An Overview

In todays business environment, competition is order of the day. The International or

global environment consists of all those factor that operate at the transactional, crosscultural and across the border level which have an impact on the business of an
organization. Before the complexity of environmental analysis started, traced back to
post-second world war period, then it was characterized as essential political in nature
with little in common with the interests of business and industry (Kazmi, 2008). The
classification of the general environment into sectors after this period brings more light
and exposes most of the business owner into real business environment. These then help
most of organization to cope with it complexity, to compete the various difference factor
that influence the operation of business in a particular area. A companys marketing
system must operate within the framework of forces which constitute the systems
environment, the major environmental forces are external variables which are not easily
control or manipulate by the executives in a firm. (Adebisi 2006). Proper planning must
put in place to ensure that the business environment is conducive enough and ready to put
the organization to the best position in the market place. Any business that is not aware of
its environment is bound to run into some crises that will definitely arise from the
increasing complexity of the environment in which such business operates. The major
objective of this study is to critically examine the effects of strategic environmental
scanning on organization performance and to establish clear position about the result of
company that adopts continuous environmental scanning and the company that merely
operate with it. Organizations can use environmental scanning to determine whether or
not to enter new market and also to know the present situation or condition of its
environment. Its purpose is to identify strategic factors- external and internal elements
that will determine the future of the organization.
The simplest way to conduct environmental scanning is through PEST Analysis. PEST is
the acronym used for describing the Political, Economical, Social-Cultural, and
Technological factors that affect the organization. The external environments consist of
variables opportunities and threats that are outside the organization and not typically
within the short-run control of the top management. The management of any organization
has little or no influence on the external environment.
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Most managers feel that in today's turbulent business environment the best scanning style
is continuous scanning using PEST analysis because this allows the firm to act quickly,
take advantage of opportunities before competitors do and respond to environmental
threats before significant damage is done, this will allow the organization to survive,
sustain the environment hardship. As a way of managing organization strategies, the
managers have to keep abreast of everything about his environment (internal and
external) for the purpose of achieving the organization goals and objectives. It is the
fundamental decision about the future direction of an organization, its purpose, its
resources and how it interacts with the world in which it operates (the environment of the
organization).
Thus 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. Environmental scanning is the process in
which a firm continually collects and evaluates information about its external
environment. There are six main categories of environmental data to consider when
evaluating marketing decisions. These are social forces, demographic forces, economic
forces, technological forces, political and legal forces, and competitive forces.
SOCIAL FORCES: Potential customers in the automobile detailing business include both
car dealerships and private customers such as families.
DEMOGRAPHIC FORCES: The most important demographic force affecting the
detailing business is the location of people. There is a better chance for business in a
commercialized area with dealerships, than in a residential area with families.
ECONOMIC FORCES: The automobile industry needs to be analyzed for the high and
low points of buying during the year. For example, around December people do not tend
to purchase new cars, therefore causing a slow period in the industry. This affects the
amount of customers in the detailing business as well.

POLITICAL AND LEGAL FORCES: The automobile detailing business should be aware
of environmental and zoning laws that may vary from state to state.
COMPETITIVE FORCES: There is relatively low concern for competition from foreignbased firms since the automobile detailing business is a service provided on a personal
level. However, there may be competition from other businesses in the area.
There are several marketing procedures to consider when increasing customers in the
automobile detailing business. It is especially hard for smaller businesses to get started.
One of the most important marketing tools used is personal selling. Sending a person
from one car dealership to the next with fliers is a good way to promote the company.
Word of mouth can also attract customers such as families who may need their car
cleaned, but not a daily basis. Another example of a marketing procedure is to identify
loyal customers and offer them special discounts.
The outside environment affects marketing in the automobile detailing business, because
automobile detailers are dependent on the car dealerships. If business is slow for the
dealerships it will hurt the detailing business.
If there is a lot of competition in the area, then the business will have to concentrate on
marketing their business over the others. The size and reputation of a company can also
affect the business. There are many factors of marketing that can affect the way that the
automobile industry operates.

What does the term Environment mean?

