Nature & Components of Environmental

Scanning

Presented by:Ashutosh

MishraMBA (Mrktg.)

What is Environmental Scanning?

Environmental scanning is a process of gathering, analyzing, and dispensing information for tactical or strategic purposes. The environmental scanning process entails obtaining both factual and subjective information on the business environments in which a company is operating or consider entering.

Environmental Scanning: “A term coined in the mid-1960’s by Francis Aguilar, a Harvard Business School professor, to describe the action of watching and collecting information on a company’s rivals and the overall market.”

Source: Fuld & Company, Inc.

Environmental Scanning

Common part of strategic analysis.

Internal elements & external elements.

All are interrelated.

Factors affecting Environmental Scanning

External Environment

Internal Environment

Events

Trends

Issues

Expectations

Infrastructure

HR

Hardware

Abilities

Structure

Three approaches to Scanning

Kubr has suggested three approaches to scanning,

Systematic: Information related to markets & customers, changes in legislation & regulations that have a direct impact on organization’s activities that could be collected continuously to monitor changes.

Ad-hoc: Conduction of special surveys & studies to deal with specific environmental issues.

Processed form: Information available from different sources both internal & external of the organization in processed form.

Sources of Information

Secondary sources

Mass media

Internal sources

External agencies

Formal studies

Spying & Surveillance

What scanning can

accomplish?

It helps an organization capitalize on early opportunities rather than lose these to competitors.It provides an early signal of impending problems, which can be defused if recognized well in advance.It sensitizes an organization to the changing needs and wishes of its customers.It provides a base of objective qualitative information about the environment that strategists can utilize.It provides intellectual stimulation to strategists in their decision making.It improves the image of the organization with its publics by showing that it is sensitive to its environment and responsive to it.It is a means of continuing broad-based education for executives, especially for strategy developers.

PEST analysis: An environmental scan for

business. Micro Environment

Macro Environment

Components

Current scanning processes

Porter’s Five Forces

Intelligence Cycle

Linear Process

Concentric Circles

Scientific Method

Hub & Spoke

Visualization

PORTER’S

FIVE

FORCES

Source: Porter, Michael. Competitive Strategy. New York

INTELLIGENCE

CYCLE

Source: Journal of Business Strategy, May/June, 1988

LINEAR

PROCESS

CONCENTRIC

CIRCLES

SCIENTIFIC

METHOD

Source: Cliff Kalb, Merck

Responses

When an issue is detected, there are generally six ways of responding to them:

Opposition strategy - try to influence the environmental forces so as to negate

their impact - this is only successful where you have some control over the

environmental variable in question .

Adaptation strategy - adapt your marketing plan to the new environmental

conditions .

Offensive strategy - try to turn the new influence into an advantage - quick

response can give you a competitive advantage .

Redeployment strategy - redeploy your assets into another industry .

Contingency strategy- determine a broad range of possible reactions - find

substitutes .

Passive strategy - no response - study the situation further .

REFERENCES

Scanning the business environment- Aguilar, F.

The New Competitor Intelligence by LeonardM. Fuld. New York, John Wiley & Sons, Inc.,1995.

http://www.bing.comhttp://www.carr-research.com

Strategic Management & Business Policy by Azhar Kazmi, 3rd. edition