Environmental Scanning Technics

2.  The Environmental scanning is the process through
which an organization monitors and understands
various environmental factors and determines the
opportunities and the threats that are provided by
these factors.
 It is the process which is made up of two sub
processes environmental search and environmental
diagnosis
 It is also known as environmental analysis.

3.  Azhar Kazmi, define environmental scanning
in his book Business Policy and strategic
management that “the process by which
organisations monitor their relevant
environment to identify opportunities and
threats defecting their business is known as
environmental scanning”.

4.  It is holistic exercise
 It is an exploratory process
 It is continuous process
 It is indispensable: necessary for the organization.
Without environmental scanning impossible for the
organization to trace the opportunities and associated
threats.

5.  Internal documents like files, records
management information system, organization
chart etc.
 Extracting information from competitor
through ex-employees and industrial espionage
agencies.
 External agencies like customers, suppliers,
marketing intermediaries etc.

6.  Mass media like internet, television
 Secondary sources of information such as
trade journals, magazines, news papers, book,
governments publication etc.
 Formal studies conducted by employees,
market research reports, consultant,
educational institution and testing laboratories.

7.  It helps in converting threats into opportunities
 Identified Customer needs
 Capitalize opportunities
 To plan long-term business strategy
 Qualitative information
 Environmental scanning aids decision-making

8. 1) PEST OR PESTEL ANALYSIS
2) QUEST ANALYSIS
3) SWOT ANALYSIS
4) ETOPANALYSIS
5) INDUSTRYANALYSIS

10. • Government intervention, tax ,
fiscal policy, trade restrictions
etc.
Political
forces
• Growth rate, interest rates,
exchange rates, rate of inflation
etc.
Economic
forces
• Cultural aspects , health factors,
population rate, age group etc.Social forces

11. • Technological changes
Technological
forces
• Climate change, global
warming
Environmental
forces
• Laws and actsLegal forces

12.  Quick Environmental Scanning Technique
 It involved following steps

13.  Internal strategists will observe and identify the
major events and trends in the Industry.
 Speculate on a wide range of important ISSUES that
might affect the future of their organization.
 Preparing summary report.
 Report and scenarios are reviewed by a group of
strategists who identify feasible strategic options to
deal with the evolving environment.

14.  SWOT a study undertaken by an organization to
identify its internal strengths and weaknesses, as
well as its external opportunities and threats
1. Identifying a company’s resources strengths :
physical assets, Human assets, organization assets,
intangible assets etc.
2. Identification a company’s resource deficiencies
(weaknesses) : lack of physical, human,
organizational or intangible assets

15. 3. Identifying a company’s market Opportunities
4.Identifying a company’s environmental
threats
SWOT analysis is an attempt to measure
opportunities and threats that are made available
by external environment and attempt to relate
firm’s internal strengths and weaknesses to
exploit the opportunities and convert threats into
opportunities.

17.  ETOP IS the Environmental Threat and
Opportunity Profile also known as ‘Environmental
Impact Matrix’.
 It is summarized projection of the environmental
factors and their likely impact on the organisation
when the environmental scanning is undertaken on a
formal and systematic way.
 ETOP is the most useful way of structuring the
results of environmental scanning. It includes the
following steps: -

18.  Environmental Factors – Identification of different
components of environment.
 Assessing importance of Environmental factors
 Assessing Impact factors
 Combining Importance and Impact factors.

19.  Michael E. Porter the renowned author of competitive
strategy, Competitive Advantage and Competitive
Advantage of Nations, has provided a structural analysis
of industries. According to this analysis, the state of
competition in an industry depends on five basic
competitive forces viz:
 1. Rivalry among existing firms
 2. Threat of new entrants
 3. Threats of substitutes
 4. Bargaining power of suppliers
 5. Bargaining power of Buyers

20.  Rivalry among existing firms
There is competitive rivalry between firms on a
continuing basis. The various players try to
constantly jockey for position and try new product
and process innovations in order to develop a
strategic edge .
 Threat of new entrants
A prosperity industry often faces threat of new
entrants which can alter the competitive
environment. There are many entry barriers like –
Government Policies, Economies of Scale, Product
differentiation, Brand Identity or Monopoly elements,
Capital Requirements and Cost disadvantages.

21.  Threats of substitutes
“ Substitutes limit the potential returns in an industry by
placing a ceiling on the price firms in the industry can
profitability charge. The more attractive the price
performance alternative offered by substitutes, the firmer
the lid on industry profits”
 Bargaining power of buyers
For several industries, buyers/ customers are potential
competitors – they may integrate backward. Beside, they
have different degree of bargaining power.
 Bargaining power of suppliers
Suppliers can exert bargaining power in an industry by
raising prices or by changing the quality of their goods
and services.