BUSINESS ENTERPRISE SIMULATION 12 ABM It is much more than reading newspapers or industry
journals or checking the latest statistics about your market.
SCANNING AND OPPORTUNITY ANALYSIS
It is about exploring both present certainty and future
uncertainty, and moving beyond what we accept as valid
ways of doing things today.
ENVIRONMENTAL SCANNING
AIM OF ENVIRONMENTAL SCANNING
Environmental scanning is the art of systematically exploring the
external environment to: The aim of environmental scanning is to identify
relevant information for your organization, both trends
Better understand the nature and pace of change in the
and weak signals of change appearing on the horizon, in
environment, and
order to broaden and deepen thinking about strategic
Identify potential opportunities, challenges and likely
options.
future developments relevant to your organization.
It is about ensuring that there are no surprises in the
DEFINITION future operating environment for your organization.
Scanning is of most value when it is focused or anchored
Environmental Scanning is a process of gathering, analyzing, around issues of current concern to your organization.
and dispensing information for tactical or strategic Alternatively, there may be a fork-in-the-road decision
purposes. that needs to be made in the near future , and you need
Careful monitoring of an organization’s internal and external to get more information about the likely implications of
environments for detecting early signs of opportunities and your options before you make a decision.
threats that may influence its current and future plans. In At the end of the scanning process, you are aiming to
comparison, surveillance is confined to a specific objective have a report that details relevant trends in the external
or a narrow sector. environment that are likely to have a significant impact
It is monitoring and interpreting sweep of social, political, on the way you do business in the future, and the
economic, ecological, and technological events to spot implications of those trends on your organization’s
budding trends that could eventually impact industry. strategy today.
Environmental scanning is the formal searching, using PURPOSE OF ENVIRONMENT SCANNING
formal methodologies for obtaining information for a
Effective utilization of resources
specific purpose.
Constant monitoring of resources
It is systematic.
Strategy formulation
Identification of threats and opportunities Continouos updating necessary not only for strategic management
Useful for the managers but also for operational activities
Prediction of future
In this approach information is collected relating to mkt customers,
FACTORS TO BE CONSIRED FOR ENVIRONMENTAL SCANNING changes in legislation govt. policy have a direct impact on
organisation.
AHHOC APPROACH
Organisations conduct special survey and stuies to undertake special
projects, evaluate existing strategies or dvise new strategies
Changes and unforseen developments may also be investigated
PROCESSED FORM APPROACH
Information used is supplies by govt agencies or private institutions
Secondary data available from external and internal sources may
also be used.
FACTORS AFFECTING ENVIRONMENTAL APPRAISAL
Factors relating to nature of environment
Complexity
Flexibility
Hostility
Diversity
APPROACHES TO ENVIRONMENTAL SCANNING Factors relating to the organization
Nature of the business
Systematic Approach Age of the Organization
Information for environmental Scanning collected systematically Size of the Organization
Nature of the markets
Information pertainingh to business and industry could be collected Nature of the products
continously to monitor changes
Factors relating to the strategies IMPORTANCE OF THE ETOP
This is master level strategy: corporate level strategy
Provides a clear picture to the strategies of the sectors
to achieve corporate objective.
and the different factors in those sectors
Sub level strategy: for specific purposes and to help
Helps the organisation in knowing where it stands with
master strategy.
the respect to its environment
Functional level strategy: how the strategy is
Hel;p the organisation in formulating appropriate
translated into functions like marketing, finance,
strategy to take advantage of the opportunities and
production and R and D.
threats in its business
Factors relating to strategies:
Age, education and experience SWOT ANALYSIS
Motivational level
SWOT STANDS FOR STRENGTHS, WEAKNESSES, OPPORTUNITIES
Ability to withstand pressure and strain
AND THREATS
Interpersonal relations
Identification of the threats and opportunities in the
STRUCTURING THE ENVIRONMENTAL APPRAISAL
external environment and strengths and weaknesses in the
Two most important techniques of enviromental appraisal internal environment of the firms are the cornerstone of
are: business policy formulation
ETOP ( environmetal threats and opportunities) ANALYSIS It is the SWOT analysis which detemines the course of action
SWOT (strengths, weaknesses, opportunities, and threats) to ensure the growth/ survival
analysis
STRENGTHS
ETOP
Internal to the unit, are a unit’s resources and capabilities that can
STEPS INVOLVED IN THE PREPARATION OF ETOP: be used as a basis for developing a competitive advantage; strength
should be realistic and not models
Dividing the environment into different sectors
Analysing the impact of each sector on the organisation WEAKNESSES
Subdividing each environmental factor into sub factors
Internal force that could serve as a barrier to maintain or archieve a
for a comprehensive ETOP
competitive advantages; a limitation, fault or defect of the unit; It
Analysing the impcat of each subfactor on the
should be truthful so that they may be overcome as quickly as
organisation in the form of a statement
possible
Preparing a summary to show the major factors for the
sake of simplicity
OPPORTUNITIES
Any favorable situation present now or in the future in the external
environment
THREATS
External force that could inhibit the maintenance or attainment of a
competitive advantage; or any unfavorable situation in the external
environment that is potentially damaging now or in the future
