Environmental Scanning Techniques.pptx

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ENVIRONMENTAL SCANNING  The term environmental scanning in business means

to carefully analyze the various factors influence the business.  It is a process by which the organization monitor their relevant environment to identify opportunities and threats affecting their business.

TECHNIQUES OF ENVIRONMENT SCANNING SWOT ANALYSIS

PEST

TECHNIQUES

PORTER FIVE FORCES MODEL

ETOP

SWOT ANALYSIS  SWOT analysis is a strategic planning method used to

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evaluate the strength, weakness, opportunities and threats involved in a business venture. It identifying the external and internal factors that are favorable and unfavorable to achieving that objective. The components of SWOT discussed below: Strength Weakness Opportunities Threats

 Strengths: Strength is a resource skill and other

advantage relative to competition. It is a distinctive competence that gives firm a comparative advantage in the market place.  Weakness: Weakness is a limitation or deficiency in resources and skill that seriously impedes effective performance.  Opportunities: An opportunity is a favorable condition in the organization external environment which enables it to strengthen its position.  Threat: Threat is an unfavorable condition in the external environment which causes a risk or damage to the organization position.

BENEFITS OF SWOT ANALYSIS:  It is simple to operate and understand.  It helps in finding goals based alternatives.  It is quite flexible and can be used to any type of

circumstances.  It enables organization to gather information in order to maximize their potential.

PEST ANALYSIS  A scan of the external macro- environment in which

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the firm operates can be expressed in terms of the following factors: Political Economic Social Technological

POLITICAL FACTORS  Political factors include government regulations and

legal issues and define both formal and informal rules under which the firm must operate.  Some examples are: a) Tax policy b) Employment law

ECONOMIC FACTORS  Economic factor effect the purchasing power of

potential customers and the firm’s cost of capital.  Examples of economic factor are: a) Economic growth b) Interest rate c) Inflation rate

SOCIAL FACTORS  Social factors include the demographic and culture

aspects of the external micro-environment. These factor affect customer need and the size of potential markets.  Some social factor include: a) Age distribution b) Career attitudes c) Population growth rate

TECHNOLOGICAL FACTORS  Technological factor can lower barriers to entry, reduce

minimum efficient production level and influence outsourcing decisions.  Some technological factors include: a) R&D activity b) Rate of technological change

PORTER’S FIVE FORCES MODEL