Environmental Analysis

As societies started to grow, the need for people grew more and more every day. Unmet human needs are prevalent in every community. On the other hand, a corporate enterprise would constantly face challenges if its environmental warnings were ignored. Due to the market's declining demand for its goods or services, such a company can possibly lose its current clientele.

Environmental analysis, which involves identifying both the present and future opportunities and threats to and from the firm's principal stakeholders with the dimensions of the firm's economic, political, legal, technological, and social environments, is extremely important for business firms to keep track of the emerging environmental trends.

William F. Glueck (1980) defines environmental analysis as “the process by which strategists monitor the economic, legal. Competitive, geographic, technical and social settings to determine opportunities and threats to their firms”.

Philip Kotler (2002) defines environmental analysis as “the process of assessing the emerging trends.”

According to Kotler, there are three categories of environmental signals and trends: fads, trends, and mega trends.

• A fad is a transient, unpredictable event that lasts just a short time and has no lasting impact on society, the economy, or politics. Whether or not business firms take advantage of the situation depends more on luck and favorable timing than anything else.
• A trend is a direction or a series of events that have some momentum and endurance; it reveals the form of the near future and is considerably more predictable and enduring than fads.
• Megatrends take time to form and are primarily social, economic, political, and technological changes that have an extended impact on society for another 7 to 10 years.

Various tools are available for environmental analysis, and their names are listed below:

• PEST analysis- Political, Economic, Social, Technological analysis
• PESTLE analysis- Political, Economic, Social, Technological, Legal and Environmental analysis
• STEEPLE analysis- Social, Technological, Economic, Environmental Political, Legal, and Ecological analysis
• SLEPT analysis- Social, Legal, Environmental, Political analysis
• STEPE analysis- Social, technological, Economic, Political and Environment
• ETPS- Economic, Technological, Political and Social

Above mentioned are some of the equipment for environmental analysis. A manager can apply any of these acronyms that represent as the best suits for an organization.

Process and Techniques of environmental analysis

It is possible to command and monitor the environment using a variety of environmental analytic techniques and information sources. Typically, the following are the most typical environmental methods:

• Environmental Scanning
• SWOT Analysis
• Business or Market intelligence system
• Business-related publications like newspapers and journals
• Business forecasting
• Formal research studies
• Scenario development
• Bench marketing

Currently, a basic explanation of environmental scanning is provided below;

Environmental Scanning

One method and approach for gathering data and assessing environmental trends is called environmental scanning. In other words, environmental scanning is the activity of keeping an eye on environmental changes and developments that could have an impact on an organization's operations. Environmental analysis or scanning is actually a requirement for the creation and execution of corporate strategies, and as such, it should be considered a step in the strategic management process.

A company firm's internal and exterior environments should both be taken into account during scanning. They can define and analyze present environmental data and forecast future changes with the aid of scanning. The highest levels of management may quickly identify changes occurring in the outside world through sources like their own experiences, journals, reports, professional meetings and conferences, coworkers, and employees. On the other hand, reports, committee meetings, memoranda, subordinate managers, employees, and outsiders can all be used to observe changes in the firm's internal environment. Following receipt of all relevant information regarding environmental changes, top management started evaluating, correlating, extrapolating, and interpreting the occurrences in order to formulate their corporate strategy.

Scanning the Environment

The following are the terminology used by Ramaswamy and Namakumari (1995) to describe the goal and method of environmental scanning:

Typically, a company gathers all accessible information in an effort to conduct an environmental scan pertaining to its environment. It also analyses, filters, and analyzes the information. It examines factors that have an impact on changes in the socioeconomic environment, emerging business or organizational trends, the market's structure and the nature of market competition, as well as specific competitor programs. It also identifies organizational leaders, profiles each one of them, and determines their strengths and weaknesses. Finally, it plots the likely course of the company's financial performance. Additionally, it assesses the relative cost-effectiveness of the alternative technologies that are offered as well as the potential for substituting items.

In short, a firm conducts environmental scanning and assesses the threats the environment poses to the firm using a macro-environment, market competition, customer product frame. After this, an elaborate environmental scanning may produce scenario predictions such as the most likely and unsettling scenario.

Business organizations must perform an internal audit as part of the strategic planning process. Through the internal scanning activity, the business enterprise attempts to gauge the strength of its competitive position. It examines its deficiencies and takes a shock at the possible competitive advantages.

A continual practice of environmental scanning should be used to ensure an organization's longevity. As a result, since they collectively decide on the design and management of an organization, it is crucial for contemporary managers to conceive the relationship between environmental scanning, communication systems, and organizational structure. The following list includes some of the most prevalent practical issues that arise in organizations;

• Failure of managers to make use of pertinent information that the organization has received but is dispersed.
• The failure of management to gather pertinent data that would benefit others.
• Failure to gather knowledge about the external environment, particularly information having long-term strategic significance.

References

• ddegjust.ac.in/studymaterial/mcom/mc-203.pdf
• de.scribd.com/document/46972704/Chapter-1-3-Strategic-Marketing
• de.scribd.com/document/43631286/Stragetic-Planning
• docs.exdat.com/docs/index-556424.html?page=11