The aggregate of surrounding things, conditions, or influences; surroundings. For an
organization an environment is divided in two types
Internal Environment:
An organization's internal environment is composed of the elements within the
organization, including current employees, management, and especially corporate culture,
which defines employee behavior. Although some elements affect the organization as a
whole, others affect only the manager. A manager's philosophical or leadership style
directly impacts employees. Traditional managers give explicit instructions to employees,
while progressive managers empower employees to make many of their own decisions.
Changes in philosophy and/or leadership style are under the control of the manager. The
following sections describe some of the elements that make up the internal environment.
External environment
Factors are events that take place outside of the organization and are harder to predict and
control. External environmental factors can be more dangerous for an organization given
the fact they are unpredictable, hard to prepare for, and often bewildering. Some
examples of external environmental factors are noted below:
Changes to the economy
Threats from competition
Political factors
Government regulations
The industry itself

Environment Scanning
What is environment scanning?
Environmental scanning is the monitoring, evaluating, and disseminating of information
from the external and internal environment to key people within the corporation or
organization. (Kazmi, 2008). 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
Organizational environment consists of both external and internal factors. Environment
must be scanned so as to determine development and forecasts of factors that will
influence organizational success. Environmental scanning refers to possession and
utilization of information about occasions, patterns, trends, and relationships within an
organizations internal and external environment. It helps the managers to decide the
future path of the organization. Scanning must identify the threats and opportunities
existing in the environment. While strategy formulation, an organization must take
advantage of the opportunities and minimize the threats. A threat for one organization
may be an opportunity for another.
Internal analysis of the environment is the first step of environment scanning.
Organizations should observe the internal organizational environment. This includes
employee interaction with other employees, employee interaction with management,
manager interaction with other managers, and management interaction with shareholders,
access to natural resources, brand awareness, organizational structure, main staff,
operational potential, etc.
A business becomes more competitive, and there are rapid changes in the external
environment, information from external environment adds crucial elements to the
effectiveness of long-term plans. As environment is dynamic, it becomes essential to
identify competitors moves and actions. Organizations have also to update the core
competencies and internal environment as per external environment. Environmental
factors are infinite, hence, organization should be agile and vigil to accept and adjust to
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the environmental changes. For instance - Monitoring might indicate that an original
forecast of the prices of the raw materials that are involved in the product are no more
credible, which could imply the requirement for more focused scanning, forecasting and
analysis to create a more trustworthy prediction about the input costs. In a similar
manner, there can be changes in factors such as competitors activities, technology,
market tastes and preferences
While in external analysis, three correlated environment should be studied and analyzed

immediate / industry environment

national environment

broader socio-economic environment

The following is the need and importance of environmental scanning:

1. Identification of strength:
Strength of the business firm means capacity of the firm to gain advantage over its
competitors. Analysis of internal business environment helps to identify strength
of the firm. After identifying the strength, the firm must try to consolidate or
maximise its strength by further improvement in its existing plans, policies and
resources.
2. Identification of weakness:
Weakness of the firm means limitations of the firm. Monitoring internal
environment helps to identify not only the strength but also the weakness of the
firm. A firm may be strong in certain areas but may be weak in some other areas.
For further growth and expansion, the weakness should be identified so as to
correct them as soon as possible.
3. Identification of opportunities:
Environmental analyses helps to identify the opportunities in the market. The firm
should make every possible effort to grab the opportunities as and when they
come.

4. Identification of threat:
Business is subject to threat from competitors and various factors. Environmental
analyses help them to identify threat from the external environment. Early
identification of threat is always beneficial as it helps to diffuse off some threat.
5. Optimum use of resources:
Proper environmental assessment helps to make optimum utilisation of scare
human, natural and capital resources. Systematic analyses of business
environment helps the firm to reduce wastage and make optimum use of available
resources, without understanding the internal and external environment resources
cannot be used in an effective manner.
6. Survival and growth:
Systematic analyses of business environment help the firm to maximise their
strength, minimise the weakness, grab the opportunities and diffuse threats. This
enables the firm to survive and grow in the competitive business world.
7. To plan long-term business strategy:
A business organisation has short term and long-term objectives. Proper analyses
of environmental factors help the business firm to frame plans and policies that
could help in easy accomplishment of those organisational objectives. Without
undertaking environmental scanning, the firm cannot develop a strategy for
business success
The main factors of environment Scanning
1.Events
Past events of business environment is the main factor of environment scanning. For
example, if Govt. has to control food prices, it has to scan every week prices of
vegetables, fruits, milk and other food items. For more simplification of price rise.
2.Trends
Not just to see the past events are effective but to establish the trends on the basis of
events is also very important because this is important factor of business environment
scanning. Suppose, you have to take decision relating to your vegetable prices, you have
all the past market price data of same vegetable. Now, you will make a trend graph. If
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there is an increasing trend, you will fix your vegetable price according to this.
3.Issues
Issues are also important factor of business environment scanning. As a good
businessman, you have to scan both cold and burning issues on daily basis. For example,

Changes in Taxation Policy

Changes in Trade regulations

Changes in Governmental rules

Changes in Unemployment Policy etc.

Changes in Inflation rate

Changes in Growth in spending power

Changes in a pensionable age, suppose in Italy, pensionable age will be 67 years

in 2026.

