ENVIRONMENTAL SCANNING

DEFINITION Environmental scanning is a process of gathering, analyzing, and dispensing information for tactical or strategic purposes. Careful monitoring of an organization's internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans. In comparison, surveillance is confined to a specific objective or a narrow sector. It is monitoring and interpreting sweep of social, political, economic, ecological, and technological events to spot budding trends that could eventually impact industry

PURPOSE OF ENVIRONMENTAL SCANNING Effective utilisation of resources Constant monitoring of resources Strategy formulation Identification of threats and opportunities Useful for the managers Prediction of future

FACTORS TO BE CONSIDERED FOR ENVIRONMENTAL SCANNING External environment of business Events Expectations of people Issues Trends

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 organisation in knowing where it stands with respect to its environment Helps the organisation 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 Strengths—internal to the unit; are a unit’s 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 unit’s 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 Weaknesses—internal 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 Opportunities—any 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, Sociocultural forces, and Technological forces. These are known as PEST factors.

PEST political economic technological socialcultural

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 long-terms. 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?