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Nature & Components of Environmental Scanning<br />Presented by:<br />Ashutosh Mishra<br />MBA (Mrktg.)<br />

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What is Environmental Scanning?<br />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.”<br />Source: Fuld & Company, Inc.<br />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.<br />

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Common part of strategic analysis.<br />Environmental Scanning<br />Internal elements & external elements.<br />All are interrelated.<br />

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Factors affecting Environmental Scanning<br />External Environment<br />Internal Environment<br />Events<br />Trends<br />Issues<br />Expectations<br />Infrastructure<br />HR<br />Hardware<br />Abilities<br />Structure<br />

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Three approaches to Scanning<br />Kubr has suggested three approaches to scanning,<br /><ul><li>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.

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

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Processed form: Information available from different sources both internal & external of the organization in processed form.</li></li></ul><li>Sources of Information<br />

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What scanning can accomplish?<br /><ul><li>It helps an organization capitalize on early opportunities rather than lose these to competitors.

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It provides an early signal of impending problems, which can be defused if recognized well in advance.

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It sensitizes an organization to the changing needs and wishes of its customers.

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It provides a base of objective qualitative information about the environment that strategists can utilize.

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It provides intellectual stimulation to strategists in their decision making.

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It improves the image of the organization with its publics by showing that it is sensitive to its environment and responsive to it.

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It is a means of continuing broad-based education for executives, especially for strategy developers.</li></li></ul><li>PEST analysis: An environmental scan for business.<br />Micro Environment<br />Macro Environment<br />

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Components<br />

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Current scanning processes<br /><ul><li>Porter’s Five Forces

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Intelligence Cycle

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Linear Process

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Concentric Circles

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Scientific Method

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Hub & Spoke

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Visualization</li></li></ul><li>P<br />O<br />R<br />T<br />E<br />R’<br />S<br />F<br />I<br />V<br />E<br />F<br />O<br />R<br />C<br />E<br />S<br />Source: Porter, Michael. Competitive Strategy. New York<br />

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I<br />N<br />T<br />E<br />L<br />L<br />I<br />G<br />E<br />N<br />C<br />E<br />C<br />Y<br />C<br />L<br />E<br />Source: Journal of Business Strategy, May/June, 1988<br />

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L<br />I<br />N<br />E<br />A<br />R<br />P<br />R<br />O<br />C<br />E<br />S<br />S<br />

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C<br />O<br />N<br />C<br />E<br />N<br />T<br />R<br />I<br />C<br />C<br />I<br />R<br />C<br />L<br />E<br />S<br />

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S<br />C<br />I<br />E<br />N<br />T<br />I<br />F<br />I<br />C<br />M<br />E<br />T<br />H<br />O<br />D<br />Source: Cliff Kalb, Merck<br />

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Responses<br />When an issue is detected, there are generally six ways of responding to them:<br /><ul><li>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 .

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Adaptation strategy - adapt your marketing plan to the new environmental conditions .

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Offensive strategy - try to turn the new influence into an advantage - quick response can give you a competitive advantage .

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Redeployment strategy - redeploy your assets into another industry .

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

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Passive strategy - no response - study the situation further .</li></li></ul><li>R<br />E<br />F<br />E<br />R<br />E<br />N<br />C<br />E<br />S<br /><ul><li>Scanning the business environment- Aguilar, F.

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The New Competitor Intelligence by Leonard</li></ul>M. Fuld. New York, John Wiley & Sons, Inc.,<br />1995.<br /><ul><li>Strategic Management & Business Policy by AzharKazmi, 3rd. edition</li></ul>http://www.bing.com<br />http://www.carr-research.com<br />