Technological changes

New or improved distribution channels

Improved communication and knowledge transfer etc.

moral factor

Laws on

Approaches to Environmental Scanning:

The experts have suggested three approaches, which could be adopted for, sort out
information for environmental scanning.
1. Systematic Approach:
Under this approach, information for environmental scanning is collected systematically.
Information related to markets and customers, changes in legislation and regulations that
have a direct impact on an organizations activities, government policy statements
pertaining the organizations business and industry, etc, could be collected continuous
updating such information is necessary not only for strategic management but also for
operational activities.
2. Ad hoc Approach:
Using this approach, an organization may conduct special surveys and studies to deal
with specific environmental issues from time to time. Such studies may be conducted, for
instance, when organization has to undertake special projects, evaluate existing strategy
or devise new strategies. Changes and unforeseen developments may be investigated with
regard to their impact on the organization.
3. Processed-form Approach:
For adopting this approach, the organization uses information in a processed form
available from different sources both inside and outside the organization. When an
organization uses information supplied by government agencies or private institutions, it
uses secondary sources of data and the information is available in processed form.
Sources of Information:
A company can obtain information from different sources, but it should be ensured that
the information is correct. The correct source should be tapped for specific information
for more accuracy. Information received form secondary sources may sometimes even
misguide strategy managers.
Hence it is important that information should be verified for correctness before it is
processed and decisions are taken based on it.
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The various sources from where information can be gathered include:

1. An internal document viz, files, records, management information system, employees,
standards, drawings, charts, etc.
2. Trade directories, journals, magazines, newspapers, books, newsletters, government
publications, annual reports of companies, case studies, etc.
3. Internet, television, radio news etc.
4. External agencies like customers, suppliers, inspection agencies, marketing
intermediaries, dealers, advertisers, associations, unions, government agencies, share
holders, competitors, etc.
5. Market research reports, consultants, educational institutions, testing laboratories etc.
6. Spying considered as a powerful way of extracting information from other companies.
It is found that chronological order of information is also quite important for strategy
managers. Usually information received from government agencies is quite complex
since processing takes more time. The information received from competitors is quite
expensive but it is usually fresh and is quite useful.

Techniques of Environment Scanning

Technique 1:
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SWOT Analysis
A scan of the internal and external environment is an important part of the strategic
planning process. Environmental factors internal to the firm usually can be classified as
strengths (S) or weaknesses (W), and those external to the firm can be classified as
opportunities (O) or threats (T). Such an analysis of the strategic environment is referred
to as a SWOT analysis. The SWOT analysis provides information that is helpful in
matching the firm's resources and capabilities to the competitive environment in which it
operates. As such, it is instrumental in strategy formulation and selection.
Steps in Swot Analysis
The primary aim of strategic planning is to bring an organization into balance with the
external environment and to maintain that balance over time. Organizations accomplish
this balance by evaluating new programs and services with the intent of maximizing
organizational performance. SWOT analysis is a preliminary decision-making tool that
sets the stage for this work.
Step 1 of SWOT analysis involves the collection and evaluation of key data. Depending
on the organization, these data might include population demographics, community
health status, sources of healthcare funding, and/or the current status of medical
technology. Once the data have been collected and analyzed, the organizations
capabilities in these areas are assessed.
In Step 2 of SWOT analysis,
In step 2 data on the organization are collected and sorted into four categories: strengths,
weaknesses, opportunities, and threats. Strengths and weaknesses generally stem from
factors within the organization, whereas opportunities and threats usually arise from
external factors. Organizational surveys are an effective means of gathering some of this
information, such as data on an organizations finances, operations, and processes.
Step 3

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It involves the development of a SWOT matrix for each business alternative under
consideration. For example, say a hospital is evaluating the development of an
ambulatory surgery center (ASC). They are looking at two options; the first is a wholly
owned ASC, and the second is a joint venture with local physicians. The hospitals expert
panel would complete a separate SWOT matrix for each alternative.
Step 4
It involves incorporating the SWOT analysis into the decision-making process to
determine which business alternative best meets the organizations overall strategic plan.
Technique2
PEST Analysis
PEST analysis stands for "Political, Economic, Social-cultural, and Technological
analysis" and describes a framework of macro-environmental factors used in the
environmental scanning component of strategic management. It is a part of the external
analysis when conducting a strategic analysis or doing market research, and gives an
overview of the different macro environmental factors that the company has to take into
consideration. It is a useful strategic tool for understanding market growth or decline,
business position, potential and direction for operations.
The growing importance of environmental or ecological factors in the first decade of the
21st century have given rise to green business and encouraged widespread use of an
updated version of the PEST framework.
Composition
o Political factors regard how and to what degree a government intervenes in the
economy. Specifically, political factors include areas such as tax policy, labour law,
environmental law, trade restrictions, tariffs, and political stability. Political factors may
also include goods and services which the government wants to provide or be provided
(merit goods) and those that the government does not want to be provided (demerit goods

