Environmental Scanning & Monitoring Techniques

Environmental Scanning Defined

Is a concept from business management by which businesses gather information from the environment, to better achieve a sustainable competitive advantage. To sustain competitive advantage the company must also respond to the information gathered from environmental scanning by altering its strategies and plans when the need arises.

Techniques
1. SWOT TECHNIQUES - SWOT Analysis (tool) 2. PEST 3. INDUSTRY ANALYSIS 4. COMPETITOR ANALYSIS

SWOT TECHNIQUE
SWOT Analysis came from the research conducted at Stanford Research Institute from 1960-1970. The background to SWOT stemmed from the need to find out why corporate planning failed. The research was funded by the fortune 500 companies to find out what could be done with this failure. The Research Team were Marion Dosher, Dr. Otis Benepe, Albert Humphrey, Robert Stewart, Birger Lie.

Examples of SWOTs
Strengths and Weaknesses - Resources: financial, intellectual, location - Creativity/ability to develop new products - Competitive capabilities

Example of SWOTs
Opportunities and Threats Takeovers Market Trends Economic condition Mergers Joint Ventures Expectations of stakeholders

Example of SWOTs
Opportunities and Threats Technology Public expectations Competitors and competitive actions Poor public relations development Criticism (editorial) Global markets Environmental conditions

USES OF SWOT ANALYSIS

1. Corporate Planning 2. Set objectives defining what the organization is intending to do 3. Environmental scanning - Internal appraisal of the organizations SWOT, this needs to include an assessment of present situation as well a portfolio of products/services and an analysis of the product/life cycle.

USES OF SWOT
5. Analysis of Existing strategies 6. Strategic Issues defined 7. Develop new/revised strategies 8. Establish critical success factors 9. Preparation of operational, resource, projects plans for strategy implementation 10. Monitoring results 11. Others uses: business planning, competitor evaluation, marketing planning and product development and research reports.

PEST ANALYSIS
A scan of the external macro-environment in which the firms operates can be expressed in terms of the following factors: Political Economic Social Technological

Political Factors
- Government regulations and legal issues and define both formal and informal rules under which the firm must operate. 1. tax policy 2. employment laws 3. environmental regulations 4. trade restrictions and tariffs 5. political stability

Economic Factors
- Affect the purchasing powers of potential customers and the firm and the cost of capital. Macroeconomy: 1. economic growth 2. interest rates 3. exchange rates 4. inflation rate

Social Factors
- Demographic and cultural aspects of the external macroenvironment. These factors affect customer needs and the size of potential markets. 1. health consciousness 2. population growth rate 3. age distribution 4. career attributes 5. emphasis on safety

Technological Factors
- Can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. 1. R&D activity 2. automation 3. rate of technological change

Industry Analysis
- An industry is a group of firms producing a similar product or service. - An examination of the important stakeholders group in a particular corporations task environment is a part of industry analysis

 Porters approach to Industry Analysis -A corporation is most concerned with the intensity of competition within its industry -The level of this intensity is determined by basic competitive forces -In scanning its industry, the corporation must assess the importance to its success of each of the six forces

Forces Driving Industry Competition

1. Potential Entrants threat of new entrants 2. Buyers bargaining power 3. Suppliers bargaining power 4. Other Stakeholders relative power of unions, government, etc. 5. Substitutes threat of substitute products and services