Environmental

Scanning Techniques
Techniques of Scanning

There are various scanning techniques used by organizations

 Issues Priority matrix
 Environmental Threats and opportunities Profile (ETOP)
 Strategic advantage profile (SAP)
 Functional – area profile and resource deployment matrix
 SWOT Analysis
 The opportunity and Threat matrices
 The Impact Matrix
 The Impact scale
 Gap Analysis
 Balanced Score card
Environmental threats and opportunities
Profile (ETOP )
 Assessment of the environmental information and determining the relative
significance of threats and opportunities require a systematic evaluation of the
information developed in the course of environmental analysis.
 For this purpose, preparation of a profile of environmental threat and opportunity
(ETOP) is considered to be a useful device. An illustrative profile is given in
Figure on the basic of environmental analysis carried out by Bharat Heavy
Electricals Ltd.
BHEL: ENVIRONMENTAL THREAT
AND OPPORTUNITY PROFILE (ETOP)
Environmental Sector Impact ( +) Opportunity (-) Threat

Socio – economic (+_) continued emphasis on infrastructural development which

includes power supply for industry, transport, and domestic
consumption. (-) Severe resource constraints.

Technological (+) High growth envisaged in industrial production and

technology up gradation.

Supplier (-) Sources of technology will become scarce due to formation

of technology cartels

Government (+) Liberalization of technology import policy

Competition (-) Customers will become more discerning in their

requirements due to an increasing role of power plant
consultants. (-) Public sector will find it increasingly difficult
to retain specialists and highly qualified personnel.
 Strategic Advantage Profile (SAP)
A Profile of strategic advantages (SAP) is a summary statement, which provides an overview of the
advantages and disadvantages in key areas likely to affect future operations of the firm.
It is a tool for making a systematic evaluation of the strategic advantage factors, which are significant for the
company in its environment.
The preparation of such a profile presupposes detailed analysis and diagnosis of the factors in each of the
functional areas (Marketing, Production, Finance and Accounting, Personnel and Human Resources, R& D).
The relevant data for the critical areas may go as a supplement to the profile.
 The following Strategic Advantage Profile relates to a food processing company in India

Internal Area (+) Strength (-) Weakness

Marketing (+) Capable sales force; sales agents dispensed with. (-)
Shrinking market for most products.

Operations (-) Stagnating sales performance. (+) Profits after tax

picking up after 1982. (-) Plant facilities are old

R&D (-) No R&D effort so far. (+) Backing in R &D expected

from parent US company

Finance (-) No additional investment since 1980. (-) Heavy

reliance on fixed deposits and bank loans. (+) Parent US
company now interested in expansion.
Corporate Resources (+) Management team comprises young, ambitious
executives
Since the Strategic Advantage Profile is a summary statement of corporate capabilities, in summarizing the
functional competencies a comparative view needs to be taken in the light of external conditions and the
time horizon of projections. For example, while comparing the level of inventory holding, one may find it
to be relatively higher than that of competing firms; as such it should be regarded as a weakness. But if the
market demand shows an increasing trend, apparent weakness should be considered strength.
 SWOT Analysis
SWOT is an acronym for the internal Strengths and Weaknesses of a business and environmental Opportunities and
Threats facing that business. SWOT analysis is a systematic identification of these factors and the strategy that
reflects the best match between them. It is based on the logic that an effective strategy maximizes a business’s
strengths and opportunities but at the same time minimizes its weaknesses and threats. This simple assumption, if
accurately applied, has powerful implications for successfully choosing and designing an effective strategy
Opportunities An opportunity is a major favorable situation in the firm’s environment. Key trends represent one
source of opportunity. Identification of a previously overlooked market segment, changes in competitive or
regulatory circumstances, technological changes, and improved buyer or supplier relationships could represent
opportunities for the firm.
Threats :A threat is a major unfavorable situation in the firm’s environment. It is a key impediment to the firm’s
current and / or desired future position. The entrance of a new competitor, slow market growth, increased bargaining
power of key buyers or supplier, major technologies change, and changing regulations could represent major threats
to a firm’s future success. Consumer acceptance of home computers was a major opportunity for IBM.
Strengths: A strength is a resource, skill, or other advantage relative to competitors and the needs of markets a firm
serves or anticipates serving. a strength is a distinctive competence that gives the firm a comparative advantage in
the marketplace. Financial resources, image, market leadership, and buyer / supplier relations are examples.
Weaknesses :A weakness is a limitation (or) deficiency in resources, skills, and capabilities that seriously impedes
effective performance. Facilities, financial resources, management capabilities, marketing skills, and brand image
could be sources of weaknesses. Sheer size and level of customer acceptance proved to be key strengths around
which IBM built its successful strategy in the personal computer market.
Gap Analysis