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or merit bads). Furthermore, governments have great influence on the health, education,
and infrastructure of a nation.
o Economic factors include economic growth, interest rates, exchange rates and the
inflation rate. These factors have major impacts on how businesses operate and make
decisions. For example, interest rates affect a firm's cost of capital and therefore to what
extent a business grows and expands. Exchange rates affect the costs of exporting goods
and the supply and price of imported goods in an economy.
o Social-cultural factors include the cultural aspects and include health consciousness,
population growth rate, age distribution, career attitudes and emphasis on safety. Trends
in social factors affect the demand for a company's products and how that company
operates. For example, an aging population may imply a smaller and less-willing
workforce (thus increasing the cost of labour). Furthermore, companies may change
various management strategies to adapt to these social trends (such as recruiting older
workers).
o Technological factors include technological aspects such as R&D activity, automation,
technology incentives and the rate of technological change. They can determine barriers
to entry, minimum efficient production level and influence outsourcing decisions.
Furthermore, technological shifts can affect costs, quality, and lead to innovation.
Tehnique3:
The QUEST (Quick environmental scanning techniques) is a four step process which
uses scenario writing for scanning the environment and identify the strategic options.
The Four steps involved in applying this technique are
1. Internal strategists will observe and identify the major events and trends in the Industry
2. Speculate on a wide range of important ISSUES that might affect the future of Their
organization
3. Preparing a report summarizing the major issues and their implications and 3-5
scenarios incorporating the major themes of their discussion.

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4. Report and scenarios are reviewed by a group of strategists who identify feasible
strategic options to deal with the evolving environment.

After the environmental

scanning process is complete, the strategists start to appraise the environment - called
environmental appraisal. It is structured by the preparation of the environmental threats
and opportunities profile (ETOP), which involves dividing the environment into different
sectors and then analyzing the impact of each sector on the organization
Technique 4
Competitor analysis
Competitor analysis in strategic management is an assessment of the strengths and
weaknesses of current and potential competitors. This analysis provides both an offensive
and defensive strategic context to identify opportunities and threats. Profiling coalesces
all of the relevant sources of competitor analysis into one framework in the support of
efficient and effective strategy formulation, implementation, monitoring and adjustment
Competitor analysis is an essential component of corporate strategy It is argued that most
firms do not conduct this type of analysis systematically enough. Instead, many
enterprises operate on what is called informal impressions, conjectures, and intuition
gained through the tidbits of information about competitors every manager continually
receives. As a result, traditional environmental scanning places many firms at risk of
dangerous competitive blindspots due to a lack of robust competitor analysis Michael
Porter (Harvard Business School Management Researcher) designed various vital
frameworks for developing an organizations strategy. One of the most renowned among
managers making strategic decisions is the five competitive forces model that determines
industry structure. According to Porter, the nature of competition in any industry is
personified in the following five forces

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Rivalry among current competitors

Threat of new potential entrants
Threat of substitute product/services
Bargaining power of suppliers
Bargaining power of buyers

FIGURE: Porters Five Forces model

The five forces mentioned above are very significant from point of view of strategy
formulation. The potential of these forces differs from industry to industry. These forces
jointly determine the profitability of industry because they shape the prices which can be
charged, the costs which can be borne, and the investment required to compete in the
industry. Before making strategic decisions, the managers should use the five forces
framework to determine the competitive structure of industry.
The five factors of Porters model in detail:
Risk of entry by potential competitors: Potential competitors refer to the firms which
are not currently competing in the industry but have the potential to do so if given a
choice. Entry of new players increases the industry capacity, begins a competition for
market share and lowers the current costs. The threat of entry by potential competitors
is partially a function of extent of barriers to entry. The various barriers to entry are

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Economies of scale
Brand loyalty
Government Regulation
Customer Switching Costs
Absolute Cost Advantage
Ease in distribution

Strong Capital base

Rivalry among current competitors: Rivalry refers to the competitive struggle for
market share between firms in an industry. Extreme rivalry among established firms
poses a strong threat to profitability. The strength of rivalry among established firms
within an industry is a function of following factors:

Extent of exit barriers

Amount of fixed cost
Competitive structure of industry
Presence of global customers
Absence of switching costs
Growth Rate of industry
Demand conditions

