What is Environmental Scanning?

Environment Scanning is the process of identifying and analyzing the environment. Environmental influences determine their potential effects in an organization and consequent problems and threads. It is an ongoing tracking of trends and occurrences in the organization internally and externally. It is a process of gathering information about events and their relationships. Environmental scanning determines to help management to regulate the future direction of the organization. It is a continuous process of monitoring the dynamic relationship of all the forces like economic, demographic, technological, socio-cultural, political forces to determine the opportunities.

Environment scanning helps an organization to make proper strategies for the business.

Features of Environmental Scanning

  • Environmental scanning is a continuous process as the environment changes at a rapid level. Hence, a track is required. It is a process of analyzing the environment and identifies the process which may affect the business.
  • Exploratory process: Environmental scanning is an exploratory process as it keeps monitor of the environment and examines possible effects in the future.
  • Future predictions are one of the important aspects of environment scanning.
  • Dynamic process: Environmental scanning is a dynamic process and the study depends upon the changing situations.
  • Holistic view: Environmental scanning does not view at the partial level but keeps a complete view of the environment.

Environmental Scanning Components

  • Internal component: Organizations internal component such as human resources, technological resources, capital resources affect the performance of an organization
  • External components: These are the components that are external to the organization. Although they are external components still, they affect the growth and development of the firm. External components have 2 sub-components micro-environmental and macro-environmental.

Variables considered for environmental scanning

  • Changes in the micro-environment: when there is a change in the microenvironment of the business then the need for Environmental scanning occurs
  • Changes in the business market: if the market changes in which the firm is doing business, then Environmental scanning is considered.
  • Changes in customers’ needs and demand: the consumers need and demand changes with time, so environmental scanning is very much important to understand customers requirement.
  • Nature of competition: the nature of competition should be done while doing environmental scanning
  • Techniques of environmental scanning: following are techniques of environmental scanning.

SWOT analysis: Strength, weakness, opportunities, and threats are there in every influence. SWOT analysis is the study of Strengths, weaknesses, opportunities. and threats of internal as well as external factors to prepare a unified strategy. Strength and weakness exist within the firm such as educated and experienced employees may be strengths and poor technology may be the weakness of the firm. Opportunity is an attractive field for a company's action in which the particular company would enjoy a competitive advantage. An environmental Threat is an unfavorable tendency or revolution in the environment.

  • PESTEL analysis: PESTEL analysis study of political, economic, social, technological, environmental, and legal factors in the environment. PESTEL analysis helps to identify the changes in the macro-environment. It helps an organization to monitor and react to the changes in the macro-environment and perform well as compared to the competitor. It helps a corporate to identify the advantages and disadvantages involved in the environment.
  • ETOP analysis: ETOP analysis is the study of environmental threat opportunity profile. ETOP analysis helps an organization to analyze the opportunities and threats involved in the business.
  • QUEST analysis: QUEST stands for Quick Environmental Scanning Technique. The objective of QUEST analysis is to quickly analyze the market and save time so that the firm can focus on other critical issues.

Process of Environmental Analysis

  • Environmental scanning: Environmental scanning involves analyzing the environment and identify the factors that may affect the business it helps the entrepreneur to take strategic decisions. Many factors may affect business operations.
  • Monitoring: Environmental monitoring involves collecting data and monitor to find out the trends and patterns. Once the relevant factors are identified, it is time to monitor the environment. Monitoring is a track-up and bottomless analysis of factors that are identified through environmental scanning.
  • Forecasting: environmental forecasting is the process of forecasting future events based on previously analyzed data. It is necessary to anticipate the future before the formation of any strategy.
  • Assessment: this process involves the assessment of various environmental factors which may provide opportunities or threats to the business. Some environmental factors are threats to some businesses while for others the same are opportunities.

Importance of Environmental Scanning

Environmental scanning is very important for businesses to make various marketing and other business strategies.

It helps an organization to achieve its goals as the strategies that can be changed as per the analysis of Environmental.

It also helps a firm to identify possible threats and opportunities involved in the micro as well as macroeconomy. Threats could be avoided and opportunities can be identified and achieved.

Environmental scanning helps in future forecasts. upcoming anticipation helps to make better strategies.

It helps the firms to understand the market well. The changes in nature and number of demands consumer expectations are the study of the market. The consumer's expectations can be known through environmental analysis.

Environmental scanning helps the firms to identify various opportunities in the market. For example, in today’s pandemic where covid 19 has become a serious concern worldwide, the business opportunity for the products like disinfectant, sanitizers, masks, PPE kits has increased. Consequently, the entrepreneurs can do the environmental scanning and identify the opportunities.

Limitations of environmental scanning: following are some of the limitations of Environmental scanning.

  • Environmental scanning cannot predict future uncertainties. However, it may only help to minimize such uncertainty.
  • Environmental scanning makes the firm alert about Environmental changes which may cause delayed in the decision making. Hence a strategic approach is required to analyze the environment and make the decision.
  • If data verification is not done and the firm completely relies on the analyzed information it may lead to misconduct.

Context and Applications    

This topic is significant in the professional exams for both undergraduate and graduate courses, especially for  

  • B.B.A. 
  • M.B.A. 
  • B.Com 

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