steps of environment analysis

8/9/2019 Steps of Environment Analysis

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Steps of EnvironmentAnalysis


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IntroductionA strategist is required to understand all the

intricacies of external environment in which anorganization operates as well as the internaloperations of an organization before a strategy can beeectively formulated and implemented.

An organization’s environment consists of two parts:

(! "he macro environmental dimensions i.e. economic#social# technological# global and political$ and

(%! "he micro environment which refers mainly to the

industry within which it operates ( for multi&business'rms# the industry is usually considered in theactivity in which the 'rm generates the maority ofits revenue!.


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Process of Environment Analysis

"he process consists of four sequentialsteps:

(! scanning#

(%! )onitoring#(*! +orecasting# and

(,! Assessment


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(1) Scanning

-eing the 'rst step in the process ofenvironment analysis# scanning involvesgeneral surveillance of all environmentalfactors and their interactions in order to

(a! dentify early signals of possibleenvironmental changes# and

(b! /etect environmental change alreadyunder way.

()0canning is ambiguous environmentalanalysis activity.

() "he potentially relevant data for scanning


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Cont…

"he fundamental challenges for analysis inscanning is# therefore# to ma1e sense out ofvague# ambiguous# and unconnected data.


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(2) Monitoring

)onitoring involves trac1ing theenvironmental trends# sequences of events#or streams of activities. t frequentlyinvolves following signals or indicators

unearthed during environmental scanning. "he purpose of monitoring is to assemble

su2cient data to discern whether certaintrends and emerging. "hus# as monitoring

progresses# the data turn frequently fromimprecise to precise.


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Cont…

"hree outcomes emerge out of monitoring:

(a! A speci'c description of environmentaltrends and patterns to be forecast$

(b! "he identi'cation of trends for furthermonitoring# and

(c! "he identi'cation of areas for furtherscanning.

() "hese outputs become inputs forforecasting. "hey will also cause for furtherscanning and monitoring.


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(3) orecasting0canning and monitoring provide a picture of

what has already ta1en place and what ishappening. 0trategic decision&ma1ing# however#requires a future orientation. 3aturally#

forecasting is an essential element inenvironmental analysis.

+orecasting is concerned with developingplausible of the direction# scope# and intensity ofenvironmental change. t tries layout the

evolutionary path of anticipated change.+or example# how long will it ta1e the new

technology to reach the mar1et place4 Arecurrent lifestyle trends li1ely to continue 4


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Cont…

"hese 1inds of questions provide the gristfor forecasting eorts.

5nli1e scanning and monitoring#forecasting is well focused and is muchmore deductive and complex activity. "hisis so because the focus# scope and goals offorecasting are more speci'c than theearlier two stages of environmental

analysis.


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(!) Assessment

0canning# monitoring# forecasting are notends in themselves. 5nless their outputsare assessed to determine implications forthe organization’s current and potential

strategies# scanning# monitoring andforecasting simply provide 6nice&to&1now’information.

Assessment involves identifying and

evaluating how and why current proectedenvironmental changes aect or will aectstrategic management of the organization.


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Cont…

n assessment# the frame of referencemoves from understanding theenvironment 7 the focus of scanning#monitoring and forecasting 7 to identifying

what the understanding means for theorganization.

Assessment# therefore# tries to answerquestions such as what are the 1ey issues

presented by the environment# and whatare the implications of such issues for theorganization 4


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" # an $ y o u…

steps of environment analysis

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