Environmental scanning techniques - Business Environment | Business Environment - B Com PDF Download

Environmental scanning is a technique of study of the general environment done to identify the trend of the environment and organize the organization accordingly. There are different techniques or methods of environmental scanning. It normally reveals equivocal, ambiguous, incomplete, unfinished data and information. The scanning system should be aligned with the context of an organization. Hence, a scanning system plotted for a volatile environment may be inappropriate for a stable and fixed environment. Many organizations even use other methods i.e. special software and internet for environmental scanning.

They are mentioned below:

Executive opinion method:

It is also known as executive judgment method. In these environmental scanning, it is forecasted on the basis of opinion, conceitedness and views of top executives. A panel is formed consisting of these executives.

Expert opinion method:

In these environment forecasting is based on an opinion of outside experts, enthusiast or specialist. The experts have much more well knowledge about market conditions and customer taste and preferences. Although this method is similar to executive judgment method. However, it requires external experts.

Delphi method:

This method is the systemic extension of expert opinion method varying a stage, develop a new forecasting method based on the results of questionnaires and feedback sent to a panel of experts. It involves forming a panel of experts and questioning each member of the panel where each of the members is independently questioned about the future environmental trend. After that, the responses and summarized are returned to the members for assessment. This process continues till the acceptable consensus is obtained. Several rounds of questionnaires are sent out, and the anonymous responses are clustered and shared with the group after each round. The specialists are allowed to modify and improve their answers in subsequent rounds. Since multiple rounds of questions are asked and the panel is told what the group thinks as a whole, the Delphi method seeks to reach the appropriate and correct response through consensus.

Extrapolating method:

Under this technique, the past information is used to assume, predict and explore the future as well as to function from the past. There are different methods used to extrapolate the future, they are: time series, trend analysis, and regression analysis.

Historical analogy:

In this method, the environmental trends are analyzed with the help of other trends which are parallel to historical trend when the past data cannot be used effectively. This qualitative tool is a method for collecting sufficient information and evaluating the effectiveness of potential adaptation strategies from the other trend by comparing observed. These compared situations and conditions that can be generally shared for more important characteristics such as time scale, severity, reversibility, significant influence sector, or exaggerating factors and find out how well accurate and actual adaptation response worked out .

This method has not seen extensive use recently in these days but also it is extremely useful during the initial survey stages of evaluating adaptation strategies to avoid duplicating research or to narrow the list of feasible, workable, possible and practicable options, and is generally used in union with a quantitative evaluation of adaptation options. This approach does not provide a method to weigh the trade-offs among different adaptation and adjustment choices but instead provides insight into how the adaptation process may work. Also, an example of adaptation in one place at a specific time is not always suitable for a future adaptation at a different place.

Intuitive reasoning:

Under this method, rational, logically sound, absurd and unbiased intuition is used for environmental scanning by the scanner. Environmental dynamics are guessed by the individual judgment that requires free thinking not constrained by past experience or personal biases. Reliability of this method is questionable. However, the validity and trustworthy of such judgments cannot be evaluated. Intuitive decision making is far more than using common sense because it involves additional sensors as a gut feeling, sixth sense, inherent impulse, inner sense, instinct, inner voice, spiritual guide, etc. Many pages on the site are vowed to encourage and to make the process of receiving information instinctively a more aware one to perceive and get alerted of the information from outside. People who can't accept the existence of such sensors may instead call it tapping into "collective intelligence" or "collective unconscious".

Scenario building:

Scenario building is a method that aids decision-makers by providing a context for assessing, planning and programming, lowering the level of uncertainty and raising the level of knowledge in relation to the consequences of actions which have been taken or are going to be taken, in the present. Scenarios are the composite pictures of possible future. They are built on the basis of time ordered sequence of events that have logical and reasonable cause and effect interpersonal relationship with each other resulting forecast based on good interrelationships among the events. Scenarios are built to address future contingencies. The prime aim of scenarios and scenario building is to enable decision-makers to detect and explore all, or as many as possible, alternative futures so as to clarify present actions and subsequent consequences. They should, thus, be prevented from making strategic decisions before they have done some strategic thinking!

Cross-impact matrix:

Under this method, environmental forecasts through various methods combined composed and coordinated and consistent description of further future. Cross-impact matrix is used to search necessary interactions among them, to determine the internal consistency of the forecasts and to find out potentialities impact in each of them. More recently, the cross-impact analysis was used on a stand-alone basis or in combination with other techniques to answer a number of research question on different subjects such as the future of a specific industrial sector, world geopolitical evolution, the future of collective activities and jobs.

Network method

In this networking method, contingency trees and relevance trees are most popular. A contingency tree is a pictorial display of logical relationships at which several alternatives outcomes are possible among environmental trends. A relevance tree is a logical network assigning a degree of significance importance to various environmental trends with reference to an outcome similar to a contingency tree. The network analysis methods are used in project management where the elements are key activities of the project in the mutual time relation focus on calculating critical path optimizing between the elements.

Importance of Environmental Scanning:

Signals threats: 
It provides an early sign of threats or imminent danger, which can be defused or minimized if recognized well in advance at the initial phase.

Customer needs:

It signals an organization to the changing needs, preferences, tastes and requirements of the customers.

Capitalize opportunities:

It helps an organization capitalize opportunities earlier than the competitors.

Qualitative information:

It provides a base of objective and qualitative information about the environment that can be utilized for strategic management.

Intellectual stimulation:

It provides cognitive stimulation to managers in their decision making.

It improves the image and reputation of the organization as being sensitive and responsive to its environment.