PEACH INC.

CBME2

STRATEGIC
MANAGEMENT
LOOKING OUTWARD FOR
COMPETITIVE ADVANTAGE: A
Report on Implementing Effective
Environmental Scanning

Bermudez, Adrian Paul

Convocar, Andrew James
Dela Cruz, Pyar Paolo
Faminia, Keneth Adrian
Magdayao, Ariane
Maranan, Ziannuzzelli Ferrer
Merlin, Sarah Jane
Navarra, Kim Patrice
Torillo, Betty Mae
Vargaz, Jon Oliver
 PEACH INC.

ABOUT OUR
REPORT
Environmental scanning is a critical
strategic planning tool that allows
organizations to gather insights
about changes in their external
landscape.

By scanning a diverse set of factors

in their external environment,
companies can identify emerging
opportunities, prepare for potential
threats, and make informed
decisions.

This report will focus on three key

aspects of environmental scanning:

Why it matters - We'll discuss the

strategic value of environmental
scanning and how it enables
firms to see around corners in
their industry.
How it works - We'll explore
different types of scanning
approaches and the kinds of
external factors that should be
monitored.
Best practices - We'll review how
to actually implement and
conduct scanning in an effective
way.

The goal is to understand why

actively scanning the external
environment should be a priority for
organizations and get guidance on
how to do it well. Let's start by
examining why environmental
scanning is so critical for strategic
management in today's fast-
changing world.
 PEACH INC.

Environmental
Subjective information - adds depth and
variation to factual data. It helps organizations

Scanning
interpret the significance of facts, anticipate
future developments, and understand how
different stakeholders, including employees,
customers, and industry experts, perceive the
A process of gathering, analyzing, and
external environment.
dispensing information for tactical or
strategic purposes.

It is the process of conducting research Factual Information in

through surveys, observation and other
methods, and gathering and analyzing
Environmental Scanning:
information for the organization.
Objective Data: Factual information in
Obtaining both factual and subjective
environmental scanning comprises objective
information
and verifiable data about the external
It involves monitoring and assessing environment. It includes concrete and
various external factors and trends that quantifiable details that are based on evidence
could impact the organization's and can be independently verified.
performance, strategies, and decision-
making. Examples: Factual information might
encompass economic indicators (e.g., GDP
The primary goal of environmental growth rates, inflation rates), market statistics
scanning is to stay informed about (e.g., market size, customer demographics),
changes and developments in the legal and regulatory changes, technological
organization's external context, helping it advancements, and environmental data (e.g.,
adapt and make informed decisions in pollution levels, climate data).
a dynamic and competitive business
environment. Role: Factual information forms the foundation
of environmental scanning. It helps
What is factual and organizations understand the current state of
subjective information: the external environment and identify trends,
opportunities, and threats based on empirical
Factual information - provides the evidence.
objective basis for decision-making and
strategy development. It offers a solid
understanding of the external
environment's current state and its
potential impact on the organization.

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Subjective Information in Ad-hoc scanning – short-term,

Environmental Scanning: infrequent examinations
initiated by crisis.
usually

Interpretations and Opinions: Subjective

information in environmental scanning Regular scanning – studies done on a
involves interpretations, opinions, and regular schedule.
insights based on personal perspectives,
experiences, and judgments. It reflects the Continuous scanning – continuous
viewpoints of individuals or groups within structured data collection and
or outside the organization. processing on a broad range of
environmental factors.
Examples: Subjective information may
include expert opinions on market trends,
Ad-Hoc Scanning:
customer feedback, employee
perceptions of organizational culture, or
Process: Ad-hoc scanning often involves
industry experts' forecasts about future
quickly assembling a team to gather
developments.
relevant data, analyze it, and provide
insights or recommendations in response
Role: Subjective information provides
to the specific situation.
context and depth to the factual data
gathered through environmental
Example: If a sudden product recall by a
scanning. It can help organizations
competitor threatens to affect your
understand how stakeholders perceive
market position, you may engage in ad-
and interpret external factors. For
hoc scanning to assess the extent of the
example, customer feedback can provide
threat and formulate a rapid response
valuable insights into market preferences
strategy.
and satisfaction levels.
Purpose: Ad-hoc scanning is conducted
on an irregular or as-needed basis,
They must use factual data as the
typically triggered by specific events or
foundation for their strategies while taking
situations that require immediate
subjective insights into account to
attention.
develop a more comprehensive and
informed view of the external landscape.
Characteristics: It is a reactive approach
This combination allows organizations to
to environmental scanning. Organizations
make well-rounded decisions that are
initiate ad-hoc scanning when they
both evidence-based and sensitive to the
become aware of a particular issue or
perspectives of stakeholders.
opportunity that demands immediate
analysis.
Kinds of Environmental
Scanning/Approach

