Explaining Environmental Scanning Process

Environmental scanning is a research process, in which businesses collect all types

of relevant information that helps these businesses in making decisions regarding surviving, expanding or entering new markets. In simple words, it can be described as keeping a close eye on external or internal happenings and analyzing this information to know how it can be detrimental or beneficial for the business. The information must be collected, arranged and disseminated among the company directors and managers. Mostly, environmental scanning is limited to external factors; however some businesses also carry out internal scanning. Environmental scanning is critical for the management or decision makers, as this information helps in making well informed decisions and that too, at the right time. These decisions include expansion, innovation, entering or leaving a market.

Small businesses usually carry out environmental scanning only when starting; for the reason that their resources do not allow them to perform environmental scanning on continual basis. However, big corporations are always scanning the macro environment factors to gain competitive advantage over their competitors, at the end of the day, its all about spotting the opportunities (or threats) before your competitors do. Something worth mentioning is that it is important to take immediate actions according to the situation or information, because environmental scanning is useful only when followed by appropriate responses. Sitting and waiting for other businesses to respond before you decide your future course of action is going to be of no use. Successful businesses are always born out of bold, timely decisions.

A business is affected by many external factors and it must monitor these factors all the time. For example, if you are entering into a new market, you must obtain information about the import and export tariffs, rate of exchange or an idea of political stability in the region. Similarly, you should base your business expansion (or contraction) decisions on the economic growth, income level or employment rate in the market. When introducing a new product or technology, you have got to have an idea of how patent laws or copyrights work. Other legal factors include union laws, environmental protection or minimum wage laws. Similarly, observing the demographic factors like population distribution, income or education level can help you identify the future trends and eventually opening up various new opportunities for your business. Internal scanning can include the identification of resources in terms of workforce, capital, technology, strength and weaknesses.

by: William

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