Environmental scanning

Environment scanning is the process of acquiring and analyzing events and trends in on the business environment in which the company operates or wants to enter.

The main objective in Environmental scanning is to gather information from the changing external environment. This information is necessary for the organization to determine the external factors that effect the company's future. Environmental scanning looks at various events of the macro-environment and provide information to the business based on those events. The main trends to look for are political, economical, social, and technical events and discoveries that could effect the the business. Within each of the catergories of the macro-environment, it is vital to find threats that could alter the basic workings of the company. By forseeing threats, companies can then have the knowledge and work around these threats. Also, the indentification of opportunities created by changing trends of the environment could enable businesses to take advantage of the market place. The opportunities of the environment allows can potentially help a business to expand or to succeed in the market. Environmental scanning can help businesses obtain a sustainable future business environment because it helps management prepare for events by providing information regarding it. Management uses environmental scanning to anticipate the future so they can be prepared to react to any impending changes to the environment. Environmental scanning includes both viewing and searching for information. Viewing information means looking at information you know and analyzing it's meaning while searching for information is looking for information that is not known yet.

There are three systems of scanning business environment:
Irregular systems - used on an ad-hoc basis, also called Ad-hoc scanning, tend to be crisis initiated. These systems are used when an organization needs information for planning assumptions and conducts a scan for that purpose only.  These scans are usually short term and end when the situation has been resolved.
Periodic systems - also known as Regular scanning, is used when the planners periodically update a scan to prepare for a new planning cycle. Done on a regular basis, it is usually done once a month to once a year, in preparation of a new fiscal year.
Continuous systems - also called 
Continuous scanning, is used when for continuously scanning the environment for data collection in order to plan and strategize for an organization.

These are some of the key objectives within each trend of the Macro Environment:

Political: the government and legal system.

  • political climate
  • political stability and risk
  • government debt
  • budget deficit or surplus
  • corporate and personal tax rates
  • payroll taxes
  • import tariffs and quotas
  • export restrictions
  • restrictions on international financial flows
  • minimum wage laws
  • environmental protection laws
  • worker safety laws
  • union laws
  • copyright and patent laws
  • anti- monopoly laws
  • Sunday closing laws
  • municipal licences
  • laws that favor business investment
Economical: the economy.

The Economy
  • GNP or GDP per capita
  • GNP or GDP growth
  • unemployment rate
  • inflation rate
  • consumer and investor confidence
  • inventory levels
  • currency exchange rates
  • merchandise trade balance
  • financial and political health of trading partners
  • balance of payments
  • future trends
Social: the society and its culture.

  • population size and distribution
  • age distribution
  • education levels
  • income levels
  • ethnic origins
  • religious affiliations
  • materialism, capitalism, free enterprise
  • individualism, role of family, role of government, collectivism
  • role of church and religion
  • consumerism
  • environmentalism
  • importance of work, pride of accomplishment
Cultural Structures
  • diet and nutrition
  • housing conditions
Technical: technological advances.

  • efficiency of infrastructure, including: roads, ports, airports, rolling stock, hospitals, education, healthcare, communication, etc.
  • industrial productivity
  • new manufacturing processes
  • new products and services of competitors
  • new products and services of supply chain partners
  • any new technology that could impact the company
  • cost and accessibility of electrical power

There are six different methods used to handle conflicts and issues that are uncovered by environmental scanning.

  • opposition strategy - try to influence the environmental forces so as to negate their impact - this is only successful where you have some control over the environmental variable in question
  • adaptation strategy - adapt your marketing plan to the new environmental conditions
  • offensive strategy - try to turn the new influence into an advantage - quick response can give you a competitive advantage
  • redeployment strategy - redeploy your assets into another industry
  • contingency strategies - determine a broad range of possible reactions - find substitutes
  • passive strategy - no response - study the situation further

Works Cited

Choo, Chun Wei (2001) "Environmental scanning as information seeking and organizational learning." Information Research, 7(1)   [Available at: http://InformationR.net/ir/7-1/paper112.html]
    © the author, 2001. Updated:24th September 2001

"Environmental scanning." 3/18/2009. Wikipedia foundation. 12 Jun 2009 <http://en.wikipedia.org/wiki/Environmental_scanning>.