envrnmnt scan tech

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ENVIRONMENTENVIRONMENTSCANNING TECHNIQUESSCANNING TECHNIQUES



Environmental Scanning & MonitoringEnvironmental Scanning & Monitoring

y Environmental scanning is a concept from business

management by which businesses gather information from the

environment, to better achieve a sustainable competitive

advantage.

y To sustain competitive advantage the company must also

respond to the information gathered from environmental

scanning by altering its strategies and plans when the need

arises.



Environmental Scanning & MonitoringEnvironmental Scanning & Monitoring--

TechniquesTechniquesSWOT

TechniquesPEST QUEST

Industry Analysis Competitor Analysis



SWOT AnalysisSWOT Analysis



SWOT SWOT

(Strength(Strength--WeaknessWeakness--Opportunity Opportunity--Threat Threat ) )

Identification of threats and Opportunities in

the environment (External) and strengths and

Weaknesses of the firm (Internal) is the

cornerstone of business policy formulation; it

is these factors which determine the course of

action to ensure the survival and growth of the

firm.



SWOT: Studying Internal & SWOT: Studying Internal & External EnvironmentExternal Environment

The aim of any SWOT analysis is to identify the key internal and

external factors that are important to achieving the objective.

SWOT analysis groups key pieces of information into two

main categories:

Internal factors ± The strengths and weaknesses

internal to the organization.

External factors ± The opportunities and threats

presented by the external environment.



Strengths and Weaknesses Opportunities and Threats

Resources: financial,

intellectual, location

Creativity / ability to develop

new products

Valuable intangible assets:intellectual capital

Competitive capabilities

Takeovers Market Trends Economic condition

Mergers

Joint ventures Strategic alliances Expectations of stakeholders Technology Public expectations

Competitors and competitiveactions

Global Markets Environmental conditions



Uses of SWOT AnalysisUses of SWOT Analysis

y Corporate planning

y

Set objectives ± defining what the organisation is intendingto do

y Environmental scanning

Internal appraisals of the organisations SWOT, this needs to

include an assessment of the present situation as well as a

portfolio of products/services and an analysis of the

product/service life cycle



y Establish critical success factors ± the achievement of

objectives and strategy implementation

y Preparation of operational, resource, projects plans for strategy implementation

y Monitoring results ± mapping against plans, taking

corrective action which may mean amendingobjectives/strategies.



PEST ANALYSIS PEST ANALYSIS

A scan of the external macro-environment in which thefirm operates can be expressed in terms of the followingfactors:

Political Economic Social Technological



y The acronym PEST (or sometimes rearranged as

"STEP") is used to describe a framework for the

analysis of these macroenvironmental factors. A PEST

analysis fits into an overall environmental scan as

shown in the following diagram:Environmental Scan

/ \

External Analysis Internal Analysis

/ \

Macroenvironment Microenvironment

|

P.E.S.T.



Political Factors Economic Factors

tax policy

employment laws

environmental

regulations

trade restrictions and

tariffs

political stability

economic growth

interest rates

exchange rates

inflation rate



Social Factors Technological Factors

health consciousness

population growth rate

age distribution

career attitudes

emphasis on safety

R&D activity

automation

technology incentives

rate of technological

change



Competitive Analysis: Porter¶s Five Forces Model Competitive Analysis: Porter¶s Five Forces Model ::

y According to Porter,the nature of competitiveness in given

industry can be viewed as a composite of five forces:

o Rivalry among competitive firms

o Potential entry of new competitors

o Potential development of substitute products

o Bargaining power of suppliers

o Bargaining power of consumers



Use of the Information from FiveUse of the Information from FiveForces AnalysisForces Analysis

Five Forces Analysis can provide valuable information for

three aspects of corporate planning:

o Statical Analysis

o Dynamical Analysis

o Analysis of Options



QUESTQUEST

The Quick Environmental Scanning Technique,is a

scanning procedure designed to assist executives and

planners to keep uptodate of change and its

implications for the organizational strategies and

policies.



The procedure permits administrators and top executives to

share their views and to develop a shared understanding

of high priority issues, future options and eventualities

which have implications to the institution. QUEST

produces

a) broad and comprehensive analysis of the external

environment and

b) analysis and assessment of the institutions capacity and

strategic options for dealing with the external

environment.



The QUEST procedure involves four stages. These are:

a) preparation,

b) environmental scanning workshop,

c) intermediate analysis and report,

d) strategic options workshop and follow-up.



y Preparation:involves four specific tasks.

o definition of the strategic issue,

o selection of participants (usually between twelve and

fifteen members),

o preparation of a notebook which contains information

on the major environmental trends and events which

are pertinent to the institution, and

o selection of suitable distraction-free sites for the

QUEST workshop.



y Environmental Scanning Workshop:

Following the preparation phase, an all-day workshop is

organized to discuss the strategic environment in

which the institution operates.



y Intermediate Analysis and Report:

The results are summarized in a written report.

The brief report is presented in two sections with the

first part dealing with the institution's mission,

purposes,objectives, stakeholders, and the second

part presenting alternative scenarios describing the

external environments which the institution may facein the interested future.



y Strategic Options Workshop and Follow-up:

The final QUEST step is to hold a strategy meeting,

usually for about half a day, to discuss the report and

the strategic options open to the organization.



Preparing ETOP Preparing ETOP

Environmental threat and opportunity profile is referred as

ETOP profile. It identifies the relevant environmental factors.

Such factors might be general environmental factors and

task environment factors. Thereafter, it is necessary to

identify their nature. Some factors are positive to the

organization whereas others are negative. Therefore, it is

necessary to find out their impact to the organization.

Positive, neutral, and negative sign in ETOP denotes the

relevant impact of environmental factor s.



y Environmental threats and opportunities profile

(ETOP) is a commonly used profile related to external

business environment.

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