Definition of Environmental Scanning
Environmental scanning is the process of gathering, monitoring, evaluating, recording, and disseminating information from internal and external environments. It is the process of monitoring changes and developments in internal as well as external environments that may influence the activities of the organization. It is the act of anticipating and interpreting changes in environmental factors.
Every organization has an internal and an external environment which variables may affect organization decisions. To cope with the changing business environment it is necessary for the manager to continuously monitors the environmental factors.
As an open system, the organizational performance is affected by the change of the environment. The environment is dynamic in nature and changes according to time. The changing environment creates both threats and opportunities for the firm. It is responsible for the manager to capitalize on the opportunities and digest the possible threats created by the environment.
Environmental scanning is the screening of large amount of information to anticipate and interpret changes in the environment. “Robbins and Coulter”
Journal reports, market surveys, expert opinions, employee feedbacks, etc. are the ways of collecting information about environmental trends that a manager can apply. On the basis of requirement, the top-level manager in support of subordinates may involve in environmental scanning and make a decision that is adoptable in changing environment.
Methods of Environmental Scanning
A manager can apply various methods/techniques of environmental scanning to collect the environmental data. Following are the important environmental scanning methods,
- Executive opinion method
- Expert opinion method
- Extrapolation method
- Intuitive reasoning
- Scenario building
- Cross impact matrix
- Morphological analysis
- Delphi technique
- Survey method
- Historical analogy
Let’s describe individually those environmental scanning methods,
Method #1 Executive Opinion Method
It is also called the executive judgment method. Under this environment is forecasted on the basis of the opinion and views of top executives. A panel is formed consisting of these executives.
Method #2 Expert Opinion Method
Under this method, environment forecasting has based on the opinion of outside experts or specialists. The experts have better knowledge about market conditions and customer tastes and preferences. This met is similar to the executive opinion method. However, it uses external experts.
Method #3 Extrapolation Method
Under this method, on the basis of past records and information, the future situation is estimated. The management assumes that the same types of events will happen in the coming year as the previous year. Time series, regression analysis, trend analysis, and forecasting techniques are used in this method.
Method #4 Intuitive Reasoning
Intuitive reasoning is the just opposite of the extrapolation method of environmental scanning. Here the manager estimates the future situation ignoring or without considering the past events. The manager estimates the future situation on the basis of his ideas and logic. It is a type of intellectual guesswork where the manager assumes the future without any biases.
Method #5 Scenario Building
Here a scenario is built for the estimation of different probable events and their outcomes are assumed. For example, units of electricity in the country can be estimated on the basis of its consumption for household and business purposes.
Method #6 Cross Impact Matrix
Under this, two conflicting trends of the environment are studied to see their potential impact on each other. Cross impact matrix is used to assess the internal consistency of the forecasts.
Method #7 Morphological Analysis
Here all the possible alternatives to achieve organizational goals are studied and evaluated. Basically, it is applied to forecast technological changes and their impact on business.
Method #8 Delphi Technique
This method is an extension of the expert opinion method. It involves forming a panel of experts and questioning each member of the panel about the future environmental trend. Later, the responses are summarized and returned to the members for assessment. This process continues till an acceptable consensus is achieved.
Method #9 Survey Method
To forecast the environmental information a field survey is conducted. Customers, experts, suppliers, leaders, competitors, etc, opinions are collected and analyzed on the basis of which the future is forecast. In surveys, both quantitive and qualitative information is collected.
Method #10 Brainstorming
Here at first, a group is formed, the new ideas are gathered through group discussion. They are formed to resolve new problems that will occur in the future. All members share their ideas, view, creativity, experience, in a group and they come to conclusion through mutual consent.
Method #11 Historical Analogy
Under this, the environmental trends are analyzed with the help of other trends that are parallel
to the historical trend. For example, today’s economic situation of a developing country can be forecasted by making a comparison with an economic situation of a developed country on a similar developing stage of the past.