SCANNIN

G:
Environmental Scanning
and Industry Analysis
 SCANNING
Part of the planning stage
Helps to have an overview of the
organization and its relationship
to its environment
Significant data are gathered to
enable the organization to
arrive at holistic strategies
 ENVIRONMENTAL
SCANNING

The evaluation of the general

economic and industrial
environment in which the
organization operates.
Covers three dimensions: societal
forces, task environment(industry),
and internal environment.
 1ST DIMENSION:
SOCIETAL FORCES

Pertain to facets like economic, technological,

political-legal, and socio-cultural factors.
 ECONOMIC FORCES

Forces that regulate the exchange of

materials, money, energy, and
information.
Determines the competitiveness of the
environment in which the firm operates.
Determine an enterprises demand for its
product and affect the marketing
strategies and activities
 TECHNOLOGICAL FORCES

Forces that generate problem-solving inventions.

Innovation takes the forefront in addressing the
objective to keep systems updated, to ensure ease
of data, and manipulate data.
Adam Smith(1776) articulated the productivity
gains from specialization through the division of
labor as well as from technological improvements
to capital equipment and processes.
Technological breakthroughs:
-portable information devices and electronic
networking
-smart, mobile robots -alternative energy sources
 POLITICAL-LEGAL FORCES

Forces that allocate power and provide

constraining and protecting laws and
regulations.
Cover the antitrust legislation, tax laws,
special incentives, environmental
protection laws, foreign trade
regulations, attitude toward foreign
companies, laws on hiring and promotion,
and stability of the government.
 SOCIO-CULTURAL-
DEMOGRAPHIC FORCES

Forces that regulate the values, mores, and customs of

society.
Changing customer tastes and preferences are
considerably foremost socio-cultural factors that greatly
influence the business landscape and its decisions.
Developments that influence business and business
decisions:
-more educated consumers
-escalating gap between rich and poor
-increasing percentage of working parents
-growing number of Christians/Muslims, ethnic or racial
 2ND DIMENSION:
TASK ENVIRONMENT

Elements or groups that directly

affect a corporation and, in turn,
are affected by it- governments,
local communities, suppliers,
competitors, customers, creditors,
employees/labour unions, special
interest groups, trade associations.
 3RD DIMENSION:
INTERNAL
ENVIRONMENT

Analyzes the performance of the organization.

Normally, the evaluation of the gap between the
actual scenario and the desired objective and vision
of the organization.
Includes evaluation of the board of directors,
management and employees.
Strengths and Weaknesses from the SWOT Analysis
which serves as the cross-functional information
before making decisions
Strengths include high competency levels,
availability of companys resources, efficient system
and procedures, effective management style, and
high level of professionalism in the workplace.
 A COMPETITIVE
ENVIRONMENTAL
SCANNING

Business leaders today are scared of competition.

Competition must not be seen as a problem but a
privilege or gift to be a better organization
Adapt and strategize based on changes brought
about by the developments in the market
environment. Analysis to various levels such as
local, national, regional, and global must be done.
Understand and examine the past, current, and
future strategies and policies of competitors,
whether direct and indirect.
 The way to
conquer the
foreign artisan is
not to kill him but
to beat his work
-Ralph Waldo
Emerson
 INDUSTRY
SCANNING
After analyzing trends in the environment, some of
those have a significantly different impact to other
industries.
According to Aaker (1995), industry analysis means
uncovering major market trends, key success factors,
and the identification of opportunities and threats
through the analysis of competitive and change forces.
Michael Porters five forces model is a worthwhile tool
for analyzing a specific industry. The model recognizes
the five forces that asserts on the influence on
competitiveness, profitability, and attractiveness.
PORTERS APPROACH TO
INDUSTRY ANALYSIS
 THREATS OF POTENTIAL
ENTRANTS

Determines the extent of influence of

new comers to the industry.
An open and attractive market means it
has no or less barriers in entering the
market. Factors that assess the
attractiveness of the industry are
economies of scale, resource
requirements, access to distribution
channels, brand and customer loyalty,
and cost disadvantages .
 BUYERS BARGAINING
POWER

Establishes the extent of power of the buyer to a

certain industry. The industry is dominated by
buyers or consumers that have control or
influence on the products in connection with the
price, volume, and quality.
The market is attractive for a business firm that
supplies and gains control of the limited raw
materials. Examples are type of industry with a
market structure of monopolistic competition, or
monopsony or oligopsony.
Monopsony- market where there are many
suppliers and one buyer.
Oligopsony- market with many sellers but meet
 SUPPLIERS BARGAINING
POWER

Ascertains the extent of power of suppliers in a

certain industry.
The industry is dominated by suppliers that have
control or influence on the products in connection
with the price, volume and quality.
This type of industry is operating with a market
structure of monopoly or oligopoly with one/ few
seller-supplier.
In case the company is on the buyer side, a better
way to lesen the power of suppliers is to make the
latter a business partner for a win-win approach.
 THREAT OF SUBSTITUTE
PRODUCTS

Influences the intensity of competition

through having substitute or alternative
products in the market.
A market is not attractive when there are
numerous substitute products over the
other existing products.
 INTENSITY OF RIVALRY
AMONG COMPETITORS

Competitors are the ones creating the

battlefield which intensify competition
within the industry.
Competitors actions affect the intensity
of the competition and market
attractiveness.