological advances are
observed in the fields of communication,
business, banking, education, medicine, security,
and in all facets of everyday living.
SLIDESMANIA.COM
 1. Community Technology – saw the
proliferation of mobile phones, popularity of
text messaging, convenience of sending fax
messages, usefulness of CCTV cameras for
surveillance and simple monitoring, and
benefits of video conferencing, among others.
2. Computer-integrated business –Today,
enterprise resource planning (ERP) integrates
business operations in marketing, accounting,
production, operations, and management.
3. E-Banking – Banking transactions like
deposits, withdrawals, and payments can be
done online nowadays.
SLIDESMANIA.COM
 4. E-learning – One of the most recent
development in education is distance or online
learning. It is learning from home, the office,
while vacation, or from any place outside the
four walls of a classroom

5. Digital Machine - Another surprising and

most welcome development in the field of
medicine is the use of technology.

6. E-security – Security is another vital global

issue. The use of information technology is
inevitable in manufacturing missiles and other
forms of ammunitions, coding military secrets,
safeguarding fortified installations, monitoring
SLIDESMANIA.COM

enemies, securing soldiers, and planning

counter attacks.
 Environmental responsibility is the urgent
call of the global neighborhood. Ecological
damage is happening everywhere. There seems
to be an utter disregard or seeming
indifference about the environment.
Environmentally, no country can claim
complete isolation. The safety and survival of
one should be the concern of others. After all,
nations share water boundaries.
SLIDESMANIA.COM
 1. Climate Change/ Use of Biodegradable
Materials – The effects of environmental
degradation, malpractices, neglect, and
indifference are critical and serious.
2. Environmental Waste Management - In
many underdeveloped countries, noise, air
and water pollution levels are high.
3. Preservation of Rainforests and Marine Life
– Rainforests are no exception. Continuous
depletion and denudation of forests explain
why torrential rains are more destructive
SLIDESMANIA.COM

and intense nowadays.

 END OF CHAPTER 2
SLIDESMANIA.COM