ENVIRONMENTAL SCANNING

Environmental scanning is a process of gathering,

analyzing, and dispensing information for tactical or
strategic purposes. The environmental scanning process
entails obtaining both factual and subjective information
on the business environments in which a company is
operating or considering entering.
Environmental Scanning is the monitoring, evaluating and
disseminating of information from the external and
internal environments to key people within the
corporation.
A corporation uses this tool to avoid strategic surprise
and to ensure its long-term health.

DEFINITION
The process by which strategists monitor the
economic, governmental/legal, market/competitive,
supplier/technological, geographic and social settings
to determine opportunities and threats to their firms

Environmental diagnosis consists of managerial
decisions made by analysing the significance of data
(opportunities and threats) of the environmental
analysis

KINDS OF ENVIRONMENTAL SCANNING
Ad-hoc scanning - Short term, infrequent examinations
usually initiated by a crisis Conduction of special surveys &
studies to deal with specific environmental issues.
Systematic : Information related to markets & customers ,
changes in legislation &regulations that have a direct impact
on organizations activities that could be collected
continuously to monitor changes.
Regular scanning - Studies done on a regular schedule (e.g.
once a year)
Continuous scanning (also called continuous learning) -
continuous structured data collection and processing on a
broad range of environmental factors

Environmental scanning refers not just to the micro
environment, but it can also include macro
environment, industry, competitor analysis, marketing
research,consumer analysis, new product
development,product innovations or the company's
internal environment.
Environmental scanning
External analysis Internal analysis
Macro environment Micro environment
PEST analysis
Five force analysis
INTERNAL ENVIRONMENT
Important internal factors are
1) Value System
The value system of founders and those at the helm of
affairs has important bearing on the choice of business, the
mission and objectives of the organization, business
policies and practices.
2) Mission and Objectives
The business domain of the company , priorities , direction
of development, business philosophy, business policy etc.
are guided by the mission and objectives of the company
INTERNAL ENVIRONMENT
3)Management Structure and Nature
The organizational structure, the composition of the Board of
Directors, extent of professionalization of management etc. are
important factors influencing business decisions.
4) Internal Power Relationship
Factors like the amount of support the top management enjoys
from lower levels and workers, share holders and Board of
Directors have important influence on the decisions and their
implementation.The relationship between the members of Board
of Directors is also a critical factor.
OTHER FACTORS
1. Physical Assets and Facilities
2. R&D and Technological Capabilities
3. Marketing Resources
4. Financial Factors


MICRO ENVIRONMENT
Also known as task environment and
operating environment
Include
The suppliers
Marketing intermediaries
Competitors
Customers
Publics

MACRO ENVIRONMENT
A scan of the external macro-environment in which the firm operates
can be expressed in terms of the following factors:

Political
Economic
Social
Technological

The acronym PEST (or sometimes rearranged as "STEP") is used to
describe a framework for the analysis of these macro environmental
factors.


Political Factors :-Political factors include government
regulations and legal issues and define both formal and
informal rules under which the firm must operate. Some
examples include:

tax policy
employment laws
environmental regulations
trade restrictions and tariffs
political stability





Economic Factors :-Economic factors affect the
purchasing power of potential customers and the
firm's cost of capital. The following are examples of
factors in the macro economy:
economic growth
interest rates
exchange rates
inflation rate
Economic conditions
Economic policies
Economic systems
, the nature of the economy, the stage of development of
the economy, economic resources, the level of income, the
distribution of income and assets, etc.





Social Factors:

Social factors include the demographic and cultural aspects of the
external macroenvironment. These factors affect customer needs and
the size of potential markets. Some social factors include:
health consciousness
population growth rate
age distribution
emphasis on safety
buying and consumption habits of people, tastes and preferences,
language beliefs and values, customs and traditions, Education








Technological Factors :-

Technological factors can lower barriers to entry, reduce minimum
efficient production levels, and influence outsourcing decisions. Some
technological factors include:

R&D activity
Automation
technology incentives
rate of technological change

INTERNATIONAL ENVIRONMENT
Particularly important for the industries directly
depending on imports or exports and import-competing
industries
Recession, economic boom, liberalization,eg
Oil price hikes increased the cost of production and the prices of
certain products such as fertilizers , synthetic fibres. So usually, the
demand for natural fibres and manures increased.
Also demand for automobiles that economise energy consumption
got increased.


FIVE FORCE ANALYSIS
Threat Of New Entrants
Threat Of Substitutes
Bargaining Power Of Buyers
Bargaining Power Of Suppliers
Rivalry Among Existing Firms
NEED & IMPORTANCE
Macro environmental and industry scanning are useful as they reveal current conditions of
market.
To predict the future characteristics of the organizational environment
To understand what is happening both inside and outside the organization
Focus on knowledge and information.
To identify strength weakness, opportunities and threats. SWOT analysis is necessary for the
survival and growth of every business enterprise.

NEED & IMPORTANCE
Optimum use of resources
Survival and growth
To plan long-term business strategy
Environmental scanning aids decision-making
Identifies changes and make adjustments
Formation of strategies of production
,sales,marketing,demandsof environment
Accurate forecastes
SWOT ANALYSIS