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Regular Scanning:
Process: Automated tools, data analytics,
Purpose: Regular scanning is conducted and specialized personnel work together to
at predetermined intervals or according monitor critical external factors
to a set schedule to keep abreast of key continuously. Alerts and reports are
external factors affecting the organization. generated as soon as relevant changes are
detected.
Characteristics: It is a proactive and
systematic approach to environmental Example: A financial services firm may
scanning. Organizations perform regular employ automated software to monitor
scanning to update their knowledge of the global financial markets, news feeds, and
external environment and identify trends. economic indicators continuously. This
allows them to make immediate
Process: Organizations allocate resources investment decisions and manage risk
and personnel to regularly collect and effectively.
analyze data related to factors such as
market conditions, regulatory changes, or
technological advancements.
Importance of
Environmental Scanning
Example: An automobile manufacturer
ADAPTATION
might conduct quarterly scans to monitor
OPPORTUNITY
changes in consumer preferences,
RISK MANAGEMENT
emerging automotive technologies, and
INFORMED DECISION
government emissions regulations to
COMPETITVE ADVANTAGE
inform product development and
LONG-TERM SUSTAINABILITY
marketing strategies.
CUSTOMER SATISFACTION
Adaptation: It helps organizations adapt to
Continuous Scanning: changes in their external environment,
staying relevant and competitive.
Purpose: Continuous scanning involves
real-time, ongoing monitoring of the Opportunity: It identifies new opportunities
external environment to provide up-to- for growth and innovation in the market.
the-minute information. Risk Management: It enables organizations
to anticipate and mitigate potential risks
Characteristics: It is a proactive and and threats.
highly responsive approach. Continuous
scanning leverages technology, Informed Decisions: It provides the data
automation, and dedicated resources to needed for informed decision-making and
keep organizations informed in real-time. strategic planning.

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Competitive Advantage: It allows Regulatory Agencies: Government

organizations to gain a competitive edge bodies and institutions that impose rules
by staying ahead of competitors. and regulations on the organization's
operations.
Long-Term Sustainability: It contributes
to an organization's long-term Investors: Individuals or groups that
sustainability by keeping it responsive to provide financial resources or capital to
evolving circumstances. the organization.

Customer Satisfaction: It helps 2. Social Environment:

organizations understand and meet
customer needs and expectations. The social environment, often referred to as
the "macroenvironment," encompasses

External
broader societal and cultural factors that
influence an organization's operations and

Environment
strategic decisions. These factors are not as
immediate as those in the task environment
but still hold significant influence. Key
1. Task Environment: components of the social environment
include:
The task environment refers to the
immediate external factors and Socio-Cultural Factors: Elements such
conditions that directly impact an as cultural norms, values, beliefs,
organization's operations and demographics, lifestyle trends, and
performance. It consists of elements that societal attitudes that shape consumer
the organization interacts with on a behavior and preferences.
regular basis to achieve its goals. Key Economic Factors: Conditions in the
components of the task environment broader economy, including inflation,
include: unemployment rates, interest rates, and
overall economic stability, which can
Customers: The individuals or entities affect consumer purchasing power and
that purchase products or services spending patterns.
from the organization. Technological Factors: Advances in
technology, innovations, and the pace of
Suppliers: Entities that provide the technological change that can create
necessary resources and materials for opportunities for new products,
the organization's operations. processes, or competitive advantages.
Political and Legal Factors: Government
Competitors: Other organizations in policies, regulations, taxation, and
the same industry that offer similar political stability that impact how
products or services. organizations operate within a given
country or region.

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 PEACH INC.

Environmental and Sustainability 2. Moderately Difficult Entry

Issues: Concerns related to somewhat difficult for new entrants to
environmental conservation, join
sustainability practices, and the some sellers may have already
impact of an organization's established near monopoly control
operations on the environment. 3. Blockaded Entry
very difficult to enter the market

Market Structure there is a full monopoly in effect

there could be legal matters that

Analysis prevent new entrants

Market structure based on the number Product Differentiation: the degree by

of sellers in the market. which a company is able to distinguish
its products or service to other players in
Atomistic Market: there are the market as valued by customers.
numerous small sellers, and each
one's actions do not significantly 1. Homogenous Products: products that
impact the market price. are highly identical. The characteristics
Oligopolistic Market: there are only of the product are not differentiated
a few large sellers or firms who from one supplier to another.
dominate the industry. 2. Differentiated products: products
Monopoly Market: there is only one differentiated by design, quality,
seller or producer in an industry. branding, among others.

