What is Environmental Scanning? Meaning, Techniques, Process

The business environment is full of opportunities and threats that make decision-making very difficult for managers. The business environment’s uncertain and unpredicted nature creates a huge challenge for managers to develop such inclusive and futuristic strategies that ensure high growth and survival here business environmental scanning is very crucial for an organization. It helps the business to identify or measure is their strengths, weaknesses, threats, and opportunities.

In this article, we will discuss what is environmental scanning, its process, and different technics of environmental scanning.

► What is Environmental Scanning?

Environment scanning is a process of analyzing the environment for the identification of the factors which impact the business.

In simple words, environment scanning refers to a continuous process of monitoring and examing all the forces that collectively and individually affect the business these forces mainly are political, social, cultural, technological, and economical in nature.

◉ Environmental Scanning Meaning

An organization operates in a dynamic environment where changes are continuous. So, organizations keep monitoring the changes in the environment, and this monitoring is aimed at the identification of risks and opportunities that affect the organization’s course of action.

Definition of Environmental Scanning

Environmental scanning is a continuous process of monitoring, and evaluating all the internal and external factors and gathering information related to all factors that help the management to determine the future direction of the organization.

► Process of Environmental Scanning

  • Examining (Scanning Environment)
  • Observing (Strategic Thinking)
  • Predicting (Strategic Decision Making)
  • Evaluation (Strategic Planning)

Also Read : Importance of Business Environment

► Types of Environmental Scanning

  • Internal Analysis
  • External Analysis
    • Macro Environment (PEST)
    • Micro Environment (Five Forces Analysis)

► Techniques of Environmental Scanning

  • SWOT Analysis
  • PESTEL Analysis
  • ETOP Analysis
  • SAP
  • Issue Priority Matrix
  • Functional Area Profile
  • Opportunity and Threat Matrix
  • The Impact Matrix

✔ SWOT Analysis

SWOT stands for Strengths Weaknesses Opportunities and Threats. SWOT analysis framework helps the company in the identification of the core competency, weakness, threat, and opportunities, and this analysis help the organization determine the course of action to ensure the survival and growth of the organization.

A SWOT analysis is facilitated an organization’s decision-making capabilities by providing realistic, fact-based evaluation which helps in the formulation of business policies and strategies.

✔ PESTEL Analysis

It is a framework to analyze the political, economic, technological, environmental, and legal factors in which a firm operates.

This framework helps the organization to keep track of all the macro environment factors that affect the performance of the organization.

factors to PESTEL analysis are.

1. Political

  • Government Policy
  • Political Stability
  • Corruption
  • Government political Ideology
  • Regulatory and governing bodies
  • Foreign Trade Policy
  • Labor laws
  • Taxation Policy
  • Income equality

2. Economical

  • Inflation rate
  • GDP growth rate
  • Exchange rate
  • Interest rate
  • Per capita income
  • Unemployment rate

3. Social

  • Life style
  • Religious and cultural factors
  • Language
  • Population growth rate
  • Education level
  • Concern about health and safety

4. Technological

  • Level of innovation
  • Technology incentive
  • Automation
  • Promotion of research and development

5. Environmental

  • Weather and climate
  • Environmental protection policies
  • Pressures from NGOs

6. Legal

  • Consumer protection law
  • Environmental law
  • Business law
  • Employment law
  • Copyright and patent law
  • Health and safety law
  • Labour welfare law
  • Bankruptcy law

✔ ETOP analysis

ETOP analysis (environment threat opportunity profile) is the process by which a firm monitor all the factors that affect the firm. It not only helps the firm to identify opportunities and threats but also helps in strategic planning.

In ETOP analysis divide environment into various factors are divided these factors into subsectors and evaluated on the basis of opportunities and threats it poses to business.

✔ SAP (Strategic Advantage Profile)

A strategic Advantage profile is a summary statement that provides an overview of the advantages and disadvantages in key areas likely to affect the future operations of a firm.

It is a total for making a systematic evaluation of strategic advantage factors which are significant for the company in its environment.

It involves functional areas like marketing, production, finance, accounting, personnel, human resource, and R&D. SAP is a summary statement.