Environmental Scanning

The process of collecting, evaluating, and delivering information for a strategic purpose is defined as
environmental scanning. The process of environmental scanning requires both accurate and personalized data on
the business environment in which the organization is operating or considering entering.
The characteristics of environmental scanning:
1. Continuous Process: Environmental analysis is an ongoing activity, not a one-time event. To stay aligned with
the rapidly changing environment, it must be conducted continuously.
2. Exploratory Process: Scanning the environment is exploratory, constantly monitoring to uncover potential
opportunities and unknown future developments. It emphasizes "What could happen" rather than predicting
"What will happen."
3. Dynamic Process: Environmental scanning is adaptable and evolves with changing circumstances, making it a
dynamic rather than a fixed process.
4. Holistic View: Environmental scanning takes a comprehensive approach, examining the entire environment
rather than focusing on isolated aspects.
Components of Environmental Scanning:
Internal Environmental Components: These are the elements within the organization that influence its
overall performance. Key internal components include human resources, capital resources, and technological
resources, all of which directly affect the organization's operations and outcomes.
External Environmental Components: These are factors outside the organization that impact its activities.
Although external, they play a significant role in shaping organizational performance. External components
are further divided into:
•Microenvironmental Components: These include entities such as competitors, consumers, markets,
suppliers, and other organizations that directly interact with the business.
•Macroenvironmental Components: These encompass broader forces like political, legal, economic,
cultural, demographic, and technological factors that indirectly influence the organization.
Techniques of Environmental Scanning
SWOT Analysis: SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This technique
assesses both internal and external factors, with strengths and weaknesses being internal, and
opportunities and threats being external. It helps determine strategic actions for business growth.
PEST Analysis: PEST examines the Political, Economic, Social, and Technological aspects of the
external macro-environment. It provides insight into broad external forces that may impact the
organization.
ETOP (Environmental Threat Opportunity Profile): ETOP helps organizations evaluate the
environment by identifying and analyzing potential threats and opportunities, providing a clearer
understanding of their impact on the business.
QUEST (Quick Environmental Scanning Technique): QUEST is a fast and cost-effective method
designed to scan the environment quickly. It helps businesses identify and prioritize critical issues that
need immediate attention.
Process of Environmental Analysis
1.Scanning- The process of analyzing the environment to spot the factors that may impact the
business is known as Environmental Scanning. It alerts the enterprise to take suitable strategic
decisions before it reaches a critical situation.
2.Monitoring- The data is gathered from various sources and is utilized to monitor and find out the
trends and patterns in the environment. The main sources of collecting data are spying, publication
talks with customers, suppliers, dealers and employees.
3.Forecasting- The process of estimating future events based on previously analyzed data is known as
environmental forecasting.
4.Assessment- In this stage, the environmental factors are assessed to identify whether they provide an
opportunity for the business or pose a threat.
Importance of Environmental Scanning:
•Goal Accomplishment: The objectives of an organization cannot be fulfilled unless it adapts itself to environmental
changes. One has to adjust the strategies to fit in the changing demands of the environment.
•Threats and Weakness Identification: For an organization to grow, it must minimize its threats and identify its weaknesses.
This is made possible with the help of environmental scanning with which better strategies can be developed.
•Future Forecast: Environmental changes are often unpredictable. An organization cannot anticipate all the future events but
based on the analysis, it can make better strategic decisions in the future. Hence, environmental analysis helps to forecast the
prospects of the business.
•Market Knowledge: Every organization must be aware of the ongoing changes in the market. If it fails to incorporate
strategic changes due to changing demands, it will not be able to achieve its objectives.
•Focus on the Customer: Environmental scanning and analysis make an organization sensitive to the changing needs and
expectations of the customer.
•Opportunities Identification: With the analysis of the current environment, an organization will be able to identify the
possible opportunities and take necessary steps.
Limitations of Environmental Scanning
•Information Overload: Excessive information can overwhelm decision-makers, leading to indecision.
As a result, environmental scanning may not always be fully reliable.
•Uncertainty and Unforeseen Events: Environmental scanning does not predict the future or eliminate
uncertainties. While it helps mitigate risks, organizations may still encounter unexpected events that it
cannot foresee.
•Delayed Decision-Making: The process may cause organizations to become overly cautious, slowing
down decision-making. A strategic approach is needed to ensure timely analysis and action.
•Risk of Inaccurate Data: If organizations rely entirely on analyzed information without verifying its
accuracy, it can result in deviations from desired outcomes. Proper data verification is essential for
effective decision-making.
Nonprofit Organization Needs a SWOT Analysis
The importance of SWOT analysis for a nonprofit organization cannot be overemphasized. If you ignore SWOT
analysis, you are depriving your nonprofit organization of a treasure trove of benefits. These benefits include:
• Enhanced Decision-making
• Increased Self-awareness
• Strategic Growth
Elements of a SWOT Analysis
Strengths
Strengths are the positive attributes of your nonprofit organization that are internal in nature. They are positive
factors found within your organization that, when harnessed, can give you a major boost and improve your reach
and impact.
Some nonprofit strength examples include:
•Motivated volunteers
•A strong brand identity
•Solid leadership structures.
Weaknesses
Weaknesses are attributes within your nonprofit organization that are negative or detrimental to your
organization. If these negative factors are left unchecked, they can lead to stagnation and even retardation in
your organization’s growth and progress.
Some nonprofit weakness examples include:
•Limited resources
•Operational inefficiencies
•A lack of skilled hands
Opportunities
Opportunities are external factors that can give your nonprofit organization a chance to succeed and improve
its current state of affairs. These factors usually present themselves as trends and developments, such as
emerging needs, technological advancements and positive government policies. When opportunities are
leveraged, they provide your nonprofit organization with great avenues for growth and development.
Threats
Threats are external factors that have
the potential to cause harm to your
nonprofit organization. Threats come
off as challenges to your
organization’s operations. They can
include economic recession,
restrictive government policies and
negative public perception. Without
proper planning and management,
threats can be a great hindrance to
your nonprofit organization’s efforts
and progress.