Environmental scanning is the process of monitoring, evaluating, and disseminating information from internal and external environments. Environmental factors are important for the formulation and implementation of the strategic plan. As an open system, organizational performance is affected by environmental changes. The environment is dynamic and changes according to time. The changing environment creates both opportunities and threats in the scope of business of a firm at a time.
Environmental scanning is the responsibility of the management to capitalize on the environment. Therefore, the management needs to develop a strategic plan by anticipating probable environmental influence.
What is Environmental Scanning?
Environmental scanning is the process of monitoring, evaluating, and disseminating information from internal and external environments. The purpose of environmental scanning is to identify internal and external elements that determine the future of the organization. Information that comes from scanning the environment can be used in making decisions and taking action.
Definitions of Environmental Scanning By Writers
According to Robbins and Coutler, “Environmental scanning is the screening of a large amount of information to anticipate and interpret changes in the environment.”
According to Richard Steers, “Environmental scanning involves monitoring changes and developments in the environment that have a potential impact on the organization.”
Therefore, from the above definition, we may conclude that environmental scanning is the process of collecting environmental information through monitoring and evaluating environmental trends. It also involves anticipation and interpretation of environmental changes. The management collects information about environmental trends through journal reports, market surveys, expert opinions, feedback from employees, etc.
On the basis of requirement, the top manager in support of subordinates may involve in comprehensive or specific environmental scanning. In comprehensive scanning information about all the environmental elements are taken into consideration whereas only elective factor is taken into account in specific environmental scanning.
Different Methods of Environmental Scanning – Explained
The following are the common methods of environmental scanning:
- Extrapolation Method
- Intuitive Reasoning
- Scenario Building
- Cross Impact Matrix
- Morphological Analysis
- Delphi Technique
- Survey Method
- Historical Analogy
1. Extrapolation Method
Under this method, the future situation is estimated on the basis of past records and information. Management assumes that the same type of change may happen in the future as that of the previous year. Trend analysis, regression analysis, and forecasting techniques can be applied to accumulate information.
2. Intuitive Reasoning
Under this method, managers estimate the future on the basis of logic and idea without considering past events. It is a type of intellectual guesswork where the managers assume the future without any biases.
3. Scenario Building
This method is used to show the cause and effect relationship among a series of events. Under this method, different probable events are estimated and their outcomes are assumed. For instance, units of electricity in the country can be estimated on the basis of its consumption for household and business purposes.
4. Cross Impact Matrix
Under cross-impact matrix method, two conflicting trends are studied to find out their impact on each other.
5. Morphological Analysis
In this method, all possible alternatives to achieve organizational goals are studied and evaluated. Basically, it is applied to forecast technological changes and their impact on business.
6. Delphi Technique
In this method, the opinions of various experts are secretly collected to forecast the future. For collecting opinions of experts, systematic questionnaires are prepared and answers provided by them are solicited in writing. The experts having different opinions and with a majority are requested to give reasons for their distinct opinions. This process will continue unless common opinions emerge. Such common expert opinions are taken as the basis of the forecast.
7. Survey Method
In this method, a field survey is conducted to gather information for environmental forecasting. The opinions of customers, experts, suppliers, lenders, competitors, etc. are collected and analyzed on the basis of which the future is forecast. In the survey, both quantitative and qualitative information is collected.
Brainstorming is the process of gathering new ideas through group discussion. Groups are formed to resolve new problems in the future. All the members share their views, ideas, creativity, experience in a group and they came to conclusion through mutual consent.
9. Historical Analogy
This method of environmental scanning is based on partial, similar, or parallel conditions somewhere in the past. Today’s economic situation of a developing country can be forecast by comparison with the economic situation of a developed country on a similar developing stage of the past. Basically, this method is applied in estimating qualitative changes like social norms, the attitude of workers, living standards, etc.