Bargaining Power of Buyers: Buyers refer to the customers who finally consume the
product or the firms who distribute the industrys product to the final consumers.
Bargaining power of buyers refer to the potential of buyers to bargain down the prices
charged by the firms in the industry or to increase the firms cost in the industry by
demanding better quality and service of product. Strong buyers can extract profits out
of an industry by lowering the prices and increasing the costs. They purchase in large
quantities. They have full information about the product and the market. They
emphasize upon quality products. They pose credible threat of backward integration.
In this way, they are regarded as a threat.
Bargaining Power of Suppliers: Suppliers refer to the firms that provide inputs to the
industry. Bargaining power of the suppliers refer to the potential of the suppliers to
increase the prices of inputs( labour, raw materials, services, etc) or the costs of
industry in other ways. Strong suppliers can extract profits out of an industry by
increasing costs of firms in the industry. Suppliers products have a few substitutes.
Strong suppliers products are unique. They have high switching cost. Their product is
an important input to buyers product. They pose credible threat of forward
integration. Buyers are not significant to strong suppliers. In this way, they are
regarded as a threat.
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Threat of Substitute products: Substitute products refer to the products having ability
of satisfying customers needs effectively. Substitutes pose a ceiling (upper limit) on
the potential returns of an industry by putting a setting a limit on the price that firms
can charge for their product in an industry. Lesser the number of close substitutes a
product has, greater is the opportunity for the firms in industry to raise their product
prices and earn greater profits (other things being equal).
The power of Porters five forces varies from industry to industry. Whatever be the
industry, these five forces influence the profitability as they affect the prices, the
costs, and the capital investment essential for survival and competition in industry.
This five forces model also help in making strategic decisions as it is used by the
managers to determine industrys competitive structure.
Porter ignored, however, a sixth significant factor- complementary. This term refers to
the reliance that develops between the companies whose products work is in
combination with each other. Strong complementary might have a strong positive
effect on the industry. Also, the five forces model overlooks the role of innovation as
well as the significance of individual firm differences. It presents a stagnant view of
competitior
Technique5
Issue priority matrix
The Issues Priority Matrix is a way to identify and analyze developments in the external
environment. Managers can use it to decide which environmental trends should be merely
scanned (low priority) and which should be monitored as strategic factors (high priority).
Steps to Building the Issues Priority Matrix:

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Identify likely trends emerging in societal and task environments

** Strategic environmental issues - important trends that determine what the

industry will look like in the future

Assess probability (low-medium-high scale) of these trends occurring

Ascertain impact (low-medium-high scale) of these trends on the corporation

External strategic factors are the key environmental trends judged to have both a medium
to high probability of occurrence and impact
Technique 6:
ETOP-Environment Threats and opportunities Profile
Assessment of the environmental information and determining the relative significance of threats and
opportunities require a systematic evaluation of the information developed in the course of E
Environmental analysis. For thispurpose, preparation of a profile of environmental threat and o
pportunity (ETOP)is considered to be a useful device.
An illustrative profile is given in Figure below on the basic of environmental analysis carried out by
Bharat Heavy Electricals Ltd.
EnvironmentalSector

Socioeconomic

(+)Opportunity(-)Threat

(+_) continued emphasis on

infrastructural
development which includes power supply for

Technological

(+)

High growth

envisaged

in

industrial
Production and technology up gradation.
Supplier

(-)Sources of technology will become scarce

due

Competitors
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Government

To
(-) Customers will become more discerning in
their requirements due to an increasing role of
power plant consultants
(+)Liberalization
of technology import policy

Glueck
Scanning
Techniques
Glueck
suggested
three
techniques

for environment scanning

Information Gathering
By gathering information strategic manager can know about the business environment
can know about the business environment.The sources of information may either be
verbal or written.
Business magazines like business today, Harward Business review.
News papers like economic times, Finacial Express and Business line.
Annual reports and profiles of the company
Spying
Spying is one of the method analyzing, collecting information required for scanning
the business environment.For this specialized individuals can me employed to get
clues about the streght of the competitors in the market or ant trade secrets.These clues
or hints are further processed scanning business environment. Here business needs to
avoid the breach of low.
Forecasting
Good anticipation is the result of good strategic exploration Joel Arthur Barker
author of the book paradigms: the usiness of discovering future rightly marks.Like
Peter Drucker,he also agrees that future mangers will be more proactive than reactors.
Forecasting is the technique of estimating events in future.Though future is uuncertain
and uneexpected yet it can be predicted to a certain extent by cor-relating the various
parameters through their analysis and combining intuition of this analysis.

