3. .
• Environmental scanning is a process of gathering,
analyzing, and dispensing information for tactical or
strategic purposes
• It is monitoring and interpreting sweep of social, political,
economic, ecological, and technological events to spot
budding trends that could eventually impact industry
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4. PURPOSE OF
ENVIRONMENTAL SCANNING
• Effective utilization of resources
• Constant monitoring of resources
• Strategy formulation
• Identification of threats and opportunities
• Useful for the managers
• Prediction of future
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6. APPROACHESTO ENVIRONMENTAL SCANNING
SYSTEMATIC APPROACH
• information for environmental scanning collected
systematically
• Information pertaining to business and industry could
be collected continuously to monitor changes
• Continuous updating necessary not only for strategic
management but also for operational activities
• In this approach information is collected relating to
mkt customers, changes in legislation govt. policy
have a direct impact on organization.
PROCESSED FORM APPROACH
• Information used is supplied by govt. agencies or private
instituitions
• Secondary data available from external and internal
sources may also be used
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7. FACTORS AFFECTING ENVIRONMENTAL
APPRAISAL
• Factors relating to nature of environment
• Complexity
• Flexibility
• Hostility
• Diversity
• Factors relating to the organization
• Nature of the business
• Age of the organization
• Size of the organization
• Nature of the markets
• Nature of the products
• Factors relating to strategists:
• Age , education and experience
• Motivational level
• Ability to withstand pressure and strain
• Interpersonal relations
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8. STRUCTURINGTHE ENVIRONMENTALAPPRAISAL
• Two most important techniques of environmental appraisal are:
• ETOP
(environmental threats and opportunities) Analysis
SWOT
(strengths, weaknesses, opportunities and threats) analysis
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9. ETOP
Steps involved in the preparation of ETOP:
• Dividing the environment into different sectors
• Analyzing the impact of each sector on the organization
• Subdividing each environmental factor into sub factors for a
comprehensive ETOP
• Analyzing the impact of each sub-factor on the organization in the
form of a statement
• Preparing a summary to show the major factors for the sake of
simplicity
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10. SWOT AnalysisSWOT stands for Strengths, Weaknesses,
• • Opportunities and Threats
• Identification of the threats and opportunities in the
external environment and strengths and weaknesses in
the internal environment of the firms are the
cornerstone of business policy formulation.
• It is the SWOT analysis which determines the course
of action to ensure the growth / survival of the firm.
• Strengths
• —internal to the unit; are a unit’s resources and capabilities
that can be used as a basis for developing a competitive
advantage; strength should be realistic and not modest.
• Examples: good reputation among customers, resources,
assets, people, :
• experience, knowledge, data, capabilities
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11. Weaknesses
• Weaknesses—internal force that could serve as a barrier to maintain
or achieve a competitive advantage; a limitation, fault or defect of the
unit;
It should be truthful so that they may be overcome as quickly as
possible
Examples: gaps in capabilities, financial, deadlines, morale
• lack of competitive
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12. Opportunities
• Any favorable situation present now or in the
future in the external environment.
• Examples: unfulfilled customer need, arrival of
new technologies, loosening of regulations,
global influences, economic boom, demographic
shift
Threats
• External force that could inhibit the maintenance or
attainment of a competitive advantage; any unfavorable
situation in the external environment that is potentially
damaging now or in the future.
• Examples: shifts in consumer tastes,
• new regulations, political or legislative effects,
• environmental effects,
• new technology,
• loss of key staff,
• economic downturn,
• demographic shifts,
• market demand
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13. Pest Analysis
It is very important that an organization considers its environment before beginning the marketing process. In fact,
environmental analysis should be continuous and feed all aspects of planning. The macro-environment consists of
e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are
known as PEST factors.
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14. POLITICAL FACTORS
• The political arena has a huge influence upon
the regulation of businesses, and the spending
power of consumers and other businesses.
ECONOMIC FACTORS
• Marketers need to consider the state of a
trading economy in the short and long-
terms.
• This is especially true when planning
forinternational marketing. Interest rates
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15. SOCIO-CULTURAL FACTORS
• The social and cultural influences on business vary
from country to country. It is very important that such
factors are considered.
TECHNOLOGICAL FACTORS
• Technology is vital for competitive advantage, and
is a major driver of globalization.
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