Environment Scanning: Meaning,

Nature and Scope

Define the Environmental Scanning

The process of collecting, analyzing, and distributing information for tactical
and strategic purposes

According to Brown and Weiner (1985)

Environmental Scanning is a kind of radar to scan the world
systematically and signal the new, the unexpected, the major and
minor.
According to Aguilar (1967):
In his study of the information gathering practices , defines scanning as the
systematic collection of external information in order to
1-lessen the randomness if information flowing into the organization.
2-Provide early warning for managers of changing external
Conditions

What is Environmental Scanning?

Whether you are planning a trip, or an excursion to buy groceries, or the direction of a
corporation, you need to consider the larger external environment.

For example, you want to go grocery shopping in the next town. You'd like to get this
done as quickly as possible. So, you turn on the radio to listen to the traffic report. Oops.
There's been an accident on the highway you usually take to get to the store. What do
you do? You plan to take an alternate route that will keep you out of the traffic jam.
You've done a limited form of environmental scan.

In terms of organizations and strategic planning, an environmental scan involves

considering the factors that will influence the direction and goals of your organization.
And, it includes consideration of both present and future factors that might affect the
organization, since, of course, we're planning for the future, not just the present.

What is Environmental Scanning?

For example, an environmental scan might project that in the next ten years, the
number of people (potential customers) between the ages of 18-24 will increase
from 30% to 40%. That's important information if we want to decide what kinds of
new products we might consider introducing into the marketplace. Should we work
on developing products targeted at a dwindling seniors population? Or should we
develop products to take advantage of the shift to a youth dominated market. The
environmental scan forces us to look at these factors.

While some suggest the environmental scan should address only factors external to
the organization (e.g. markets, legislation and government actions, demographics,
marketing trends, etc), we suggest that you also do an INTERNAL
ENVIRONMENTAL SCAN.

An internal environmental scan involves looking at the present capabilities of the

organization (infrastructure, hardware, personnel, abilities, structure, etc) and that
information can be compared to what the organization WILL need in the future to
achieve its strategic goals

Objective of Environmental Scanning

Identified the following objectives of an environmental Scanning system:
Detecting scientific, technical, economic, social and political trends
and events important to the business.
Defining the potential threats, opportunity, or change for the business
implied by those tends and events.
Promoting a future orientation in the thinking of management and staff.
Alerting management and staff to trends that are converging, diverging,
speeding up, slow down, or interacting.

Modes Of Scanning:
Systematic scanning
Information related to markets and customers, changes in legislation,
regulations having a direct impact on the organization's activities, government
policy etc. are collected continuously by taking relevant factors into account

Ad-hoc scanning
Conducting special surveys and studies to deal with environmental issues from time to
time.

Processed-form scanning
sing information in a processed form available from different sources inside and
outside the organization

Types of environmental scans

Ad Hoc

Continuous

Tied to planning cycle (e.g.,

every 3 years)
In-depth
Forecasts 5 to 10 years

Also called Continuous Learning

Structured, in-depth data collection and
analyses by dedicated staff
Data gathered is more comprehensive

Pros

Allows for quicker turn-around of

scan results
Lower commitment of resources
over time

Predictable frequency allows

for appropriate budget
planning
Frequency provides timely
information gathering for
planning
Planning is proactive

Dedication of time by researchers

allows incorporation of data from more
sources
Provides planners with more
comprehensive information
Informs planners of critical changes
sooner
Plans can be adjusted or adopted more
proactively

Cons

Data can be more superficial

Results may address immediate
issues, but are less generalizable
If only conducted in response to
crises, indicates lack of organized
institutional planning efforts
Planning response is reactive

Reaction to unforeseen
changes in environment (e.g.,
onset of recession) may
require Ad Hoc scan to
supplement information.
Planning response is then
more reactive

Requires ongoing institutional

commitment of resources (funding,
personnel, and time)

General
Characteristics

Usually performed in response to

crisis
Not as in-depth
Forecasts are more short-term

Periodic

What to include in your scan

More things to consider including:
Economic

Macroenvironment: STEEP
Socio-cultural
Demographics

population size and distribution

age distribution
education levels
income levels
race and ethnicity

Socio-Cultural (continued)
Attitudes about higher education
Cultural shifts

Technological
New products and services
training opportunities
New manufacturing processes
Infrastructure changes

Industry/career demand and

decline
Unemployment
Inflation

Environmental/Ecologica
l
New industry opportunities

Political
Political climate/stability
State budget deficit or surplus
Changes in legislation

Environmental scanning refers to possession and utilization of

information about occasions, patterns, trends, and relationships within
an organizations internal and external environment.

It helps the managers to decide the future path of the organization.

Scanning must identify the threats and opportunities existing in the
environment. While strategy formulation, an organization must take
advantage of the opportunities and minimize the threats. A threat for one
organization may be an opportunity for another.

Internal analysis of the environment

Internal analysis of the environment is the first step of environment

scanning. Organizations should observe the internal organizational
environment. This includes employee interaction with other employees,
employee interaction with management, manager interaction with other
managers, and management interaction with shareholders, access to natural
resources, brand awareness, organizational structure, main staff,
operational potential, etc.
Also, discussions, interviews, and surveys can be used to assess the
internal environment. Analysis of internal environment helps in identifying
strengths and weaknesses of an organization.

External Analysis of the Environment

As business becomes more competitive, and there are rapid changes in the
external environment, information from external environment adds crucial
elements to the effectiveness of long-term plans.

As environment is dynamic, it becomes essential to identify competitors

moves and actions. Organizations have also to update the core
competencies and internal environment as per external environment.

Environmental factors are infinite, hence, organization should be agile and

vigil to accept and adjust to the environmental changes.
For instance - Monitoring might indicate that an original forecast of the
prices of the raw materials that are involved in the product are no more
credible, which could imply the requirement for more focused scanning,
forecasting and analysis to create a more trustworthy prediction about the
input costs. In a similar manner, there can be changes in factors such as
competitors activities, technology, market tastes and preferences.

Environmental scanning is one of four activities comprising

External analysis.
As illustrated in Figure 1, external analysis is the broader activity of
understanding the changing external environment that may impact the
organization.
In describing external analysis, Fahey and Narayanan (1986) suggest that
organizations scan the environment to identify changing trends and
patterns, monitor specific trends and patterns, forecast the future direction
of these changes and patterns, and assess their organizational impact.
Internal analysis of the organization's vision, mission, strengths, and
weaknesses, external analysis assists decision makers in formulating
strategic directions and strategic plans.
The goal of environmental scanning is to alert decision makers to
potentially significant external changes before they crystallize so that
decision makers have sufficient lead time to react to the change.
Consequently, the scope of environmental scanning is broad.