Environment Scanning process

Consider Your Scanning Type
Your first order of business is to set some parameters on the type of scanning you will be doing.
There are two fundamental scanning types: "social intuitive" and "formal analytical." If you run
a scanning process in which people investigate a wide range of sources and then produce a report
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by a given date, you are in formal-analytical mode. "Social intuitive" is a less rigorous type of
scanning: The term acknowledges the fact that everyone scans their environment for useful
information about what's coming down the pike.
Some people are much better at social-intuitive scanning than others; research indicates that
founders of successful startup ventures are adept at social-intuitive scanning. They do a lot of
networking and are naturally inclined to ask questions and generate opinions on what the future
holds. Similarly, people who use social media are trafficking in the kind of information that
lends itself to social-intuitive scanning. Think of formal-analytical scanning as a means of
bringing discipline, range, and conclusions to a social-intuitive inclination.
The second consideration has to do with the scanner's perspective and intent. One approach is to
conduct an unrestricted search of the entire environment. In this "viewing" mode, the scanner is
open to anything that could be relevant to the organization, though the scanner is especially
attentive to broad subject categories that are thought to offer the best opportunities. One such
viewing scheme goes by the acronym STEEP, referring to trends in the social, technological,
economic, environmental (i.e., ecological), and political spheres.
Another approach, the "directed" mode, relates to specific trends an organization is already
aware of. Here the goal is to learn more about how a trend will affect its industry or profession.
For example, in directed mode the scanner drills down to discover the implications of a trend for
suppliers, competitors, customers, and downstream beneficiaries.
It's important to remember that no organization operates exclusively in viewing or directing
mode: A formal scanning process engages in both simultaneously, at once identifying newly
relevant trends and performing in-depth research on those already believed to be the most
significant.
How long should your scanning process last? A formal, periodic scan might occur at a set
interval, like every year or every three years, last a few weeks or months, and culminate with a
report that informs the planning process. But organizations that make scanning a continuous
activity recognize the importance of regularly developing, monitoring, and adjusting strategies.
They also recognize that everybody in the organization needs to be thinking about the future and
sharing thoughts about the implications of specific trends in an organized manner. An ongoing
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scan is better than a periodic one, but a periodic scan is the place to start if no formal-analytical
scanning is happening at all.
2. Select Your Scanning Team
There are two factors to consider as you establish a scanning team: the number of people
involved and the profile of the participants. A staff-only group is easier; including both staff and
members can become complicated in terms of size and logistics. Regardless, a group of six to 10
people constitutes a good size for a scanning team. As for the type of people you include,
attributes that seem to correlate with scanning proficiency include

Imagination. Participants need an ability to create mental images of things that have not
actually happened.

Fluency. An ability to speak or write easily and coherently is essential. Scanning is about
exploring concepts using language.

Networking. The best scanners are inclined to develop contacts with a diverse spectrum
of people and to stay in touch with them over time, giving and gathering information.

In addition, it's a good idea to have at least one representative from each program department
that scans as a matter of course. These might be your association's journalists, lobbyists, and
education professionals.
3. Identify Your Primary Information Sources
Primary information sources are media that offer productive and reliable insights over time. But
it's important to always be exploring other sources that might offer a single but important piece
of information or secondary sources that are worth checking periodically. Never assume you've
arrived at a stable set of sources.
Every association will develop its own list of primary sources that includes print and electronic
news, live events where members gather, and social media outlets where member-related
information is transferred. Your mix of sources might include

Credible print or online news media, such as The New York Times and The Wall Street
Journal. These sources, which make huge investments in journalism and the information
they deliver, offer starting points for your explorations.

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There are plenty of resources specific to the STEEP categories mentioned in step one,

though you'll want to sort through them to find the ones most appropriate for your
association. For example, MIT Sloan Management Review addresses technology with an
IT bias that might be appropriate for an engineering association, while Technology Review,
also published by MIT, takes a broader perspective on the topic that is friendlier to a
nontechnical association.

The "American Demographics" section of Advertising Age magazine is one of several

important sources of information regarding population shifts. Tracking this dynamic is
critical regardless of your particular constituency profile.

4. Design Your Scanning Method

Your appropriate scanning method will depend on factors such as available resources and
leadership commitment. It will also depend on your constituent complexity. A more stratified
and diverse membership will require more complex scanning. Environmental uncertainty plays a
role as well; not all industries and professions experience change at the same rate. But every
good scanning method shares some common responsibilities. These include the following:

Identifying possible trends. Each person on the scanning team is given an assigned "beat"
or list of sources he or she is to track over time. Each team member looks for possible
trends and captures them in a standard format that everyone on the team is trained to use.