 It is a useful method to describe the process involved in deciding what course of

action should be taken to remove any potential profit or sales gap or risk gap.
 Product life-cycle
 The product life-cycle (PLC) refers to the different stages a product goes through from introduction to
withdrawal.
 The product life-cycle refers to a likely pathway a product may take. It has implications for the
marketing strategy of a firm as it seeks to introduce, grow and maintain market share.
 In this case, the product has four stages:
 Introduction – when the product is introduced and struggles to gain brand recognition.
 Growth – advertising and word of mouth helps the product to increase sales. As sales growth, more firms are
willing to stock the product which helps the product to grow even further.
 Maturity – When the product reaches peak market penetration.
 Decline – the product gets eclipsed by new products
 Example of the Product Life Cycle 2018
 Introduction – Self-driving cars. Self-driving cars are still at the testing stage, but firms hope to be able to sell
to early adopters relatively soon.
 Growth – Electric cars. For example, the Tesla Model S is in its growth phase. Electric cars still need to
convince people that it will work and be practical. As there are more electric charging points and more people
adopt, it becomes easier to sell to those who are more sceptical of new technology like electric cars.
 Maturity – Ford Focus. The Ford Focus is a well-established car. It has a good brand reputation and has
reached its peak level of market penetration. It would be difficult to gain a significantly greater market share.
The product life cycle of the Ford Focus has been extended by constant upgrades and redesigns to keep the car
on top of the market.
 Decline – Diesel cars. Since governments have expressed concern at the level of pollution from diesel cars.
Some cities have threatened to ban diesel cars within a few years. Sales have fallen considerably and the market
for diesel cars may be in terminal decline.
 The usefulness of Product Life Cycle
In the different phases of the product life cycle firms, will need to concentrate on different aspects of marketing and
sales
 Introduction phase
Raising product awareness through advertising / word of mouth.
Offering the product at discount – penetration pricing to tempt customers to try the product.
Target early adopters and influential market leaders. For example, firms may offer free product reviews to influential
bloggers in the market.
Firms need to find willing suppliers who are willing to stock.
This phase will not be profitable because costs are high, but revenue relatively low.
 Growth
 Firms need to capitalise on growth to extend product sales from small retailers to big supermarkets.
 Firms can change marketing from niche areas to a more mass market.
 The firm can adapt to consumer feedback and offer new features/better consumer support.
 Maturity
 With peak market penetration, the firm may seek to increase prices to increase profitability. However, if the
market is very competitive the firm may feel the need to keep prices low to defend market share.
 The firm may concentrate on seeking to improve the product to gain market differentiation and extend the
period of maturity.
 Decline
 In the decline phase, the firm may feel it is best to let the product go – e.g. diesel cars cannot solve issues of
pollution and damage to its brand reputation. However, with an iPhone, Apple let old models go, to be replaced
by the next model. Decline and discontinuing the product can be a way to force customers to buy an upgrade –
next time their contract expires.
 Managed decline by targeting on a niche market. For example, vinyl records have declined, but now they have
become a very profitable niche for record labels. Total sale revenues from vinyl are close to sale revenues from
digital downloads because record companies can charge a premium price for the good.