Environment Scanning

The business environment is exceptionally dynamic in nature as it is predominantly impacted by several external social, economic, legal, technological, and global factors. The environment scanning, also termed environment checking can be described as the investigation or study of these internal and external factors. Mainly, the Environment Scanning is responsible for determining the organisation’s future prospects. 

Today, in this article on Environment Scanning, you will get detailed information on the concept of Environment Scanning, the Characteristics of Environment Scanning, along its techniques and importance. So, without further ado, let’s get started with Environment Scanning in strategic management in the Business study material.

Concept of Environment Scanning

There are several activities that regularly take place in an organisation environment that directly or indirectly impacts the overall growth and development of an organisation. The Environment Scanning or checking is a process of determining these activities and finding out the organisation’s future prospects. The Environment Scanning committee takes the necessary steps and creates an action plan to tackle these upcoming challenges, arranging resources, and deciding an appropriate course of action with fellow employees to foster smart decisions. 

In simple terms, environment scanning can be defined as the process of the collection, evaluation, and delivery of information for a pre-defined purpose. The environmental processing requires both personalised and accurate data regarding the business environment where the business operations are actually taking place. 

Characteristics of Environment Scanning

Here is the list of environmental scanning characteristics. Let’s have a look – 

• Continuous process – Rather than being sporadic, environment scanning is an ongoing process. However, the increasingly changing environment needs to be captured regularly to be on track. 

• Exploratory process – The next is the exploratory process which keeps track of the environment and scales out unknown dimensions. It is mainly concerned with the fact that what will happen and what could happen. 

• Dynamic process – The environment scanning is not rigid. It changes with the changing situations. 

• Holistic view – Rather than focusing partially, the environment scanning is mainly concerned with a complete view. 

Components of Environment Scanning 

There are two major components of environment scanning. These are as follows –

• Internal Environmental Components – The internal environment can be described as the components that are a part of an organisation. In case any changes occur, it can directly affect the overall organisation’s performance. In an organisation, capital resources, human resources, and technological resources are Internal Environmental Components. 

• External Environmental Components – The external environment components are those components that fall outside the organisation. Although the external components are outside the organisation, they directly affect the organisational activities. 

Techniques of Environment Scanning 

The following are environment scanning techniques. Let’s have a look – 

• SWOT analysis – SWOT analysis, also known as Strengths, Weaknesses, opportunities and threats analysis, is the combination of internal and external factors where Strengths, Weaknesses are internal factors; however, opportunities and threats are external factors. 

• PEST analysis – PEST analysis is also known as Political, economic, social, and technological analysis of the business environment. Generally, the PEST analysis deals with the external macro-environment. 

• ETOP – ETOP, also known as Environmental Threat Opportunity Profile, helps the organisation analyse the environmental impact depending on Opportunities and threats. 

• QUEST – QUEST, also known as Quick Environmental Scanning Technique, is equally designed for quick analysis of the environment so that the business can easily focus on all major areas and issues. 

Importance of Environment Scanning 

Here are several points stating the Importance of Environmental Scanning. Let’s have a look- 

• Goal accomplishment 

• Identification of threats and weaknesses 

• Future forecasting 

• Knowledge of market 

• Focus on meeting the customer’s expectations 

• Easy identification of possible opportunities 

Limitations of Environment Scanning 

Apart from benefits, environment scanning has a long list of limitations as well. These are as follows –

• Environment scanning is not completely reliable as sometimes, overloading of information can lead to confusion and indecision. 

• Environment scanning cannot eliminate future uncertainties. At times, organisations might come across unfavourable conditions. During such times, the environment scanning should be focused on analysing and detecting the prevailing threats and finding scalable solutions. 

• Since environment scanning leads to cautiousness, it leads to delay in decision making. Rather than going for this route, it is prefered to have a strategic approach and take appropriate actions timely. 

• In case an organisation completely relies on any information which is not backed by data or accuracy, it results in deviations in the desired outcomes. 

Environmental Analysis Process 

The environmental analysis process includes four major steps. These are as follows- 

• Scanning – Environmental scanning is referred to a process where the business environment is deeply analysed to spot any deviations or factors that may impact the overall business. It acts as an alarming ring for the organisation to make suitable strategies. 

• Monitoring – In environmental scanning, the data is collected from several sources, which is further used for monitoring and finding trends in the business environment. 

• Forecasting – Environmental forecasting can be defined as the process of estimating future outcomes based on the data acquired and analysed. 

• Assessment – In the last stage, it is determined whether the accessed environmental factors are proving an opportunity or threat to the business. 

Conclusion 

With this, we come to an end to our study material on environment scanning. The environment scanning is the process of the collection, evaluation, and delivery of information for a pre-defined purpose. The environmental processing requires both personalised and accurate data regarding the business environment where the business operations are actually taking place. 

In this article on environment scanning, we studied the concept of environmental scanning in strategic management. We covered several other topics such as the environmental scanning process, components, importance of environmental scanning, its advantages and disadvantages, and so on. We hope the need for environment scanning must have helped attain a greater understanding of this topic.