Environmental scanning is the process of gathering, analyzing, and sharing information about a company's external environment for strategic purposes. There are three types of environmental scanning: ad-hoc scanning for crises, regular scheduled scanning, and continuous scanning. Environmental scanning examines both the macro environment including political, economic, social, and technological factors (PEST analysis), as well as the micro environment including competitors, customers, and a company's internal environment. Environmental scanning helps managers predict future market conditions to make strategic decisions.

1. Environmental scanningEnvironmental 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 considering entering

2. Kinds of environmental scanningAd-hoc scanning - Short term, infrequent examinations usually initiated by a crisisRegular scanning - Studies done on a regular schedule (e.g. once a year)Continuous scanning (also called continuous learning) - continuous structured data collection and processing on a broad range of environmental factors

3. Environmental scanning usually refers just to the macro environment, but it can also include industry, competitor analysis, marketing research (consumer analysis), new product development (product innovations) or the company's internal environment.

4. Environmental scanningExternal analysisInternal analysisMacro environmentMicro environmentPEST analysisFive force analysis

5. A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:PoliticalEconomicSocialTechnologicalThe acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macro environmental factors.

6. Political Factors:-Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:tax policy

7. employment laws

8. environmental regulations

9. trade restrictions and tariffs

10. political stabilityEconomic Factors :-Economic factors affect the purchasing power of potential customers and the firm's cost of capital. The following are examples of factors in the macro economy:economic growth

11. interest rates