Structural Features of the Market Porter's Five

Market Concentration: is the degree
by which a small number of
Forces Model
companies dominate a particular Porter’s five forces model was developed by
market. It explains a number of Michael Porter in 1979 through his book
companies which are competing in “Competitive Strategy: techniques for
the market. analyzing Industries and Competitors.
Michael Porter is an American academic
Entry Barriers: refers to difficulties economist, researcher, author and one of
and challenges by potential new the most influential thinkers on
entrants which are entering the management and competitiveness.
Market. Michael Porter develops the five forces
model in reaction to SWOT analysis,
1. Ease of Entry believing his framework was more
new entrants will not have accurate.
difficulty in entering the market,
in terms of restrictions

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Porter’s five forces model is a model that A company would be more dependent on
analyzes five competitive forces that a supplier in an industry with fewer
helps assess the industry’s strengths and providers. As a result, the supplier is in a
weaknesses. This model is frequently stronger position and has the ability to
used to measure competitive intensity, increase input costs and demand
attractiveness, and profitability of an additional trade benefits. On the other
industry. hand, a business can maintain its input
costs low and increase its profits when
Porter’s five forces there are several suppliers or low
switching costs between competing
Competitive rivalry: The power of a suppliers.
corporation decreases as the Customer power
number of competitors and the One of the Five Forces is the power or
number of comparable goods and capacity of the customer to influence
services they provide increases. If a price reductions. It is influenced by the
competitor can provide a better deal quantity and value of a company's
or lower rates, suppliers and purchasers or customers, as well as by
customers will look to them. To obtain how expensive it would be for a company
more sales and profits, a corporation to find new markets or consumers for its
can charge higher prices and dictate goods. Each consumer has greater
the conditions of contracts when leverage to bargain for lower rates and
there is little to no competitive rivalry. better deals because the client base is
Threat of new entrants: The force of smaller and more strong. It will be simpler
new entrants into a market has an for a business with lots of small,
impact on a company's power as independent clients to raise pricing and
well. An established company's boost profitability.
position may be considerably Threat of substitutes
undermined the quicker and cheaper Threats come from substitute items or
it is for a rival to enter its market and services that can be employed in place of
become a viable rival. It is a company's goods or offerings.
appropriate for existing enterprises Companies with the ability to raise prices
inside an industry with significant and secure advantageous terms will be
entry barriers since the company those that make items or provide services
would be able to charge higher rates for which there are no direct alternatives.
and negotiate better conditions. Customers will have the choice to choose
Supplier power: It addresses how not to purchase a company's product
easily suppliers can drive up the cost when close substitutes are readily
of inputs. It is influenced by the available, which might diminish a
number of suppliers of an item or company's position in the market. An
service, the degree to which these organization can modify its business plan
inputs are special, and the cost to a to more effectively utilize its resources and
corporation of switching providers. produce higher earnings for its investors
by comprehending Porter's Five Forces
and how they apply to an industry.

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Advantages Competitive Intelligence (CI): Competitive

Helps to estimate the competition in intelligence is focused on gathering
the industry information about competitors, industry
Identify which entities holding the trends, and market dynamics to inform
power strategic decision-making within a business or
Disadvantages organization. It aims to help organizations gain
Impractical to use on large a competitive advantage by providing insights
companies into what competitors are doing, identifying
Limitation in the composition market opportunities and threats, and aiding
Not useful for all industries alike in strategic planning.
The model alone is not enough o set
company strategy Strategic Intelligence: Strategic intelligence is
a broader concept that encompasses
Competitive competitive intelligence. While competitive
intelligence is primarily concerned with the
Intelligence external competitive environment, strategic
intelligence includes a more comprehensive
Competitive Intelligence analysis of an organization's overall strategic
position. It considers both internal and external
It is the act of gathering, analyzing and factors, including competitors, market trends,
distributing vast information coined as regulatory changes, and internal capabilities,
intelligence about anything that would to formulate long-term strategic plans and
help competing in the market. goals.
It is the perspective in the situations and
events to gain competitive advantage. It Tactical Intelligence: Tactical intelligence
is about the knowledge what the focuses on short to medium-term actions and
competitors will do before they actually decisions. It involves gathering and analyzing
do it. information related to specific operational
tasks and challenges. Tactical intelligence is
THREE APPROACHES often used by military, law enforcement, and
1. Strategic Intelligence – being able to business operations teams to make day-to-
understand the competitors’ future day decisions that align with broader strategic
prospects and goals. This also goals. While it may include competitive
includes the competitors’ major intelligence, it also covers a wider range of
customers and suppliers. operational issues.
2. Tactical Intelligence – small scale
intelligence and operational in the Counterintelligence: Counterintelligence is the
short run. This includes competitors’ practice of identifying, preventing, and
terms of sale, pricing policies and countering espionage and intelligence
plans. Information gathered is usually activities conducted by rival organizations,
used by middle-level managers. foreign governments, or malicious actors.
3. Counter Intelligence – knowing how
to defend company secrets. Those
secrets must not be divulged in the
wrong places.

