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Environmental Scanning Environmental scanning is the communication of external information about facts that could influence an organization on its

strategic decision-making process. It is a method of analyzing relevant gathered information and use to determine strategic and premeditated action on the business environment. The environmental scanning process seek obtain both realistic and subjective information on the business environments where a corporation is functioning or considering entering. It is the possession and use of information concerning events, trends, and interaction in an organization's external environment, the data of which could support management in scheduling the organization's future line of action. Organizations should scan the environment in order to recognize any external factors that could affect their position on the market, and therefore build up successful responses to protected or improve their position in the future. They scan in order to evade surprises, spot pressure and opportunities, increase competitive advantage, and improve long-term and immediate planning. An organization's capability to adapt to its external environment is strongly dependent on the interpretation of external factors. Environmental scanning focuses on the detection of rising issues, circumstances, and potential issues that could determine an organization's future. The gathered information is provided to key managers on the organization and used to direct management in future plans. It is also used to evaluate an organization's strengths and weaknesses in response to external threats and opportunities. In essence, environmental scanning is a process to identify, collect, and transmit information about external factors to be converted into plans and decisions. Environmental scanning assesses the internal strengths and weaknesses of an organization in relation to the external opportunities and threats it faces. All organizations need examine at some stage what goes on in their environments and be familiar with their strengths and weaknesses in relation to it. The importance of environmental information depends on the extent to which the accomplishment of the organization itself depends on its environment. The correlation between an organization and its environment depends upon on the internal strengths and weaknesses of the company, which means that an opportunity for one company will be viewed as a risk to another, depending on how well each is placed to deal with the particular concern. In the industry literature, this dependency of the organization on its environment is

referred to as: Perceived Environmental Uncertainty (PEU). Gordon and Narayanan (1984, p33-47) acknowledged some factors that determine PEU. These factors consist of the character of the society, economic stability, legal constancy, political constraints, and nature of the industry, customer base and the nature of the organization. Khandwalla (1977, p326-354) identifies three probable relationships between organizations and their environments: Dominant organization/dominated environment Dominant environment/dominated organization Symbiotic relationship neither the environment nor the company dominates. There are numerous important reasons to carry an environmental scanning activity. Because of fast changes in today's market and recent and emerging business practices, it is easy for an organization to fall behind by not keeping up in areas such as technology, regulations, and various rising trends. Environmental scanning reduces the possibility of being blindsided and results in superior anticipatory management. Environmental scanning helps organizations gain knowledge of possible influences from outside environments and how it can react strategically. Understanding two elements: external influences and the organization's internal practices. An organization can take action in a more suitable and efficient manner. The aim of environmental scanning is premeditated assessment and preparation. Its importance comes from the recognition and understanding of complex issues that an organization can face. Environmental scanning helps an organization in acting strategically manner on external factors over which it has small, if any, control. Through regular monitoring of outside influences, organizations can form their own internal procedures and policy to reflect required and efficient responses. The course of understanding the correlation between external influences and internal procedures assists in adjusting organizational structure and strategic procedure that are intended to be more efficient and flexible to changing market. Environmental scanning should not be a stagnant process. It should be continuous and ongoing in order to sustain a preparative posture as environmental influences take place. This organizational learning practice is a key element to organizational success. Through regular monitoring of the environment, management has the capability to formulate essential adjustments in the organization's reaction to the factors that can turn out to be the difference between success and failure.

PEST Analysis Application 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. External Environmental Scanning There are many factors in the macro-environment that will effect the decisions of the managers of any organization. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analysis these factors managers can categories them using the PESTEL model. Gillespie (2007) Political: Local, national, and international politics can influence an organization directly or indirectly. It is valuable for an organization to have a clear understanding of the political situation in which it operates so that it can be organized for unexpected changes that outcome from elections or changes in existing policies or laws. Economic: Local, regional, national and international economies can have an effect on an organization, depending on its size, scope, and market. Social: Market changes are from time to time motivated by changes in society. Demographic shift in the population may increase or decrease demand for a particular product or service. Demographic information should be monitored for changes in variables such as, age, education, and income. Technological: The appearance of new technologies can impact organizations' overall business and production processes. It is valuable, therefore, to observe changes in technologies, mainly those that influence business efficiencies, changes in production, existing infrastructures (e.g., energy, transportation, and communication), and the rise of new products or services.

