Ans. ENVIRONMENTAL SCANNING
You
have learnt that the business environment encompasses a variety of factors like
economic, socio-cultural, political, legal, natural, international,
technological and many others operating at micro as well as macro levels. But
the immediate concern of business is to identify that part of the environment
which is of strategic relevance to it. This part of environment is called
relevant environment. Every organisation must closely and thoroughly monitor
its relevant environment. The process by which the organisations monitor their
relevant environment to identify the opportunities that could benefit them and
the threats that should be avoided is known as environmental scanning, analysis
or appraisal. The whole process consists of tracing the source of any
opportunity or threat and break the whole into parts so as to examine its
nature and inter- relationship. It is from such analysis that the management is
in a position to decide whether to react to, ignore, or try to influence, or
anticipate future s opportunities and threats discovered.
Process of
Environmental Scanning
The
process of environmental scanning involves performance of the following steps
in a sequential manner.
Identification
of key environmental variables : The first step in
environmental scanning involves identification of key environmental variables
which have an impact on the organisation's business and industry. These
environmental variables comprises both micro and macro environment of business.
The organisation requires to identify those variables which are relevant and
also the variables which are general in nature. The key environmental variables
can be customer related, competition or market related, technology related,
regulatory framework related etc.
Identification
of sources of information for environmental Scanning
: Environmental scanning requires information input which can be derived from
different sources. These could be formal and informal sources. These could be
written as well as verbal sources. The origin of the sources of data could be
internal as well as external. Some of the important types of sources of
information are:
·
Internal sources such as company files
and documents, data base generated by management information systems, company
employees, and so on.
·
Secondary sources of information such as
government publications, newspapers, journals, magazines, trade and industry
associations newsletters, annual reports of competing firms, etc.
·
Mass media such as radio, television,
internet.
·
Formal studies conducted by external
agencies such as marketing research agencies, consultants and educational
institutions.
·
Spying and surveillance through
industrial espionage agencies or through ex- employees of the competitors or by
planting own persons in the rival companies.
Approaches
of environmental scanning : The organization may adopt
either systematic approach or ad-hoc approach or processed form approach or
combination of these approaches in varying degrees depending upon the need of
situation.
Techniques
of environmental scanning : There is a wide range of
techniques available for environmental scanning. There are quantitative as well
as qualitative techniques. There are formal and systematic techniques as well
as intuitive methods available with the strategist. Any of these techniques may
be selected depending upon the need and cost involved.
Various authors have identified different methods
and techniques of environmental scanning. Some of these techniques are:
Scenario writing, simulation, morphological analysis, structured and
unstructured expert opinion, dynamic modeling, single variable extrapolation,
multivariable interaction analysis, cross impact analysis and a number of other
forecasting techniques. While many of these techniques are based on statistical
methods but some of the techniques are based on intuition and judgment of the
strategist to predict what the future is likely to be.
Factors
affecting environmental scanning : There are several
factors which affect environmental scanning. These factors are events, trends,
issues and expectations of different groups which have interest in the
organisation or its stakeholders. Events are important and specific occurrences
taking place in different environmental sectors. Trends are the general
tendencies or courses along which events take place. Issues are the current
concerns of various sections of the society which arise in response to events
and trends. Expectations are the demands which are made by various interest groups
in response to their concern for the issues which have emerged.
Preparation
of Environmental Threat and Opportunity Profile-ETOP
: The last step in the process of environmental scanning is to structure the
environmental appraisal in such a way that the environmental issues identified
in the earlier steps are classified into opportunities and threats. This needs
to be done in a systematic manner. William F. Glueck has suggested a technique
called preparation of E~lvironmental Threat and Opportunity Profile(ET0P) for
an organisation. The preparation of ETOP requires overall environment to be
divided into various sectors and then the impact of each sector on the
organisation duly analysed. Such ETOP provides the strategists a clear picture
about the sectors which have favourable impact on the organisation and also the
sectors having unfavourable or no impact on the organisation. This
understanding can be of great help to an organisation in the fol-mulation of
appropriate strategies whereby it can take the advantages of the opportunities
available and counter the threats posed by the environment.
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