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It is primarily concerned with protecting characteristics of the business or a

an organization's sensitive information team that gives it an advantage over
and assets from unauthorized access or others in the industry.
disclosure. Counterintelligence efforts can positive tangible and intangible
include monitoring and safeguarding attributes, internal to an organization.
against attempts to gather competitive or beneficial aspects of the organization
strategic intelligence by hostile entities. or the capabilities of an organization
which includes human competencies,

SWOT Analysis
process capabilities, financial
resources, products and services,
customer goodwill and brand loyalty,
SWOT is a business or strategic planning among others.
technique used to summarize the key
components of your strategic Examples:
environments. It is a framework for Strong Brand Reputation: A positive
identifying and analyzing the internal and and well-established brand image can
external factors that can have an impact be a significant strength as it often
on the viability of a project, product, place leads to customer loyalty and trust.
or person. It is used by organizations to Skilled Workforce: Having a highly
assess and evaluate their internal trained and motivated team of
strengths and weaknesses, as well as the employees with specialized skills and
external opportunities and threats in their knowledge can be a strength, as it can
operating environment. lead to increased productivity and
innovation.
Strengths and Weaknesses are Cutting-Edge Technology: Access to
considered internal factors---meaning advanced technology or proprietary
you as the business owner can control technology that competitors lack can
them. How you manage or market the provide a competitive edge.
business controls whether it is a strength Efficient Processes: Streamlined and
or weakness. efficient operational processes can
lead to cost savings and improved
STRENGTHS quality.
It is the internal attributes and Financial Stability: Having a solid
resources that give an organization a financial foundation, with strong cash
competitive advantage or represent its reserves or minimal debt, can provide
positive qualities. Strengths are the flexibility and security.
factors or characteristics that set the Strategic Location: A prime physical
organization apart from others in its location can be advantageous,
industry or market. These internal especially in retail or real estate
attributes contribute to the industries.
organization's ability to achieve its Customer Base: A large and loyal
objectives and succeed in its customer base can provide stability
endeavors and opportunities for upselling or
cross-selling.

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Effective Marketing and Sales Teams: Examples:

A well-structured and successful Limited Financial Resources:
marketing and sales strategy can
drive revenue growth. Insufficient capital, high levels
of debt, or cash flow problems
WEAKNESSES can hinder an organization's
the internal attributes and ability to invest in growth
characteristics of an opportunities or weather
organization that put it at a financial downturns.
disadvantage or hinder its Inadequate Leadership: Weak
ability to achieve its goals or ineffective leadership can
and compete effectively in lead to poor decision-making,
the market. Weaknesses are lack of direction, and a
areas where the organization disengaged workforce.
falls short or underperforms Outdated Technology: Using
compared to its competitors. outdated or obsolete
Identifying weaknesses is technology can result in
crucial for strategic planning inefficiencies, reduced
because it helps the productivity, and a loss of
organization address and competitiveness.
mitigate these shortcomings. Lack of Skilled Workforce:
characteristics that place Insufficiently trained or
the firm at a disadvantage underqualified employees can
relative to others. impact the quality of products
detract the organization from and services, as well as
its ability to attain the core innovation and customer
goal and influence its growth. satisfaction.
weaknesses are the factors Inefficient Processes:
which do not meet the Cumbersome or inefficient
standards we feel they operational processes can
should meet. However, lead to increased costs,
sometimes weaknesses are slower production, and lower
controllable. They must be overall quality.
minimized and eliminated.

