Presentation on

Environment
Scanning
Guided by Rachna Nigam
Presented by Deepshree
Chuhan
Subham Agrawal
Divyansh Sharama

DEFINITION
Environmental scanningis a process of gathering,
analyzing, and dispensing information for tactical or
strategic purposes.
Carefulmonitorof
an
organization'sinternalandexternal
environmentsfor
detectingearlysignsofopportunities and threatsthat
mayinfluenceitscurrentandfutureplans.
In
comparison,surveillanceis
confined
to
a
specificobjective or a narrowsector.

It is monitoring and interpreting sweep of social,

political, economic, ecological, and technological events

PURPOSE OF
ENVIRONMENTAL SCANNING

Effective utilization of resources

Constant monitoring of resources
Strategy formulation
Identification of threats and
opportunities
Useful for the managers
Prediction of future

Types of environment
Internal environment
External environment

Internal environment
The factors which are there
inside the organization and
effect the organization.
Employees, resources ,
culture of the organization.

External Environment

The environment
which lies
outside of the
organization but
effect the
organization.

1. MICRO ENVIRONMENT

2. MACRO
ENVIRONMENT

Micro environment
Factors or elements in an
organization's immediate area of
operations that affect its
performance and decisionmaking freedom. These factors
include competitors, customers,
distribution channels, suppliers,
and the general public

Macro Environment
Known as general environment
and remote environment.
- They are more uncontrollable
then micro environment.

Types
The acronym for macro analysis is STEEP.
S- Socio-Cultural and Demographics
T-Technology
E-Economic Conditions
E- Ecology and Physical Environment
P- Political and Legal

FACTORS TO BE
CONSIDERED FOR
ENVIRONMENTAL SCANNING
Events

Trends

External
environment
of business

Issues

Expecta
tions of
people

APPROACHES TO
ENVIRONMENTAL
SCANNING

SYSTEMATIC APPROACH
information for environmental scanning collected systematically
Information pertaining to business and industry could be collected
continuously to monitor changes
Continuous 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.
ADHOC APPROACH
Organisations conduct special surveys and studies to undertake special
projects, evaluate existing strategies or devise new strategies
Changes and unforeseen developments may also be investigated

PROCESSED FORM APPROACH

Information used is supplied by govt agencies or private instituitions

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

Factors relating to the

organisation

Nature of the business

Age of the organisation
Size of the organisation
Nature of the markets
Nature of the products

Factors relating to the

Strategies

This is master level stretgy:corporate level strategy to achieve

corporate objective.
Sub level strategy:-for specific purpose
and to help master stretgy.
Functional level strategy:-how the
stretgy is translated into functions like
marketing,finance, production and R
AND D.

Factors relating to strategists:

Age , education and experience

Motivational level
Ability to withstand pressure and strain
Interpersonal relations

STRUCTURING THE
ENVIRONMENTAL
APPRAISAL

Two most important techniques

of environmental appraisal are:
ETOP(environmental threats
and opportunities) Analysis
SWOT(strengths, weaknesses,
opportunities and threats)
analysis

ETOP
Steps involved in the preparation of
ETOP:
Dividing the environment into different sectors
Analysing the impact of each sector on the organisation
Subdividing each environmental factor into sub factors
for a comprehensive ETOP
Analysing the impact of each subfactor on the
organisation in the form of a statement
Preparing a summary to show the major factors for the
sake of simplicity

Importance of
ETOP

Provides a clear picture to the

strategists of the sectors and the
different factors in those sectors
Helps the organization in knowing
where it stands with respect to its
environment
Helps the organization in formulating
appropriate strategy to take
advantage of the opportunities and
threats in its business

SWOT
Analysis

SWOT stands for Strengths,

Weaknesses, Opportunities and
Threats
Identification of the threats and opportunities in
the external environment and strengths and
weaknesses in the internal environment of the
firms are the cornerstone of business policy
formulation.
It is the SWOT analysis which determines the
course of action to ensure the growth / survival of
the firm.

