1. Environmental Scanning
CHAPTER 4
Environmental Scanning
Identifying Forces Driving Change
By Anil Bilgihan for Dr. DeMicco

2. Student Learning Objectives
On completion of this chapter, you will be able to;
Identify the environmental scanning process.
Develop an appreciation to scan the business environment effectively.
Describe the effective environmental scanning system.
Identify the unique elements business domain.
Identify and define the sources of information and give at least 1 hospitality
related example for each of them.
Identify the timing information.
Achieve a more practical understanding of forces that drive change in hospitality.
(Case Study)
Comprehend the feedback and evaluation systems.

3. Objectives
Upon completion of this chapter, you will: 1. Understand the skills necessary to scan the business environment effectively. 2. Develop and maintain an effective environmental scanning system.

4. Key Concepts of the Chapter
Environmental scanning
The business domain
Setting up a structure for scanning
Determining information needs
Determining information mediums
Timing information
Identifying sources of information
Choosing scanning activities
Analyzing and synthesizing information
Information sharing
Information feedback and evaluation systems

5. Objectives
1. Develop the skills necessary to scan the business environment effectively.
Please read pages 91 through 112 in the text book for further information.

6. Strategic Management Model
Domain Definition
Long-term Objectives
Geographic Market Area
Segment
Primary Competition
Target Market
Performance Measure
Action Plan
Resources Needed
Evaluation Timetable
Responsibility
Accountability
Rational
Environmental Events
Competitive Methods
Strengths and
Weakness Analysis S2 P2 P3 S3 P1 S1
Industry
Remote
Task
Firm
Functional
Functional Analysis
Financial Position
Structural Analysis
Physical Assets
Labor Force
Risk
Competitiveness
Short-term Objectives
Mission Statement
Nature of Business
Target Customer
Products/Services
Standard Desired
Means to Accomplish Above
Evaluation

7. Scanning the Business Environment

8. Identifying the Forces Driving Change
The goal of any environmental scanning process is to successfully identify the key forces driving change within the contextual environment of the organization.
To achieve that goal, managers must set up personal and organizational scanning systems to be sure that the widest perceptional view of the environment is achieved. This scanning system should;
Identify each force, the variables, and their interdependencies with other variables.
Suggest cause-and-effect relationships.
Determine the history and timing associated with the development of the forces.
Assist the manager estimating the impact of forces driving change on the firm.
Please read pages 91 through 94 in the text book for further information.

9. Identifying Events in the Environment
Major Trend a consistent pattern of
events-all firms
Industry Structure
All firms in the sector
have invested in the CM
Ideal Scanning Window
Evidence of use by leaders
Leading firms adopt and
invest in the new CM
A pattern is emerging
Introduction of new CMs
Innovator/Entrepreneur
creates a new CM
Fads
Innovations
Major Trend
Fact of Life
Innovation / CM Life Cycle

10. Establishing an Environmental Scanning System
Establish domain definition
Organizational structure issues
Determine information needs – quantitative and qualitative
Determine information mediums
Assess timing of information
Identify sources
Choose scanning activities – regular and irregular
Determine analysis and synthesis processes
Determine information sharing
Establish information feedback and evaluation systems

11. Domain Definition
The task of domain definition is the first step in establishing an effective environmental scanning system.
The domain of an organization refers to the context in which it exists and functions.
Please read page 94 in the text book for further information.

12. Criteria of the Domain Definition
Elements of the domain
Geographic market area
Segment defined by competitive methods made up of the mix of product and service attributes
Primary competition
Major descriptors of target market
Industry structure
Existing competitors, potential competitors, substitutes, suppliers and buyers
Determine interdependencies
Relationships with suppliers, competitors
Relationships among different environmental categories
Primary and secondary relationships (hierarchical)

13. Organizational Structure Issues
Who participates in the process, what resources
are allocated to this endeavor, and how the
information is processed and used.
Scanning the environment must fit into that
structure because resources
must be allocated to this
important management activity.
Please read page 95 in the text book for further information.

