BUSINESS STRATEGY

XI
Environmental Scanning
DEFINITIONS &
FACTORS
 The process by which an organisation
monitors its relevant environment for
identification of opportunities & threats is
environmental scanning
 Factors to be considered are Events which are
specific and important occurrences in
different sectors, Trends general tendencies
and courses of action along which evens take
place, Issues current concerns in response to
events & trends & Expectations are the
demands made by the interested in the light
of their concerns
ONE EXAMPLE
 First public issue of Reliance Industries
in 1977-EVENT
 TREND started was of wider
participation of public in equity
investments in private sector
companies
 ISSUE was of developing equity culture
in India
 EXPECTATIONS among general public
that fruits of corporate sector will be
shared by all & sundry
APPROACHES
 Systematic Approach- information
collected systematically and continuously
re: markets, customers, legislation, govt.
policies and updated continuously
 Ad Hoc Approach- special studies and
surveys regarding specific issues very
often for special projects
 Processed Form Approach- using
information from different sources inside
and outside
SOURCES OF
INFORMATION
 Documentary or Secondary Sources- from
different forms of publications – print media,
trade and industry association newsletters,
govt. publications, annual reports of
competitors
 Mass Media- radio, TV, Internet
 Internal Sources- company files, databases,
company employees etc.
SOURCES OF
INFORMATION
 External Agencies- customers, dealers,
trade associations, govt. agencies
 Formal Studies made by employees,
market research bodies, consultants,
institutions etc.
 Industrial Espionage- spying and
surveillance agencies
METHODS &
TECHNIQUES OF
SCANNING
 Single Variable Extrapolations
 Unstructured Expert opinion
 Structured expert opinion
 Structured inexpert and unstructured
inexpert opinions
 Scenario building
 Simulation
METHODS &
TECHNIQUES OF
SCANNING
 Complexity Theory- a set of
mathematical techniques to deal with
the dynamic nature of real world
problems- fractals, fuzzy logic, genetic
algorithms, swarm stimulations, Monte
Carlo Method, the chaos theory
 Techniques based on artificial
intelligence, neural networks, data
mining etc.
PITFALLS
 Over focusing on the relevant environment and
missing out on the trends and issues in the
general environment
 Paralysis by analysis- study of environment
does not mean number-crunching and paper
pushing
 The Scanning should be done to uncover
influences that matter for the future of
corporate strategic decision making
PITFALLS
 Scanning should be kept separate
from operations
 Scanning cannot become an
impersonal Staff function
 It should not be too far from the
realities of the organisation
FACTORS AFFECTING
ENVIRONMENT
APPRAISAL
 Strategist-related Factors- the
personality and the identity of the
strategist has a central role and when
a group of consultants is used the
group dynamics among them
 Organisation-related factors- size,
nature of the business
 Environment-related factors- is it
complex, stable, changing, turbulent
and so on and so forth