Environmental Scanning: Business Strategy

• Environmental scanning is possessing and using information about events, patterns, and relationships within an organization's internal and external environment to find opportunities, threats, trends, lessons, and weaknesses for future strategies.
• Environmental scanning helps companies understand industry strengths, opportunities, and threats.
• It helps assess the effective use of resources like human and capital resources.
• It enables organizations to learn about industry opportunities and threats, and plan future strategies.
• Companies can learn about the business strategies of their competitors through environmental scanning.
• Data from environmental scanning is important for long-term business planning.
• It helps companies stay connected with their consumers.

Internal and External Environmental Components

• Internal environmental components are factors within the organization that impact its overall performance.
• External environmental components are factors outside the organization, including:
  • Micro-environment
  • Macro-environment

Techniques in Environmental Scanning include

• Research
• Experts' opinions
• SWOT analysis
• PESTLE analysis

Research

• An established method used across industries to understand the industry in detail, including the latest trends and threats, to take precautions and find opportunities.

Experts' Opinion

• Consulting marketing specialists/consultants with deep industry knowledge to discover trends and recognize emerging opportunities.

SWOT Analysis

• A business analysis technique to decide on the best way to achieve future growth for products, services, and markets.
  • S - Strengths
  • W - Weaknesses
  • O - Opportunities
  • T - Threats
• SWOT analysis has two parts:
  • SWOT internal analysis examines the organization's internal factors, like culture, expertise, resources, and unique qualities within the market.
  • SWOT external analysis focuses on external factors like the environment, market, ecosystem, and third parties involved.

Aspects of SWOT Analysis

• Strengths
• What the company does well
• Unique company resources
• How others view the company's strengths
• Weaknesses
• Areas for company improvement
• Resource scarcity compared to others
• How others may perceive weaknesses
• Opportunities
• Available opportunities
• Trends to take advantage of
• How to turn strengths into opportunities
• Threats
• Potential harm to the company
• Competitor actions
• Weaknesses that expose threats

Matching vs. Converting

• Matching uses competitive advantages to pair strengths with opportunities.
• Converting means turning weaknesses or threats into strengths or opportunities.

PESTLE Analysis

• PESTLE analysis covers the entire environment from various angles to track and check an idea or plan.
  • P - Political
  • E - Economic
  • S - Social
  • T - Technological
  • L - Legal
  • E - Environmental

Factors of PESTLE Analysis

• Political Factors
• Determine how much a government may influence the economy or an industry.
• Economic Factors
• Determinants of an economy's performance that directly impacts a company and have long-term effects.
• Social Factors
• Scrutinize the social environment of the market and measure determinants like cultural trends, demographics, and population analytics.
• Technological Factors
• Relate to innovations in technology that may favorably or unfavorably affect the operations of the industry and the market.
• Legal Factors
• Include external and internal aspects; certain laws affect the business environment in a country, while certain policies are maintained by companies.
• Environmental Factors
• Include all aspects that influence or are determined by the surrounding environment.