14. Determining Information Needs
Determining the information needs of the firm can begin only after the process of defining the domain the firm must complete in is completed.
Once established, the information will generally fall into four categories;
Quantitative
Qualitative
Personal
Non-personal

15. Examples of Quantitative Information
Primary Demand Generators
Population
Housing
Transportation
Industry
Health facilities
Recreational facilities
Special events
Attractions
Income levels
Secondary Demand Generators
Business travelers
Conventions and meetings
Incentive travel
Government
Military
Fraternal groups
Pleasure travelers
Airline business
Sports teams
Special events

16. Determining the Information Medium
Most common medium is face-to-face personal interaction.
The written medium, both personal and impersonal, continues to be an important one.
The telecommunication revolution will no doubt bring about rapid changes in the mediums used.
Please read page 101 in the text book for further information.

17. New Communication in the Information Age

18. Assessing Timing of Information
The phase timing is everything has a great deal of validity in the world of strategy.
Bad timing can be avoided most often when firms have effective scanning systems and the organization has structured itself to improve the processing of information and its timing.
The timing also reflects how managers study the emerging forces that are developing.
Please read pages 101 through 102 in the text book for further information.

19. Body of Knowledge in the Hospitality Industry
Economics
Accounting
Ecology
Finance
Food Science
Management Information Systems
Nutrition
Human Resources
Organizational Behavior
Linguistics
Organization Theory
Marketing
Psychology
Management Science
Political Science
Operations
Technology
Engineering
Sociology
Strategic Management

20. Identifying Sources of Information
The primary concern of the manager in selecting the sources of information are validity and reliability.
Validity refers to fact that the information accurately represents and describes the relationships that are necessary to make important strategic decisions.
Reliability refers to the need for accuracy and consistency over time.
Please read page 103 in the text book for further information.

21. Common Information Sources Available to the Hospitality Manager
Quantitative & Qualitative Information
Personal
Researchers
Internal personnel
Consultants
Suppliers
External business associates
Friends and family
Non-personal
Conferences
Seminars
Trade Associations
Trade Magazines
Newsletters
News Services
On-line Services
Newspapers
Government Statistics/Reports
Internal Research
Databases

22. Choosing Scanning Activities
Scanning is an activity that does not lend itself to neatly defined processes or timetables.
It cannot be done effectively without strong cognitive, experimental, and perceptional skills.
Please read pages 105 through 107 in the text book for further information.

23. Concept Map of Environmental Event
Please read pages 110 through 113 in the text book for further information.

24. Matrix Analysis
Today’s manager must be able to understand the present relationships and regulators.
To do this, the use of matrices to assess relationships becomes extremely useful.
Matrix analysis help to create greater understanding of the present and emerging body of knowledge.
Please read pages 113 through 117 in the text book for further information.

25. Information-Sharing Feedback and Evaluations Systems
Executive Level
External Level
Operations Level
Functional Level
Please read pages 117 through 118 in the text book for further information.

26. A Continuous Process of Scanning is Necessary
A good scanning system will never be able to remove all the uncertainty from a decision.
Scanning should be done on a continuous basis levels of executives who contribute substantively to the strategic management process.
Please read page 118 in the text book for further information.

27. Summary of the Chapter
The chapter provides an overview of tools necessary for proper environmental scanning.
It begins with the importance of identifying forces that drive change and how to establish a domain for analysis purposes.
It then provides insight into the steps in the effective assessment of key forces and opportunities.
Shows the importance of sharing derived conclusions throughout the organization.

28. Readings for the Chapter
(interactive webpage)
Literature in strategic management in the hospitality industry, Michael D. Olsen
CEO Perspectives on Scanning the Global Hotel Business Environment, Michael D. Olsen, Bvsan Murthy and Richard Teare

29. Case Study
Please read Case Study: ‘Technology as a Competitive Method: The Case of InterContinental Hotels’ (page ).
Please answer the discussion questions at the end of the Case Study.

