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Environmental Scanning

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13 views

Environmental Scanning

Uploaded by

mrutyunjayjadhav1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Environmental Analysis and

Forecasting
 Business decisions particularly strategic decisions need
a clear identification of the relevant variables and a
detailed and in depth analysis of them to understand
their impact and implications for the organisation.
 Eg:
what are the threats followed by liberalisation and
what are the opportunities possible by liberalisation?
 Forfinding the answers of these questions there must be
a thorough analysis of environment is needed.
Introduction:
 Environmental analysis refers to process of identifying
and examining all potential environment variables that
can either directly or indirectly affect the performance
and profitability of business organization.
 Itis also termed as environmental scanning that is a
strategic tool to find out all internal and external
elements having capability of influencing the efficient
and effective functioning of organization.
 Internalelements comprise of strengths and weakness
of business enterprise, whereas external element
represent the opportunities and threats outside the
organization.
 The environmental analysis takes into consideration the
trends and high-level factors such as interest rates,
economy and manner how these are going to change
firm’s business.
 Under it, the firm pertaining data is collected and
utilized by management in order to determine the best
strategies for capitalizing opportunities and generate
large returns.
 In
today’s time, the business environment is quite
dynamic that keeps on changing frequently with time.
 Therefore, it becomes crucial to analyse environment for
identifying each and every factor of business
environment that can affect its operations.
 Once these factors got identified and their impact got
understood, then it becomes easy to frame plan and
policies accordingly.
 Theinternal insights from environmental analysis help
businesses in assessing the employee’s performance,
maintenance cost, customer satisfaction etc, so that
required corrective actions can be taken timely.
 External metrics, on other hand, assists in responding to
environment in positive manner and also aligning all
policies as per the objectives of business organization.
Process of environmental analysis:
 1. Identify environmental factors
 2. Gather information
 3.Evaluate your competitors
 4. Forecast the impact
 5. Access your strategies
 In short Scanning, monitoring, forecasting, Assessment
Identify environmental factors:
 Thefirst step in environmental analysis involves
identification of all such environmental factors or forces
that influence the functioning of business entity.
 Thisidentification is carried out at distinct levels such as
company level, market level, country level and
international level.
 Onlyrelevant environmental factors are figured out
under it, so that irrelevant, vague and ambiguous data
can be avoided.
 Generally,the identification step includes competitor’s
strategies, market factors, government policies etc. that
Gather Information:
 Once the factors to be examined are decided, then start
gathering information concerned with selected
environmental factors. Research needs to be carried out
for collecting information that is of two types:
 verbal and written information. The verbal information
is gathered via hearing such as listening to radio
podcast, whereas written information is gathered by
reading sources such as magazines, journal and
newspaper.
Evaluate your competitors:

 Here
in this step, information is collected regarding
competitors to find out if there are any threats from
them or not.
A technique called spying is utilized for gathering
information in non-traditional way.
Forecast the impact:

 Forecastingis an important step for identification of


threats and opportunities in future and framing the plans
and strategies accordingly.
 Thisstep predicts about future events and their impacts
on business entity on the basis of data gathered with
regard to past and present events. Forecasting covers
every aspect of business environment such as economic,
technological, political etc. The methods used for
forecasting include surveying and brainstorming.
Access your Strategy:
 Finallyin last step, each of environmental factor that is
identified in previous steps are evaluated on the basis of
their impact on organizational functioning and
profitability.
 Thedegree of impact is variable from one factor to
another. Some of the factors provide opportunity while
other pose threat to business enterprise.

 Proper knowledge on impact of environmental factors


assists in resolving the potential challenges that may
arise from them.
Types of Environmental Analysis:
 Environmental analysis is of different types based on the
technique used for reviewing and evaluating information
regarding internal and external environment.
 1. SWOT analysis
 2.TOWS Matrix
 3.WOTS-UP Analysis
 4. BCG Matrix
SWOT Analysis:
 SWOT refers to internal strengths and weaknesses of
business enterprise as well as external threat and
opportunities surrounding that business.
 The swot analysis assists managers in knowing the
strategic situation of firm and determining whether it is
a perfect fit in between internal resources, values and
external environment.
A good fit is one that maximizes the strengths and
opportunities of entity and minimizes its weakness and
threats.
 The primary role of SWOT analysis is to identify key
internal as well as external forces that are crucial for
attaining the desired goals and objectives.
 One of the effective utilization of SWOT analysis for good
effect can be exploiting market opportunities through
leveraging the firm’s strengths.
TOWS Matrix:
 TOWS matrix is an environmental analysis technique
used for strategic planning and facilitate marketers in
identifying opportunities and threats and comparing
them against internal strengths and weakness.
 It can be simply defined as variant of SWOT analysis
paying more attention on opportunities and threat that
are external to business organization and counting them
with organization’s internal strengths and weakness.
 Therefore, TOWS and SWOT are simply acronym for
distinct arrangements of words: strength, weakness,
threat and opportunity.
 Bothof them utilize same forces for carrying out
analysis but are at sometimes used interchangeably
without regard to order that strengths, weakness,
threats and opportunities are evaluated
WOTS-UP Analysis:
 WOTS-UP analysis is also similar to above mentioned
TOWS and SWOT analysis and are used interchangeably
during business analysis for conveying the same thing.
 Itserves as tool of planning for examining the
strengths, weakness, threats and opportunities of
organization. Its main motive is to do evaluation of both
internal as well as external environment of business
enterprise that helps in summarizing supportive and
unsupportive factors by business.
 WOTS-UP analysis enable business in thinking strategic
wise and utilizing their capabilities with full efficiency
BCG Matrix:
 BCG matrix was formed by Boston Consulting Group, a
strategic management consulting enterprise, in order to
examine the product’s performance.
 This
matrix carries out comparison of distinct
businesses in an organizational portfolio on the basis of
market growth rate and relative market share.
 Relative
market share means the ratio of business
market share to market share of large rival existing in
market. Whereas, market growth rate refers to market
growth during previous year relative to economy growth
as a whole.
Importance of environmental
analysis:
 1. Identify opportunities, threats, strengths, weaknesses
 2. Understanding the environmental changes
 3.Provide inputs for decision making
 4.Formulation of appropriate strategy

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