Environmental ScanningSubmitted to: Sir Khalid

Submitted by : Mohammad Ahmad Reg # 2121099

Environmental Scanning Definition : Environmental scanning can be

defined as ‘the study of the political,

economic, social and technological events which influence a business, an industry or even a total market’

Environmental Scanning Monitoring and evaluating of information from external and internal environment to key people within the corporation.

A corporation uses this tool to avoid strategic surprise and to ensure its long-term health.

Environmental Scanning The environmental scan provides a systematic overview of the external factors that are important to the organization and indicates whether the organization can control them or not.

Environmental Scanning (contd.)In general the factors are classified in factors influencing the demand/need for services (and products), the supply of inputs to the organization concerned.

Environmental Scanning1. Pest Analysis2. External Strategic

Factors

PEST analysisPolitical factorsTaxation PolicyTrade regulationsGovernmental stabilityUnemployment Policy etc.

PEST analysis (Contd.)Economical factorsInflation rateGrowth in spending powerAge distribution of populationRecession or Boom

PEST analysis (Contd.)Socio-Cultural factorsage distribution.education levels.income level.diet & nutrition.population growthReligion

PEST analysis (Contd.)Technological factorsTechnological changesNew or improved distribution channels

Improved communication and knowledge transfer etc.

moral factor

Scanning Task EnvironmentIndividual reports written by various people in different parts of firm.

Reports summarized and passed to top mgmt for use in strategic decision making.

‘External strategic factors’ evolve through these reports

External Strategic FactorsA corporation’s external strategic

factors are those key environmental trends that are judged to have both a medium to high probability of occurrence and a medium to high probability of impact on the corporation.

Environmental trends judged as a corporation’s strategic factors are categorized as opportunities and threats and are included in strategy formulation

Identifying External Strategic FactorsNo firm can successfully monitor all

external factors.Managers sometimes miss or ignore

crucial new developments. This is called Strategic Myopia.

One way to identify and analyze developments in the external environment is to use the issues priority matrix.

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