Refining possibilities. At some regular interval, the scanning team meets to discuss the
findings from each individual. Exercises should be in place to brainstorm the possible
implications of a trend for each affected constituency. In such discussions, it's important
not just to identify implications that an association will likely confront; you'll need to
project how much impact those implications will have as well. You're looking for probable
implications with any significant level of impact, or implications with slight probability
but high levels of impact if they were to occur.

Continuously scanning. The scanning team is looking for new possibilities from the open
universe of information ("viewing" mode) and for more information on those that passed
the initial screening ("directed" mode).

Finding a larger forum to test implications. On a modest scale, the team might present
initial findings at an all-staff meeting to get a fresh assessment of the implications and to
prompt some shared learning. On a larger scale, this could happen in an environment

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where members can provide feedback, such as an annual meeting session or online forum.
Your purpose here is twofold. First, you need to get more thoughts and build consensus on
what may warrant strategic attention. Second, it's important that your scanning experience
generates new knowledge that many can learn from, not just the strategy makers.
5. Deliver "Ready-to-Use" Scanning Information
The viability of a scanning process is assessed at two points. The first time is when the report is
put into the hands of the association's strategy makers. The second comes years later, when
everybody involved has enough hindsight to determine the accuracy and significance of their
predictions.
So how do you know if your scanning process makes sense without waiting a few years? Quality
is said to reside in a product or service's "fitness for use"; in other words, quality is there if it
does what it is supposed to do in a manner that is efficient and effective. The fitness for use of
scanned information is determined by the value it offers to the strategy-making process. If that
process is poorly defined, generating a useful scanning report will be difficult.
In the hopes of defining the process, a scanner may be tempted to ask strategy makers what they
need. Unfortunately, if they have a poorly defined processmany dothey'll ramble about what
they want instead. It's far more productive for the scanner to ask how the strategy-making
process works. Who does what and in what order? If the strategy maker isn't sure, keep probing,
diplomatically but persistently.
While pages of prose may go into explaining an implication drawn from a trend, each strategic
issue your team identifies should be distilled into a single sentence. The objective is to describe a
cause-and-effect scenario that you had better do something about. Whatever you do about it is
contained in a strategy; the reason to do something at all is a strategic issue.
For example, several years ago many physicians were talking about the effect the internet was
having on patient expectations. Everyone agreed it was transforming the doctor-patient
relationship: Doctors had less influence over what their patients think, and they had to work
harder to respond to the torrent of information patients now had at their command. A trend of
this type certainly needs some detailed text to describe it sufficiently. But in the end, a
straightforward cause-and-effect sentence did the job:

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"Patient use of the internet to find and track clinical trials regarding their particular form of
disease [the cause] is changing the traditional doctor-patient relationship with respect to patient
involvement in diagnostic and treatment considerations [the effect]."
Note that the statement does not recommend an action the association should take in response to
this issue. That's the job of the strategy makers, which they will get to if they agree that the issue
warrants a response. The issue itself could have been framed several different ways; the process
invites people to read the extended text and propose framing it differently. What's important is
that there's a firewall between the stimulus (the issue) and the response (the strategy). The
number-one failure point in problem solving comes when nobody can agree on the motive to act
before launching an action. In this particular case, the association expanded access to its
previously physicians-only website to patients, and it now counsels them on using the internet
effectively and structuring a productive dialogue with their doctors.
When developing a response to a strategic issue, the team should consider threeand only three
response options but explore each in depth:
1.

Make the cause go away so you don't have to worry about the consequences.

2.

Acknowledge that the cause is not apt to go away, but find ways to dodge the
consequences.

3.

Acknowledge that the cause and the consequences are inevitably coming, so become
different in ways that avoid the negative consequences and strengthen the organization in
the long run.

For example, when the Clinton administration initiated discussions about healthcare reform in
1993, coalitions that opposed reform proposals successfully terminated the cause (option one).
When the Obama administration took up the cause again in 2009, the same coalitions tried the
same strategy but failed to appreciate that something had changed since 1993: Now, both
chambers of Congress were politically aligned with the White House. Many still fought the
cause to the bitter end, while others saw the writing on the wall and began working their own
deals to reduce the consequences (option two). But most began work on significant adaptations
in the way they do business (option three).
The value of the three-option framework is itself threefold. It forces people to agree on the need
to act before they consider possible actions; if they don't agree on the motive, they're not likely
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to agree on a strategy. Second, it provides an analytical format to explore a full spectrum of

strategic options. Finally, it helps ensure that the scanning team's findings are useful for strategy
makers.
As more and more association members are exposed to environmental scanning systems in their
own work, they'll expect their associations to pursue environmental scanning as well. But what
may be more important is the fact that a good environmental scanning system in the association
should provide a valued information source for members' own scanning efforts. This will make
scanning both an administrative tool for the association and a service to its members

