Environmental scanning

Environmental scanning is one component of the global environmental analysis. Environmental monitoring, environmental forecasting and environmental assessment complete the global environmental analysis. Environmental scanning refers to the macro environment.The global environment refers to the macro environment which comprises industries, markets, companies, clients and competitors. Consequently, there exist corresponding analyses on the micro-level. Suppliers, customers and competitors representing the micro environment of a company are analyzed within the industry analysis.

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Definition

Environmental scanning can be defined as ‘the study and interpretation of the political, economic, social and technological events and trends which influence a business, an industry or even a total market’. The factors which need to be considered for environmental scanning are events, trends, issues and expectations of the different interest groups. Issues are often forerunners of trend breaks. A trend break could be a value shift in society, a technological innovation that might be permanent or a paradigm change. Issues are less deep-seated and can be 'a temporary short-lived reaction to a social phenomenon'. A trend can be defined as an ‘environmental phenomenon that has adopted a structural character’.

Modes of scanning

There are three modes of scanning the business environment according to Kubr:

• Systematic scanning - Information related to markets and customers, changes in legislation, regulations having a direct impact on the organization's activities, government policy etc.are collected continuously by taking relevant factors into account
• Ad-hoc scanning - Conducting special surveys and studies to deal with environmental issues from time to time
• Processed-form scanning - Using information in a processed form available from different sources inside and outside the organization

Macro environment

There are a number of common approaches how the external factors, which are mentioned in the definition of Kroon and which describe the macro environment, can be identified and examined. These factors indirectly affect the organization but cannot be controlled by it. One approach could be the PEST analysis. PEST stands for political, economic, social and technological. Two more factors, the environmental and legal factor, are defined within the PESTEL analysis (or PESTLE analysis).

The segmentation of the macro environment according to the six presented factors of the PESTEL analysis is the starting point of the global environmental analysis.

PESTEL analysis

The six environmental factors of the PESTEL analysis are the following:

Political factors

• Taxation Policy
• Trade regulations
• Governmental stability
• Unemployment Policy etc.

Economical factors

• Inflation rate
• Growth in spending power
• Rate of people in a pensionable age etc.

Technological factors

• Technological changes
• New or improved distribution channels
• Improved communication and knowledge transfer etc.

Environmental factors

• Laws on
• Waste disposal
• Energy consumption
• Pollution monitoring etc.

Legal factors

• Unemployment law
• Health and safety
• Product safety
• Advertising regulations
• Product labelling etc.

ecology

• affects customer's buying habits.
• affect the firm production process.

socio-cultural

• age distribution.
• education levels.
• income level.
• consumerism.
• iet & nutriion.

potential supplies

1)labour supply

  *quantity of labour available.
  *quality of labour available.

2)material suppliers.

  *delivery delay.
  *level of competition to supplers,

2)service provider.

  *special requirement.

Microenvironment

The meso-level is settled between the macro- and the micro-level. This field deals with the design of the specific environment of the enterprises. It is of decisive importance that the layout of the physical infrastructure (transport, communication and power distribution systems) and of the sector policies, especially of the education, research and technology policy, are oriented towards competitiveness. In addition the design of the trade policy and systems of rules (for example environmental norms and technical safety standards), which contributes to the development of national advantages of competition, is relevant. Like on the micro-level, on the meso-level new patterns of organisation and steering must be developed. The state shall give impulses and mediate between enterprises, associations, science and intermediate institutions. "The design of locations becomes like that a continuous process on the basis of the efforts of enterprises, science and state as well as of the determined cooperation of private and public agents"

See also

• Strategic early warning system