Environmental Scanning-SM-MBA

1. Environmental scanning
Definition:
 Environmental scanning is a process of gathering, analysing, and dispensing information
for tactical or strategic purposes.
 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.
 It is monitoring and interpreting sweep of social, political, economic, ecological, and
technological events to spot budding trends that could eventually impact industry.
Submitted by :
Immani Chandra Shekar
(Reg. No: 19K61E0020)

2. 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

3. Factors To Be Considered For Environmental Scanning:

4. Factors affecting environmental appraisal:
1.Factors relating to nature of environment:
• Complexity
• Flexibility
• Hostility
• Diversity
2.Factors relating to the organization:
• Nature of the business
• Age of the organization
• Size of the organization
• Nature of the markets
• Nature of the products
3. Factors relating to strategists:
• Age , education and experience
• Motivational level
• Ability to withstand pressure and strain
• Interpersonal relations

6. Approaches To Environmental Scanning:
1.SYSTEMATIC APPROACH
• information for environmental scanning collected
systematically.
• Information pertaining to business and industry
could be collected continuously to monitor
changes.
• Continuous updating necessary not only for
strategic management but also for operational
activities.
• In this approach information is collected relating
to mkt customers, changes in legislation govt.
policy have a direct impact on organisation.
2.ADHOC APPROACH
• Organisations conduct special surveys and
studies to undertake special projects, evaluate
existing strategies or devise new strategies.
• Changes and unforeseen developments may also
be investigated.
3.PROCESSED FORM APPROACH
• Information used is supplied by govt agencies or
private instituitions.
• Secondary data available from external and
internal sources may also be used.

7. 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.
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.
The Four steps involved in applying this technique are:

8. In the PEST analysis, which involves identifying the political,
economic, socio-cultural and technological influences on an
organization.
2.PEST Analysis:

9. • 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.
3.SWOT Analysis:

10. • 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.
4.ETOPAnalysis:

11. 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.