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Chapter 3 Environmental Scanning

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Asghar Ali
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41 views10 pages

Chapter 3 Environmental Scanning

Uploaded by

Asghar Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Environmental Scanning

Definition:
Ø Environmental scanning is a process of gathering, analysing, and dispensing information
for tactical or strategic purposes.
Ø Careful monitoring of an organization's internal and external environments for detecting
early signs of opportunities and threats that may influence its current and future plans. In
comparison, surveillance is confined to a specific objective or a narrow sector.
Ø It is monitoring and interpreting sweep of social, political, economic, ecological, and
technological events to spot budding trends that could eventually impact industry.
Purpose of environmental scanning:

• Effective utilisation of resources


• Constant monitoring of resources
• Strategy formulation
• Identification of threats and opportunities
• Useful for the managers
• Prediction of future
Factors To Be Considered For Environmental Scanning:
Approaches To Environmental Scanning:
1.SYSTEMATIC APPROACH 2.ADHOC APPROACH
• information for environmental scanning collected • Organisations conduct special surveys and
systematically. studies to undertake special projects, evaluate
• Information pertaining to business and industry existing strategies or devise new strategies.
could be collected continuously to monitor • Changes and unforeseen developments may also
changes. be investigated.
• Continuous updating necessary not only for 3.PROCESSED FORM APPROACH
strategic management but also for operational • Information used is supplied by govt agencies or
activities. private instituitions.
• In this approach information is collected relating • Secondary data available from external and
to mkt customers, changes in legislation govt. internal sources may also be used.
policy have a direct impact on organisation.
Techniques of environmental scanning:
1.QUEST Analysis: The QUEST (Quick environmental scanning techniques) is a four step
process which uses scenario – writing for scanning the environment and
identify the strategic options.
The Four steps involved in applying this technique are:
1. Internal strategists will observe and identify the major events and trends in the Industry
2. Speculate on a wide range of important ISSUES that might affect the future of their
organization
3. Preparing a report summarizing the major issues and their implications and 3-5 scenarios
incorporating the major themes of their discussion.
4. Report and scenarios are reviewed by a group of strategists who identify feasible strategic
options to deal with the evolving environment.
2.PEST Analysis: In the PEST analysis, which involves identifying the political,
economic, socio-cultural and technological influences on an
organization.
3.SWOT Analysis:
• SWOT, is an instrumental framework
in value based management and
strategy formulation to give in-depth
information to strength, weakness,
opportunity and threats for a
particular company / organization.

• The relationships in a SWOT


analysis are generally’ represented
by a 2x2 matrix. The ‘Strength’ and
‘Opportunities’ are both positive
considerations. ‘Weakness’ and
Threats are both negative
considerations.
4.ETOP Analysis:

• Preparing ETOP Environmental threat and opportunity profile is referred as ETOP


profile. It identifies the relevant environmental factors.
• Such factors might be general environmental factors and task environment factors.
Thereafter, it is necessary to identify their nature. Some factors are positive to the
organization whereas others are negative.
• Therefore, it is necessary to find out their impact to the organization. Positive,
neutral, and negative sign in ETOP denotes the relevant impact of environmental
factors.
Steps involved in the preparation of ETOP:
• Dividing the environment into different sectors.
• Analysing the impact of each sector on the organisation.
• Subdividing each environmental factor into sub factors for a comprehensive ETOP.
• Analysing the impact of each sub factor on the organisation in the form of a statement.
• Preparing a summary to show the major factors for the sake of simplicity.

Importance of ETOP:
• Provides a clear picture to the strategists of the sectors and the different factors in those sectors.
• Helps the organisation in knowing where it stands with respect to its environment.
• Helps the organisation in formulating appropriate strategy to take advantage of the
opportunities and threats in its business.

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