30. Case Study Answers

31. Case Study Answers

33. Figures for Case Study
Figure 1

34. Figures for Case Study
Figure 2
IT Planning Process

35. Figures for Case Study
Figure 3

36. Figures for Case Study
Figure 4

37. Chapter Questions Which is NOT a function of the scanning system?
Identify each force, the variables, and their interdependencies with other variables
Suggest cause and effect relationships
Determine resource allocation
Determine the history and timing of the development of the forces
Assist in estimating the impact of forces driving change

38. Chapter Questions (cont’d)
The concept of industry structure refers to
the degree of complexity in the market place.
the degree of uncertainty in the market place.
another way to define the industry domain.
the degree of concentration of suppliers.
the degree of dispersion of customers.

39. Chapter Questions (cont’d)
In understanding industry structure, the manager must be able to assess the degree of interdependencies that exist in the domain. This statement refers to
the firm's ability to lead competitors in creating new products and services.
the investment in strategic alliances with other firms.
the degree to which the firm is dependent upon its board of directors.
the manager's ability to determine the cause and effect relationships in the business domain.
the manager's ability to utilize such management tools as yield management.

40. Chapter Questions (cont’d)
The term body of knowledge refers to
the sum total of the firm's knowledge regarding its competitive method.
the ability of the firm to gain competitive advantage because it possesses more knowledge.
the sum total of all literature that has been written on a particular topic.
the consultants' reports on industry structure.
none of the above

41. Chapter Questions (cont’d)
Which is not a criterion for evaluating the quality of information sources?
The influence it has on strategic thinking
The number of sources
Timing
Validity
Reliability

42. Chapter Questions (cont’d)
Which company led the hotel industry in utilizing technology in the1980s?
Holiday Inn Worldwide
Marriott
Hilton
Starwood

43. Chapter Questions (cont’d)
When discussing the structure of an environmental scanning system, one must consider the following issue(s):
who should participate in the process.
what resources should be allocated.
how the information is being processed and used.
all of the above
none of the above

44. Chapter Questions (cont’d)
What skill is not required for the director of competitive intelligence or development analysis?
Analytical skills
Marketing skills
Communication skills
Self-management capability

45. Chapter Questions (cont’d)
Which is not considered a category of information?
Quantitative
Qualitative
Personal and personal
Signals and signs

46. Chapter Questions (cont’d)
Which field is not mentioned in the sampling of disciplines and fields of study contributing to the body of knowledge in the hospitality industry?
Nutrition
Sociology
Safety and security
Accounting

47. Chapter Questions (cont’d)
Which mode of scanning activities would most managers fit into now?
Proactive
Routine
Reactive
Null

48. Chapter Questions (cont’d)
Content analysis is a tool to help managers interpret the large amount of information about the environment. In using content analysis, which skills are not required for applying the content analysis process?
Comprehension skills
Analytical skills
Synthesizing skills
Application skills
Extrapolation skills

49. Chapter Questions (cont’d)
Environmental scanning activities should be carried out:
annually.
bi-annually.
quarterly.
continuously.

50. Chapter Questions (cont’d)
Concept mapping is another tool to help interpret the large amount of data that a manager must review in analyzing the environment. It is a useful tool to help managers:
determine the frequency and volume of ideas that have emerged from the content analysis process.
assess the relationship among various themes identified in the content analysis process.
rank the most important themes.
identify relationships among various themes.
all of the above

51. Chapter Questions (cont’d)
Matrices are excellent ways of understanding the relationship of:
the task environment with the remote environment.
the task environment with the resources of the firm.
the firm environment with the multinational environment.
the task environment with the resources of the firm; the firm environment with the multinational environment.
all of the above

52. Chapter Questions (cont’d)
Scanning is best accomplished by
a team of individuals working independently on policy oriented matters.
a team of individuals working together on strategic issues.
information shared equally among all the firm's employees.
information sharing based on the total body of knowledge on the subject.
a team of individuals working together on strategic issues; information sharing based on the total body of knowledge on the subject.

53. Student Learning Objectives
On completion of this chapter, you will be able to;
Identify the environmental scanning process.
Develop an appreciation to scan the business environment effectively.
Describe the effective environmental scanning system.
Identify the unique elements business domain.
Identify and define the sources of information and give at least 1 hospitality
related example for each of them.
Identify the timing information.
Achieve a more practical understanding of forces that drive change in hospitality.
(Case Study)
Comprehend the feedback and evaluation systems.