BUSINESS ENTERPRISE SIMULATION 12 ABM  It is much more than reading newspapers or industry

journals or checking the latest statistics about your market.

SCANNING AND OPPORTUNITY ANALYSIS
 It is about exploring both present certainty and future
uncertainty, and moving beyond what we accept as valid
ways of doing things today.
ENVIRONMENTAL SCANNING
AIM OF ENVIRONMENTAL SCANNING
Environmental scanning is the art of systematically exploring the
external environment to:  The aim of environmental scanning is to identify
relevant information for your organization, both trends
 Better understand the nature and pace of change in the
and weak signals of change appearing on the horizon, in
environment, and
order to broaden and deepen thinking about strategic
 Identify potential opportunities, challenges and likely
options.
future developments relevant to your organization.
 It is about ensuring that there are no surprises in the
DEFINITION future operating environment for your organization.
 Scanning is of most value when it is focused or anchored
 Environmental Scanning is a process of gathering, analyzing, around issues of current concern to your organization.
and dispensing information for tactical or strategic Alternatively, there may be a fork-in-the-road decision
purposes. that needs to be made in the near future , and you need
 Careful monitoring of an organization’s internal and external to get more information about the likely implications of
environments for detecting early signs of opportunities and your options before you make a decision.
threats that may influence its current and future plans. In  At the end of the scanning process, you are aiming to
comparison, surveillance is confined to a specific objective have a report that details relevant trends in the external
or a narrow sector. environment that are likely to have a significant impact
 It is monitoring and interpreting sweep of social, political, on the way you do business in the future, and the
economic, ecological, and technological events to spot implications of those trends on your organization’s
budding trends that could eventually impact industry. strategy today.

 Environmental scanning is the formal searching, using PURPOSE OF ENVIRONMENT SCANNING

formal methodologies for obtaining information for a
 Effective utilization of resources
specific purpose.
 Constant monitoring of resources
 It is systematic.
 Strategy formulation
  Identification of threats and opportunities
 Useful for the managers
 Prediction of future
FACTORS TO BE CONSIRED FOR ENVIRONMENTAL SCANNING
Continouos 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.

AHHOC APPROACH

Organisations conduct special survey and stuies to undertake special

projects, evaluate existing strategies or dvise new strategies

Changes and unforseen developments may also be investigated

PROCESSED FORM APPROACH

Information used is supplies by govt agencies or private institutions

Secondary data available from external and internal sources may

also be used.

FACTORS AFFECTING ENVIRONMENTAL APPRAISAL

 Factors relating to nature of environment

 Complexity
 Flexibility
 Hostility
 Diversity
APPROACHES TO ENVIRONMENTAL SCANNING  Factors relating to the organization
 Nature of the business
Systematic Approach  Age of the Organization
Information for environmental Scanning collected systematically  Size of the Organization
 Nature of the markets
Information pertainingh to business and industry could be collected  Nature of the products
continously to monitor changes
  Factors relating to the strategies IMPORTANCE OF THE ETOP
 This is master level strategy: corporate level strategy
 Provides a clear picture to the strategies of the sectors
to achieve corporate objective.
and the different factors in those sectors
 Sub level strategy: for specific purposes and to help
 Helps the organisation in knowing where it stands with
master strategy.
the respect to its environment
 Functional level strategy: how the strategy is
 Hel;p the organisation in formulating appropriate
translated into functions like marketing, finance,
strategy to take advantage of the opportunities and
production and R and D.
threats in its business
 Factors relating to strategies:
 Age, education and experience SWOT ANALYSIS
 Motivational level
SWOT STANDS FOR STRENGTHS, WEAKNESSES, OPPORTUNITIES
 Ability to withstand pressure and strain
AND THREATS
 Interpersonal relations
 Identification of the threats and opportunities in the
STRUCTURING THE ENVIRONMENTAL APPRAISAL
external environment and strengths and weaknesses in the
 Two most important techniques of enviromental appraisal internal environment of the firms are the cornerstone of
are: business policy formulation
 ETOP ( environmetal threats and opportunities) ANALYSIS  It is the SWOT analysis which detemines the course of action
 SWOT (strengths, weaknesses, opportunities, and threats) to ensure the growth/ survival
analysis
STRENGTHS
ETOP
Internal to the unit, are a unit’s resources and capabilities that can
STEPS INVOLVED IN THE PREPARATION OF ETOP: be used as a basis for developing a competitive advantage; strength
should be realistic and not models
 Dividing the environment into different sectors
 Analysing the impact of each sector on the organisation WEAKNESSES
 Subdividing each environmental factor into sub factors
Internal force that could serve as a barrier to maintain or archieve a
for a comprehensive ETOP
competitive advantages; a limitation, fault or defect of the unit; It
 Analysing the impcat of each subfactor on the
should be truthful so that they may be overcome as quickly as
organisation in the form of a statement
possible
 Preparing a summary to show the major factors for the
sake of simplicity
OPPORTUNITIES

Any favorable situation present now or in the future in the external

environment

THREATS

External force that could inhibit the maintenance or attainment of a

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