Strengths
Strengthsinternal to the unit; are a units resources and
capabilities that can be used as a basis for developing a competitive
advantage; strength should be realistic and not modest.
The list of strengths should be able to answer:
What are the units advantages?
What does the unit do well?
What relevant resources do you have access to?
What do other people see as your strengths?
What would you want to boast about to someone who knows nothing about this
organization and its work?
Examples: good reputation among customers, resources, assets, people, :
experience, knowledge, data, capabilities
Think in terms of: capabilities; competitive advantages; resources, assets,
people
(experience, knowledge); marketing; quality; location; accreditations
qualifications, certifications; processes/systems

Weaknesses
Weaknessesinternal force that could serve as a barrier to maintain or
achieve a competitive advantage; a limitation, fault or defect of the unit;
It should be truthful so that they may be overcome as quickly as
possible

The list of weaknesses should be able to answer:

What can be improved?
What is done poorly?
What should be avoided?
What are you doing as an organization that you feel could be done more
effectively/efficiently?
What is this organization NOT doing that you feel it should be doing?
If you could change one thing that would help this department function more
effectively, what would you change?

Examples: gaps in capabilities, financial, deadlines, morale

lack of competitive

Opportunities
Opportunitiesany favorable situation
present now or in the future in the external
environment.
Examples: unfulfilled customer need, arrival of
new technologies, loosening of regulations, global
influences, economic boom, demographic shift
Where are the good opportunities facing you?
What are the interesting trends you are aware of?
Think of: market developments; competitor;
vulnerabilities; industry/ lifestyle trends;;
geographical; partnerships

Threats
External force that could inhibit the maintenance or attainment
of a
competitive advantage; any unfavorable situation in the external
environment that is potentially damaging now or in the future.
Examples: shifts in consumer tastes, new regulations, political or
legislative effects, environmental effects, new technology, loss of key staff,
economic downturn, demographic shifts, competitor intent; market
demands; sustaining internal capability; insurmountable weaknesses;
financial backing

The list of threats should be able to answer:

What obstacles do you face?
What is your competition doing?
Are the required specifications for your job/services changing?
Is changing technology threatening your position?
Do you have financial problems?
Could any of your weaknesses seriously threaten your unit?

Pest Analysis

It is very important that an organization

considers its environment before
beginning the marketing process. In fact,
environmental analysis should be
continuous and feed all aspects of
planning. The macro-environment
consists of e.g. Political (and legal) forces,
Economic forces, Socio cultural forces,
and Technological forces. These are
known asPESTfactors.

PEST

political

economic

socialcultu
ral

technologi
cal

POLITICAL FACTORS

The political arena has a huge influence upon the

regulation of businesses, and the spending power of
consumers and other businesses. One must consider
issues such as:
1.How stable is the political environment?
2.Will government policy influence laws that regulate or tax
your business?
3.What is the government's position on marketing ethics?
4. What is the government's policy on the economy?
5. Does the government have a view on culture and
religion?
6. Is the government involved in trading agreements such
as EU, NAFTA, ASEAN, or others?

ECONOMIC FACTORS
Marketers need to consider the state of
a trading economy in the short and longterms. This is especially true when
planning for international marketing.
One need to look at:
1. Interest rates.
2. The level of inflation Employment level per
capita.
3. Long-term prospects for the economy Gross
Domestic Product (GDP) per capita, and so on.

SOCIO-CULTURAL FACTORS

The social and cultural influences on business vary

from country to country. It is very important that
such factors are considered. Factors include:
1.What is the dominant religion?
2.What are attitudes to foreign products and services?
3.Does language impact upon the diffusion of products onto
markets?
4.How much time do consumers have for leisure?
5.What are the roles of men and women within society?
6.How long are the population living? Are the older
generations wealthy?
7.Do the population have a strong/weak opinion on green
issues?

TECHNOLOGICAL FACTORS

Technology is vital for competitive advantage, and

is a major driver of globalization. Consider the
following points:
1. Does technology allow for products and services to be
made more cheaply and to a better standard of quality?
2.Do the technologies offer consumers and businesses
more innovative products and services such as Internet
banking, new generation mobile telephones, etc?
3.How is distribution changed by new technologies e.g.
books via the Internet, flight tickets, auctions, etc?
4.Does technology offer companies a new way to
communicate with consumers e.g. banners, Customer
Relationship Management (CRM), etc?

Internet

providing a variety
of information and
communication
facilities, consisting
of interconnected
networks using
standardized

internet for
environment
Data collection.
scanning
Publication of information.

To get the feedback from the society.

To know the demand and taste of the
people of the society.

Conclusion
Environment scanning is very
important for each and
organization for the smooth
functioning of the environment and
to know the threats and
opportunities of the business. And
in that internet also plays a very
important role.