Understanding Environmental Scanning

This article will cover several aspects of environmental scannings, such as its importance, the various types of environmental scanning, the usual modes of scanning used, and its weaknesses. The results of this scanning are beneficial in shaping the goals and strategies of an organisation. For example, environmental scanning can show what internal and external factors will impact an employee’s performance that will ultimately affect the organisation.

The environmental scanning process helps identify a threat or an opportunity that will greatly impact an organisation. For any businessman knowing all the factors that may affect the business is essential. The environment of any business, whether internal or external, is dynamic and needs to be observed all the time. Companies are constantly changing, and they are full of ups and downs, so if we get to know the threats that can harm the business beforehand, the organisation will benefit and progress.

Need for Environmental Scanning

• Problems or threats can be solved if they are identified beforehand.
• The requirements and demands of potential customers can be recognised and fulfilled.
• The environmental scanning process in strategic management is essential in making the right game plan for the future so that the company can achieve its target as soon as possible. 
• The scanning also helps in the decision-making and policy-making process. Internal and external factors of a company’s environment should be kept in mind while formulating a plan.
• A business always flourishes if the CEO is always ambitious about new opportunities and avenues. Scanning opens the door to so many options that wouldn’t have been recognised in the first place.
• Environmental scanning in strategic management helps a strategist develop strategies that will improve the comeback of an organisation. The delivery of these strategies is also much faster, smoother, and more accessible as the threats are already known beforehand.

Techniques of Environmental Scanning

1. SWOT Analysis: SWOT analysis was first designed by Albert Humphrey, who belonged to the famous Stanford Research Institute. He invented this technique while trying to identify why corporate planning continuously fails. Since then, SWOT has been a helpful tool for companies to grow and progress. 

SWOT is the short form of four elements that are:

• Strengths: These are the attributes that speed up the process of achieving short- and long-term goals. 
• Weaknesses: these are the factors that work against the process of completing the organisation’s targets.
• Opportunities: these are something the company can utilise to gain benefits. 
• Threats: these can harm or jeopardise the success of the organisation

The main goal of this SWOT analysis is to be aware of the organisation’s characteristics overall. SWOT has its uses when it comes to recognising the challenges that the company needs to overcome. SWOT analysis influences business planning.

1. PESTLE Analysis: This analysis helps a great deal in understanding the macro-environmental factors that affect the performance of an organisation. Startups can benefit significantly if they use this technique. The full form of PESTLE stands for:

• Political: These factors determine the degree to which the government has a role to play. It consists of corruption, tax policy, labour law, trade and restriction laws, foreign trade policy, etc. 
• Economic: These factors include exchange rates, interest rates, inflation rates, economic growth, unemployment rate, and other factors that affect a country or an organisation. 
• Social: Social factors include age distribution, career attitudes, income distribution, safety emphasis, lifestyle attitude, cultural barriers, health consciousness and many more. When the organisation targets a specific audience to promote and sell its products or services, these factors should be considered. 
• Technological: this includes innovative technical ideas, research and development activities (R&D), technological changes, etc. 
• Legal: this includes all the factors related to laws such as discrimination laws, antitrust laws, consumer protection laws, emolument laws, health and safety laws, and copyright and patent laws that are necessary for every organisation. Legal advisors can guide an organisation in these cases. 
• Environmental: Environmental awareness is vital, so companies also need to take care of these things like carbon footprints and pollution targets set by the authorities. Factors that fall under this category are weather, climate, climate change, and environmental offsets. Tourism and agriculture industries especially need to be aware of environmental factors.

• QUEST Analysis: This method requires four steps, which are as follows:

• First, strategists observe the trends and events of the company.
• Then from that observation, they identify the essential issues that impact the company.
• Then the organisation implements the strategies suggested by the strategists and creates reports.
• Finally, planners also input their ideas and suggestions after checking the reports.

Advantages of environmental scanning

• The company can achieve its long- and short-term goals smoothly without any difficulties. 
• Identification of threats. 
• Awareness regarding the marketplace. 
• Converting threats into opportunities. 

Disadvantages of environmental scanning

• Organisations cannot rely entirely on this type of scanning 
• Most future events and external factors cannot be predicted. 
• Methods that are applied may not be effective. 

Conclusion

Environmental scanning is necessary and must be undertaken in all organisations. After the environmental scanning process, there’s another step known as environmental appraisal. The next step includes dividing different sectors of an organisation and analysing the shortcomings and opportunities of those separated sections. For startups, environmental scanning is mandatory as it helps initiate awareness of internal and external factors that affect the company. Knowing your company enables you to understand all the elements and your employees’ needs to make the organisation run smoothly.