Environmental: environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities. Gillespie (2007) Legal: Changes in laws and regulatory guidelines may also have an important impact on the organization. Laws concerning minimum wage, employment practice, and business taxes can have direct impact on organizations. Importance of Environmental Scanning Environmental scanning is the process of dealing with the measurement, projection and evaluation of changes in the different environment variables (Oladele 2006).Most of the organization today are developing different types of strategies that will sustain them in their business environment, and this can only be achieved through the analysis of the environment.(Opportunity and Threats). Oladele (2006) stated some importance to environmental scanning as follows: the environment is dynamic in nature, therefore scanning is necessary to keep abreast of change; it reveals the elements or factors that constitute threats and opportunity to the overall objectives of the organization; competitors activities can be monitored and appropriate strategies put in place to check market incursion; it gives necessary inputs to the formulation and implementation of potent marketing strategies.

Methods of Environmental Scanning This aspect of environmental scanning has caused much debate among the scholars in the field of Management. However, the following are therefore suggested: secondary data collection approach such as articles, textbooks, magazines and ready-made information.etc. primary data collection approach, using research instruments such as questionnaire, personal interview, personal observation etc. establish a unit within the organization which will responsible to scan wide range of environmental factors and makes forecast about specific variables through qualitative and quantitative means.

How Is an Environmental Scan Conducted? Bryson (1989, p242-244) outlines general steps for conducting an environmental scan: Identify the purpose, participants and time commitments. Carry out the scanning activities. Analyze and interpret the strategic importance of issues and trends. Select issues and trends for further action. Report and disseminate the results. Each of these steps is broken down into detailed actions. Executives and other decision-makers inside an organization must not spend their entire time monitoring the environment. The environmental scanning task can be set up as a separate division, based upon a set of criteria determined in union with the decision-makers in the organization, prioritizing factors and events with higher potential to impact the business. Scanning the external environment identifies possible threats and opportunities for an organization; an internal evaluation of an organization identifies its strengths and weaknesses. When gathering the information, the organization's requirements must then be translated into detailed elements of information that will be necessary. A listing of

questions and particular sources should be organized in advance in order to compose scanning performance more precise and successful. There are a range of sources normally used in environmental-scanning activities. These include both external and internal information. External information sources can contain a wide variety of materials such as market research studies, printed articles, monitoring demographic figures and experts. External sources can also incorporate casual conversations with other executives and relatives. In-house information includes organization-specific information that can be compared to the findings of external scanning in order to make best use of organizational reaction. Once the information has been collected, it should be analyzed for aspects and factors that may influence the organization. Information that has been analyzed and translated into possible consequence on the organization can subsequently be reported to the suitable decision-makers within the organization. Once the environmental scanning actions are presented, organizational management can take correct action in preparing and directing the organization behaviour that will be most reactive to the opportunities or threats that have been recognized. Organizational managers and executives are in charge for making quick decisions that may considerably transform an organization. Environmental scanning offers preventive and forecasting information to support managers in making these decisions while attempting to recognize crisis before they take place. Managers are also liable for making several decisions and, consequently, do not have a large amount time to dedicate searching for information. As an alternative, they need suitable information that has been analysed and highlighted on main points significant to the organization. Choo (2001) says that managers tend to prefer information that is offered in solid terms, plainly focused with attention given to detail, and in an approach that allows them to scan and absorb the information promptly. Managers can gain their information from a range of sources, including printed and online materials. Choo (2001) says they frequently rely most deeply on a small group of persons who serve as their network of resources. Managers wish to receive information that is personally presented rather than through reading. This system allows managers to ask questions, organize the flow of information and obtain only that information that they establish is essential for making decisions, which is not achievable when depending on a book or report.

The environmental scanning is more likely to receive proper investment and attention when senior management integrate the activity into the strategic planning of actions.

Potential problems in implementing environmental scanning activities There are a number of reasons why environmental scanning might not be successful in an organization. The amount of information may be vast, resulting in an information overload in which vital pieces could be unobserved or missed. In addition scanners may not be aware of several sources of important information. Analyzing the gained and existing information can be too tricky because of the lack of organization, knowledge and complexity of the material offered. Furthermore in some cases information may not be accurate for the time. This is predominantly common on quickly altering markets, such as strongly influenced by technology. In addition when the activity is performed by a team, there are also possible inconveniences such as; the understanding of the information collected, determination of importance, experience with the matter, verbal communication practice, time restrictions.

Conclusion Environmental scanning can present numerous rewards for modern organizations. It can contribute to an organization's renovation, one that constantly seeks new practises that could modify its place in the market. Furthermore environmental scanning assists in the improvement of planned procedure and policy. It is indispensable to evaluate new information to meet new challenges as they take place. It can identify an organization's distinctive strengths, find weaknesses in its

competitors, and recognize new markets, potential trade, and up-and-coming technology. By identifying potential threats to the organization, the environmental scanning facilitate in putting in place preventive measures. By alerting the organization to potential changes in the environment, environmental scanning helps it adjust its strategies to the external environment. The crucial objective of environmental scanning is to assist organizations in gain knowledge of the external environment in order to amplify its reaction and flexibility in decision-making process.