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5 Environmental Analysis and Environmental Scanning

The document discusses environmental analysis, which is a process that identifies internal and external factors that can impact an organization's performance. It categorizes the internal environment, which includes resources, capabilities, and culture, and the external environment, which includes the micro environment of competitors, suppliers, customers, and the macro environment of economic and demographic trends. The document also describes approaches to environmental scanning such as systematic, ad hoc, and processed methods to collect relevant information.

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Mansi Goel
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234 views

5 Environmental Analysis and Environmental Scanning

The document discusses environmental analysis, which is a process that identifies internal and external factors that can impact an organization's performance. It categorizes the internal environment, which includes resources, capabilities, and culture, and the external environment, which includes the micro environment of competitors, suppliers, customers, and the macro environment of economic and demographic trends. The document also describes approaches to environmental scanning such as systematic, ad hoc, and processed methods to collect relevant information.

Uploaded by

Mansi Goel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 19

Topic 5: Environmental

Scanning

BBA-308 Business Policy & Strategy- Ms.


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Soumya
Meaning of Environmental
Analysis(1/2)
• Environmental analysis is a strategic tool. It is a
process to identify all the external and internal
elements, which can affect the organization’s
performance.
• The internal components indicate the strengths and
weakness of the business entity whereas the
external components represent the opportunities
and threats outside the organization.

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Meaning of Environmental
Analysis(2/2)
• To perform environmental analysis, a constant
stream of relevant information is required to find out
the best course of action.
• Strategic Planners use the information gathered from
the environmental analysis for forecasting trends for
future in advance.
• The information can also be used to assess operating
environment and set up organizational goals.

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Examples

• Many humans made their living from diaper service


companies. Suddenly Procter & Gamble brought out
pampers (disposable diapers) and others joined the
parade.

• Copies were made by typing stencils. These were put


on duplicating machines made by firms such as A.B.
Dick Company. Xerox, IBM and others came along
with a new product which captured the market from
the stencils.

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Categorization of EA

Categorization of EA
Internal
External Environment
Environment

Micro Macro
Environment Environment
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Internal Environmental Factors
The internal environment is the environment that has a direct impact on the business. The
internal factors are generally controllable because the company has control over these factors.

Culture:
Capabilities:
It is the specific collection of
Resources: The term organizational
values and norms that are
capabilities are used to refer to
To look at tangible, intangible shared by people and groups in
a firm’s capacity for
and human resources. an organization and that helps
undertaking a particular
in achieving the organizational
productive activity.
goals.

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External Environmental Factors

1. Micro Environment
The factors or elements in a firm's immediate environment which affect its
performance and decision-making; these elements include the firm's
suppliers, competitors, marketing intermediaries, customers and publics.

2. Macro Environment
A macro environment is the condition that exists in the economy as a whole,
rather than in a particular sector or region. In general, the macro
environment includes trends in the gross domestic product (GDP), inflation,
employment, spending, and monetary and fiscal policy.

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Micro Environment- Description
• Micro Environment, refers to the environment comprising of all the actors of an organization’s
immediate environment which influences the performance of the company, as they have a direct
bearing on the firm’s regular business operations.

• Competitors- Competitors are the rival sellers operating in the same industry. It must be noted
that the nature and intensity of competition highly influence the firm’s products and services.
Product Differentiation is something that helps the firm to beat the cut-throat competition in the
market.
• Suppliers- When there is uncertainty as to the supply constraints, it usually builds pressure on
the firms and they are required to maintain high inventories, which leads to cost increases.
Suppliers have the power to change the firm’s position in the market and its capabilities.
• Customers- The success of the organization greatly depends on how effectively the firm fulfills
the needs and wants of the customers, which is profitable to the firm and also provides value to
the customer. It must be noted that without customers no business can survive for a long time.
So, the primary objective of the firm is to create and retain customers, to keep itself going.
• Resellers- Intermediaries refer to marketing intermediaries which cover agents, merchants,
distributors, dealers, wholesalers, etc. that participate in the company’s supply chain, in stocking
and transporting the goods from their source location to their destination. It acts as a link
between the business organization and the ultimate consumer.
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Micro Environment- Description
• The Public- It includes Shareholders, Employees, Media.

a. Shareholders- Shareholders are the real owners of the company who invest their
money in the company’s business, by purchasing the shares, for which they are
paid a dividend every year as a return.
b. Employees- Placing the right person at the right job and retaining them for the
long term by keeping the staff motivated is very important for the strategic
planning process. Training and development act as a guide to the firm’s
employees which ensures an up-to-date workforce.
c. Media- Management of media whether electronic media, press media or social
media is really important not just to create a positive and clean image of the
company and its products in front of the audience but also to support the firm in
building a good reputation in the market.

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Macro Environment-Description

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Approaches to Environmental
Scanning(1/2)
Definition:
Careful monitoring of an organization internal and external
environment for detecting early signs of opportunity and
threats that may influence its current and future plans.

Objective:
The objective of the analysis is to provide knowledge and
insights and to impart different thinking to be used in
management planning and decision making.

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Approaches to Environmental
Scanning(2/2)

Systematic
Approach

Processed Ad hoc
Approach Approach

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1. Systematic Approach

In this approach information for environmental scanning is


collected systematically.

Information is related to markets and customers, change in


legislation and regulation etc. have a direct impact on the
business therefore it is continually monitored for relevant facts.

This approach is beneficial for strategic management and


operational activities.

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2. Ad hoc Approach

In this approaches organization conduct


special survey and studies for any specific
environmental issues time to time.

Such study may be conduct to undertake


special project, evaluate or change
existing strategy or making new strategy.

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3. Processed Approach

To adopt this approach organization uses information in


processed form available from different sources both
inside and outside of the organization.

The information collected from survey interview etc. are


primary source of operation.

This form of approaches are occasionally used.

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Thank You

BBA-308 Business Policy & Strategy- Ms.


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