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Limited Market Knowledge: A OPPORTUNITIES:

lack of understanding about refer to external factors or
customer needs, market circumstances that an
trends, or competitors can organization can leverage or
hinder effective marketing capitalize on to achieve its
and product development. objectives, grow, or gain a
Weak Brand Image: A competitive advantage.
negative or weak brand Identifying opportunities is a
reputation can lead to critical part of strategic
difficulties in attracting and planning because they
retaining customers. represent potential avenues
Dependency on a Few for business expansion and
Customers: Relying heavily on improvement.
a small number of customers chances to make greater
or clients can pose a profits in the environment.
significant risk if those External attractive factors that
relationships are lost or represent the reason for an
strained. organization to exist and
Regulatory Compliance develop.
Issues: Failing to meet arise when an organization
industry regulations or facing can take benefit of conditions
legal challenges can result in in its environment to plan and
financial penalties and execute strategies that enable
damage to the organization's it to become more profitable.
reputation. Organizations should be able
Ineffective Marketing and to recognize when
Sales Strategies: Poorly opportunities are present, due
designed or executed to changes in market,
marketing and sales efforts competition, industry /
can result in missed government and technology.
opportunities and revenue
losses.

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Examples: Regulatory Changes: Changes

Market Growth: Expanding in regulations or policies can
markets, emerging markets, or create opportunities for
growing customer demand for businesses to enter new
specific products or services markets or offer new products
present opportunities for and services.
increased sales and revenue. Global Expansion: The ability to
Technological enter new international
Advancements: Advances in markets can lead to increased
technology can open up new sales and diversification of
possibilities for product revenue streams.
development, process Consumer Needs and
optimization, and cost Problems: Identifying unmet
reduction. needs or problems that
Changing Consumer Trends: consumers face can lead to
Shifts in consumer innovative product or service
preferences, such as a solutions.
preference for sustainable New Sales Channels: The
products or online shopping, growth of online sales, e-
can create opportunities for commerce platforms, or other
businesses that can adapt distribution channels can
quickly. provide opportunities for
Competitor Weaknesses: reaching a broader customer
Identifying weaknesses in base.
competitors' offerings or Mergers and Acquisitions:
operations can allow an Opportunities for acquiring
organization to gain market other businesses or merging
share or offer superior with them can lead to
alternatives. increased market share and
Partnership and synergies.
Collaboration Opportunities:
Forming strategic
partnerships or alliances with
other organizations can lead
to mutual benefits, such as
expanded market reach or
access to new technologies.

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THREATS Economic Downturns:

external factors or conditions Economic recessions or
could negatively impact an downturns can lead to reduced
organization consumer spending, decreased
elements beyond the control demand for products and
of the organization services, and financial
external factors or conditions instability.
that could negatively impact Market Saturation: When a
an organization's market becomes saturated
performance, profitability, or with similar products or
ability to achieve its services, it can be challenging
objectives. Identifying threats to differentiate and maintain
is essential for strategic pricing power.
planning because it helps Changing Consumer
organizations anticipate Preferences: Shifts in consumer
potential challenges and tastes and preferences can
develop strategies to mitigate make previously popular
or address them. products or services obsolete.
external elements in the Technological Disruptions:
environment that could cause Rapid advancements in
trouble for the business. technology can render current
These are elements beyond products or processes obsolete
the control of the organization. and require significant
arise when conditions in the investments to stay
external environment competitive.
jeopardize the reliability and Regulatory Changes: New
profitability of the regulations or changes in
organization’s business. existing regulations can
increase compliance costs,
Examples: limit product offerings, or
Competitive Pressures: impact market access.
Intense competition from Negative Public Perception:
existing competitors or new Negative publicity, such as
entrants can erode market scandals or controversies, can
share and profitability. damage a company's
reputation and brand image.

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Natural Disasters and

Environmental Factors:
Events like earthquakes,
hurricanes, or climate-related
issues can disrupt operations,
damage infrastructure, or
impact the availability of
resources.
Supplier Issues: Dependence
on a single or a few key
suppliers can create
vulnerabilities if they
experience production
problems or supply chain
disruptions.
Labor Shortages: Difficulty in
attracting and retaining skilled
employees can affect
productivity and increase
labor costs.
Cybersecurity Threats: The
risk of data breaches,
cyberattacks, and security
vulnerabilities can damage an
organization's reputation and
disrupt operations.
Natural Resource Scarcity:
Depletion of essential natural
resources, such as water or
minerals, can affect
production and supply chain
costs.

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