Environmental scanning is an activity that helps an organization to identify the opportunities and threats in its environment. It is the systematic, ongoing collection and interpretation of data about internal and external factors that affect marketing and performance.
According to Aguilar (1967), environmental scanning is the process of gathering information about a company’s external events and relationships, in order to assist top management in its decision-making, in order to develop its future course of action.
It can be regarded as the internal communication of external information about issues that may potentially influence an organisation’s decision-making process, focusing on the identification of emerging issues, situations and potential threats in the external environment (Albright, 2004).
This is the first step in marketing planning, before charting the organization’s marketing.
Environmental Scanning is done by conducting Internal audit and External Audit.
Internal audit covers capabilities and factors inside the organisation, which helps to identify the organisation’s strengths (S) and weaknesses (W). External audit covers circumstances and factors outside the organisation and helps in identifying the organisation’s opportunities (O) & threats (T).
The findings of the audit is then presented as SWOT analysis, a critique of the organisation’s primary strengths, weaknesses, opportunities and threats. From this, the TOWS strategy matrix is developed (Wood, 2017).
Information Requirements for Environmental Scanning
Customer and competitor information
This involves understanding more about competitors’ prices, competitors’ new product introductions, competitors’ advertising/promotional programmes, competitors’ entry into new markets and new product technologies, customers’ buying habits, customers’ product preferences, customers’ demands and desires.
Company resources and capabilities
This involves understanding more about a firm’s R&D capabilities and resources, company’s advertising and promotions resources, company’s sales capabilities/resources, company’s financial capabilities/resources, company’s management capabilities/resources.
Suppliers of labour and funds
This involves understanding more about availability of external financing, availability of labour and new manufacturing technologies.
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