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GEE 102 Lesson 3 - Environmental Scanning

This document provides an overview of environmental scanning and its importance for businesses. It defines environmental scanning as gathering internal and external information to identify threats and opportunities. Conducting environmental scans allows businesses to understand changes in their environment, identify strengths, weaknesses, opportunities and threats, optimize resource usage, ensure survival and growth, develop long-term strategies, and make better decisions. The document also provides examples of market trends that could be identified through environmental scanning and affect businesses.

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Reygie Fabriga
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737 views4 pages

GEE 102 Lesson 3 - Environmental Scanning

This document provides an overview of environmental scanning and its importance for businesses. It defines environmental scanning as gathering internal and external information to identify threats and opportunities. Conducting environmental scans allows businesses to understand changes in their environment, identify strengths, weaknesses, opportunities and threats, optimize resource usage, ensure survival and growth, develop long-term strategies, and make better decisions. The document also provides examples of market trends that could be identified through environmental scanning and affect businesses.

Uploaded by

Reygie Fabriga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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NAME: _________________________________ COURSE & YEAR: __________

GEE 102 The Entrepreneurial Mind


CHAPTER II DEVELOPMENT OF BUSINESS PLAN AND STRATEGIES
LESSON 1: Environmental Scanning

At the end of this lesson, you should be able to:


a. identify the importance of conducting environmental scanning in business, and
b. conduct environment scanning through feasibility study.

OVERVIEW
What is Environmental Scanning?
The environment of a business is extremely dynamic in nature. It is always in a flux, i.e.
constantly changing. Which means that the future of the business is also ever changing. And the
organization must keep a close at its environment via environmental scanning. Let us learn the
environmental scanning meaning.

In any business organization, there is an internal and external environment. They comprise all
the factors that can affect the business of a company in any way. And they also present
opportunities for the business to grow and threats that may harm the business. So these environments
need constant monitoring. This is where environmental scanning comes into the picture.

Environmental scanning is the gathering of information from an organizations internal and


external environments, and careful monitoring of these environments to identify future threats and
opportunities. It is the analyses of all factors that may affect the future of the organization.

Why is it necessary for a business firm to conduct environmental scanning?


Environmental analysis will help the firm to understand what is happening both inside and
outside the organization and to increase the probability that the organisational strategies developed will
appropriately reflect the organizational environment.

In any business organization, there is an internal and external environment. They comprise all
the factors that can affect the business of a company in any way. And they also present
opportunities for the business to grow and threats that may harm the business. So these environments
need constant monitoring. This is where environmental scanning comes into the picture.

8 Important Needs and Importance of Environmental Scanning in Business


The following is the need and importance of environmental scanning:

1. SWOT Analysis
As we saw previously in the environmental scanning meaning, it is a complex process.
The close study of the internal and external environment of an organization will reveal some very
valuable information, i.e. the strengths, weaknesses, opportunities, and threats of a company.
Let us take a brief look.

 Identification of STRENGTH
Strength of the business firm means capacity of the firm to gain advantage over its
competitors. Analysis of internal business environment helps to identify strength of the firm.
After identifying the strength, the firm must try to consolidate or maximise its strength by
further improvement in its existing plans, policies and resources.

 Identification of WEAKNESS
Weakness of the firm means limitations of the firm. Monitoring internal environment
helps to identify not only the strength but also the weakness of the firm. A firm may be strong
in certain areas but may be weak in some other areas. For further growth and expansion, the
weakness should be identified so as to correct them as soon as possible.

 Identification of OPPORTUNITIES
Environmental analyses helps to identify the opportunities in the market. The firm
should make every possible effort to grab the opportunities as and when they come.

 Identification of THREAT
Business is subject to threat from competitors and various factors. Environmental
analyses help them to identify threat from the external environment. Early identification of
threat is always beneficial as it helps to diffuse off some threat.

2. Optimum use of resources


Proper environmental assessment helps to make optimum utilisation of scare human,
natural and capital resources. Systematic analyses of business environment helps the firm to
reduce wastage and make optimum use of available resources, without understanding the
internal and external environment resources cannot be used in an effective manner. Whether it
is capital resources, human resources or other factors of production, their best use and
utilization is very important for any business. Environmental scanning will help us avoid any
wastages and allow for the most effective and economical use of these resources.

3. Survival and growth


Systematic analyses of business environment help the firm to maximise their strength,
minimise the weakness, grab the opportunities and diffuse threats. This enables the firm to
survive and grow in the competitive business world.

4. To plan long-term business strategy


A business organisation has short term and long-term objectives. Proper analyses of
environmental factors help the business firm to frame plans and policies that could help in easy
accomplishment of those organisational objectives. Without undertaking environmental
scanning, the firm cannot develop a strategy for business success.

5. Environmental scanning aids decision-making


Decision-making is a process of selecting the best alternative from among various
available alternatives. An environmental analysis is an extremely important tool in understanding
and decision making in all situation of the business. Success of the firm depends upon the
precise decision making ability. Study of environmental analyses enables the firm to select the
best option for the success and growth of the firm.
LET’S CONNECT

ACTIVITY 1 Multiple Choice


Directions: Encircle the letter of your choice.

1. What is environmental scanning?


a. The physical and social characteristics of the population
b. An analysis and evaluation process that businesses use to understand their current environment
c. The community of people living in a particular region and having shared customs, laws, and
organizations
d. Consists of the beliefs, behaviors, objects, and other characteristics common to the members of
a particular group or society
2. Why is there a need to conduct an environmental scan?
a. To take action in a more suitable and efficient manner
b. To identify a number of broad factors and issues that will have a significant impact on businesses
and their plans for the future
c. To provide you the capability to formulate essential adjustments in the organization's reaction to
the factors that can turn out to be the difference between success and failure
d. All of the above
3. Which of the following “market trends” show the changing needs of the customers?
a. increasing use of online purchasing
b. market trend to discounting
c. trend for children to stay at home longer
d. increasing or decreasing product or service usage
4. Which of the following “market trends” show the changes in pricing among products?
a. increasing use of online purchasing
b. market trend to discounting
c. trend for children to stay at home longer
d. increasing or decreasing product or service usage
5. Which of the following “market trends” show the obvious effect of tehnology?
a. increasing use of online purchasing
b. market trend to discounting
c. trend for children to stay at home longer
d. increasing or decreasing product or service usage

ACTIVITY 2 ESSAY
Directions: In not less than 100 words, write a short essay based on what is being asked.
This task is worth 10 points.

1. In your own words, explain the importance of environmental scanning in entrepreneurship.

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