Environment Scanning techniques used by Hindustan Uniliever Ltd

Over view of the Company
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods
Company with a heritage of over 80 years in India and touches the lives of two out of
three Indians.
HUL works to create a better future every day and helps people feel good, look good and
get more out of life with brands and services that are good for them and good for others.
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With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos,
skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and
water purifiers, the Company is a part of the everyday life of millions of consumers
across India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf
Excel, Rin, Wheel, Fair & Lovely, Ponds, Vaseline, Lakm, Dove, Clinic Plus, Sunsilk,
Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Walls and Pureit.
The Company has over 16,000 employees and has an annual turnover of INR 27408
crores (financial year 2013 - 2014). HUL is a subsidiary of Unilever, one of the worlds
leading suppliers of fast moving consumer goods with strong local roots in more than 100
countries across the globe with annual sales of 49.8 billion in 2013. Unilever has
67.25% shareholding in HUL.

The two techniques of scanning the environment used by HUL are as Follows:
Porter Five Force Analysis
ETOP Analysis
Porter Five forces analysis

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i.

Bargaining power of customers:

High bargaining power due to low cost of switching.
Price sensitivity in customers.
Customers are not reluctant to buy/try new products off the shelf.
Product Loyalty can be a favourable factor.

ii.

Bargaining power of suppliers:

Suppliers may determine the cost of raw material and other inputs affecting
profitability.
But their bargaining power is not very high.
Oligopoly in the supplier side i.e. many suppliers available.

iii.

Threat of New Entarants:

Suppliers accessible.
Distributors accessible.
Low-cost switching.
Market Growth.
Cost effectiveness.

iv.

Threats of new products

Complex and never ending needs of consumers.
Wide range of choices.
High expectations of consumers.
Low-cost switching.
Beneficial Alternatives.

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v.

Competition threat
A large number of players.
Highly saturated industry therefore scarce customers.
Intensive Advertisements

The second technique used by HUL is ETOP analysis

HUL uses ETOP technique to scan the environment for the following:

Helps organization in identifying Opportunities and Threats.

To consolidate and strengthen organisation's position.

Helps strategists in appropriate strategy formulation.

Helps to know the current position

ETOP
E-ENVIRONMENT
Political-International Trade, taxation policy
Economic-Interest rates, exchange rates, national income, inflation rate, unemployment,
stock market

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Social-Ageing Population, Attitude to work, Income distribution

Technological-New innovation LawsLaw-Corporate laws, Competition
Law-Corporate laws, Employment laws, Competiton Laws
T-THREAT

Increasing competition from Organizations like ITC which has entered sectors
like food,retailing.,etc.
Low priced substitutes and new entrants.
Dissatisfaction or high quality of products of other organizations.
Low-cost switching over
O-OPPORTUNITY

Market Leaders Brand Awareness and Brand Value.

Expansion of horizons - countries beyond Asia.

New products lines

New markets may be available to increase in disposable living standards

Opportunities in food sectors

Conclusions:
Thus it can be concluded that scanning the environment is very important for a company
reach its goal. Without scanning it wont be possible.
Through environment scanning one comes to know about the Strengths, Weakness
Opportunity and threats through which one can fully utilize the opportunities and
strengths and help the company to gain success and simultaneously knowing the threats
and weakness will give and indication how the company can fail which help the company
to eliminate them. But all above it is also very important to know the scanning techniques
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that should be used to scan. technique have to be selected on the basis of resources
available with company, factors such as the cost of the technique is important while
choosing the technique. There are number of techniques available for environment
scanning but SWOT, PESTLE, ETOP are some of the techniques used mostly by the
organization

BIBLIOGRAPHY
Following are the links from which the information is taken while making this project
http://www.yourarticlelibrary.com/environment/approaches-and-techniques-used-forenvironmental-scanning/23556/
http://www.preservearticles.com/2013082933393/8-important-needs-and-importance-ofenvironmental-scanning-business.html
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http://thinkingfutures.net/wp-content/uploads/2010/10/ES-Guide-April-09.pdf
http://www.businessdictionary.com/definition/industry-analysis.html
http://www.businessdictionary.com/definition/industry-analysis.html
http://business.svtuition.org/2011/10/factors-of-environmental-scanning.html
http://en.wikipedia.org/wiki/Competitor_analysis
http://en.docsity.com/en/study-notes
http://www.scribd.com/doc/111562195/Strategic-Management-Environmental-ScanningTechniques-Notes-Business-Management
http://balancedscorecard.org/Resources/About-the-Balanced-Scorecard

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