Environmental Scanning
Environmental scanning is a process of gathering, analyzing, and dispensing information for tactical or strategic purposes. The environmental scanning process entails obtaining both factual and subjective information on the business environments in which a company is operating or considering entering.
There are three ways of scanning the business environment:
- Ad-hoc scanning - Short term, infrequent examinations usually initiated by a crisis
- Regular scanning - Studies done on a regular schedule (say, once a year)
- Continuous scanning - (also called continuous learning) - continuous structured data collection and processing on a broad range of environmental factors
How it useful for International business:
Environmental scanning usually refers just to the macro environment, but it can also include industry and competitor analysis, consumer analysis, product innovations, and the company's internal environment. Macro environmental scanning involves analyzing:
- The Economy
- GDP per capita
- economic growth
- unemployment rate
- inflation rate
- consumer and investor confidence
- inventory levels
- currency exchange rates
- merchandise trade balance
- financial and political health of trading partners
- balance of payments
- future trends
- Government
- political climate - amount of government activity
- political stability and risk
- government debt
- budget deficit or surplus
- corporate and personal tax rates
- payroll taxes
- import tariffs and quotas
- export restrictions
- restrictions on international financial flows
- Legal
- minimum wage laws
- environmental protection laws
- worker safety laws
- union laws
- copyright and patent laws
- anti- monopoly laws
- Sunday closing laws
- municipal licences
- laws that favour business investment
- Technology
- efficiency of infrastructure, including: roads, ports, airports, rolling stock, hospitals, education, healthcare, communication, etc.
- industrial productivity
- new manufacturing processes
- new products and services of competitors
- new products and services of supply chain partners
- any new technology that could impact the company
- cost and accessibility of electrical power
- Ecology
- ecological concerns that affect the firms production processes
- ecological concerns that affect customers' buying habits
- ecological concerns that affect customers' perception of the company or product
- Socio-Cultural
- demographic factors such as:
- * population size and distribution
- age distribution
- education levels
- income levels
- ethnic origins
- religious affiliations
- attitudes towards:
- * materialism, capitalism, free enterprise
- individualism, role of family, role of government, collectivism
- role of church and religion
- consumerism
- environmentalism
- importance of work, pride of accomplishment
- cultural structures including:
- * diet and nutrition
- Potential Suppliers
- Labour supply
- * quantity of labour available
- quality of labour available
- stability of labour supply
- wage expectations
- employee turn-over rate
- strikes and labour relations
- educational facilities
- Material suppliers
- * quality, quantity, price, and stability of material inputs
- delivery delays
- proximity of bulky or heavy material inputs
- level of competition among suppliers
- Service Providers
- * quantity, quality, price, and stability of service facilitators
- Stakeholders
- Lobbyists
- Shareholders
- Employees
- Partners
IMPORTANCE OF ENVIRONMENTAL SCANNING
Without taking into account relevant environmental influences, a company cannot expect to develop its strategy. It was the environmental influences emerging out of the energy crisis that were responsible for the popularity of smaller, more fuel-efficient automobiles and that brought about the demise of less efficient rotary engines. It was the environmental influence of a coffee bean shortage and geometric price increases that spawned the "coffee-saver" modification in Mr. Coffee automatic drip coffee makers. Shopper and merchant complaints from an earlier era contributed to the virtual elimination of deposit bottles; recent pressures from environmental groups, however, have forced their return and have prompted companies to develop low-cost, recyclable plastic bottles.
Bhoj Suresh
For more information pls contact
sureshbhoj@gmail.com
