CHAPTER:-1 INTRODUCTION

Environmental scanning is a process that systematically surveys and interprets relevant data to
identify external opportunities and threats. An organization gathers information about the
external world, its competitors and itself. The company should then respond to the information
gathered by changing its strategies and plans when the need arises.
The environmental scanning process encompasses several steps. The first step is for an employer
to gather information about the world in which it operates, including information about the
economy, government, laws and demographic factors such as population size and distribution.
Next, the organization should focus on its competitors. The company should examine the
research for trends, opportunities and threats that might impact its business.
The next step is to conduct an internal scan of the organization. Examine the companys
strengths and weaknesses. Consider where the company is now and where it plans to be in five or
10 years. Interview or survey leaders of the company
Sometimes an organization also might decide to gather information from community service and
religious groups and interview the leaders of the groups or use surveys. This might help a
company decide, for example, whether it should try to work with the other organizations and
what activities to pursue. The company then might decide to plan joint activities that will meet
the needs of both groups or to encourage employees to get involved in community activities,
such as building a house for Habitat for Humanity or serving food to the homeless at the local
shelter.
When conducting an environmental scan, a variety of methods should be used to collect data,
including publications, focus groups, leaders inside and outside the organization, media, civic
associations and the library. After the data is collected, the final step is to analyze the data and
identify changes that can be made.

Environmental analysis will help the firm to understand what is happening both inside and
outside the organization and to increase the probability that the organisational strategies
developed will appropriately reflect the organizational environment.
Environmental scanning is necessary because there are rapid changes taking place in the
environment that has a great impact on the working of the business firm. Analysis of business
environment helps to identify strength weakness, opportunities and threats. SWOT analysis is
necessary for the survival and growth of every business enterprise.

Environmental scanning is the acquisition and use of information about events, trends, and
relationships in an organization's external environment. It is used to assist management in
planning the organization's future course of action. Organizations scan the environment in order
to understand the external forces of change so that they may develop effective responses which
secure or improve their position in the future, in order to avoid surprises, identify threats and
opportunities, gain competitive advantage, and improve long-term and short-term planning.
Environmental scanning is a method for determining how others perceive a company's policies
and procedures. Environmental scanning includes both looking at information and looking for
information. It could range from a casual conversation at the lunch table or a chance observation
of an angry customer, to a formal market research program or a scenario planning exercise. It
may be conducted once, or on a regular or continuous basis
Environmental scanning is a data collection practice. It is aimed at collecting information about
an environment such as an office or institution that can be used in planning, development, and
ongoing monitoring by managers and supervisors. Once data has been collected with scanning it
can be processed and analyzed to create a brief to be used in decision making.
Some environmental scanning is performed on an ad-hoc basis, as needed. This scanning is done
in response to a specific issue or concern such as the need to plan for a new product launch.
Regular scanning is conducted on a regular basis; an example might be an annual review of a
working environment conducted with surveys, observation, and other study methods. In
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continuous scanning, an environment is constantly being scanned and analyzed. While a

continuous process is time consuming and costly, it allows for rapid adaptations to changing
situations.
One reason to use environmental scanning is in preparation for a major change such as a new
facility, a big shift in policy, or a product launch. Scanning and gathering data before entering the
planning stage is a useful tool to help identify weaknesses, opportunities, threats, and strengths.
These can be built upon in the planning stage to create a strong and effective plan to address
issues identified during environmental scanning. Failure to collect information before starting
plans can result in costly mistakes and missed opportunities

Any organization should constantly perform an environmental scanning to detect emerging

trends and create a set of scenarios (Robbins and DeCenzo. 2008. Fundamentals of
Management). Today`s organizations might use a large of number of resources to conduct
effectiveenvironmental scanning. A fast and recognized way of doing that is competitive
intelligence, which states that most of the competitors related information is available through
public sources of information. Hardcopy and online publications are available, also reports from
government agencies and industry associations. Also, advertisement in newspapers, radio,
television, and social networking. There are also a large number of companies that help you to
search for specific sets of records you can use to scan your environment.
Once the organization has gathered enough information to understand the environment where it
is embedded in, the next step is to identify internal and external factors that impact the
organization. This can be done through a strengths, weaknesses, opportunities, and threats
(SWOT) analysis. Strengths and weaknesses are considered external factors. Strengths are
internal resources or things that the company does well and they might represent unique skills or
actions that can be used to develop the organizations competitive advantage. On the other hand,
weaknesses is the lack of certain resources or the identification of activities or things that the
firm or organization does not do well. For the organization is very important to truly understand
what these internal factors are and how these factors affect the organization.

Looking outside the organization, the organization should be able to identify opportunities that
can exploit to achieve competitiveness and at the same time it is necessary to identify threats that
the organization might face. There are important dynamics that happen outside of the
organization such as changing demographics, regulatory policy, availability of financing, new
competitors, substituted products, etc. that can affect the company in a negative or positive way.
In any case, the organization should be able to develop a SWOT analysis from the environmental
scan and also from internal sources of information. Based on the SWOT analysis the
organization should be able to re-evaluates its mission and vision statements, and strategic
objectives.

CHAPTER:-2NEEDS AND IMPORTANCE

The need and importance of environmental scanning are as follows:
Environmental analysis will help the firm to understand what is happening both inside and
outside the organization and to increase the probability that the organisational strategies
developed will appropriately reflect the organizational environment.
Environmental scanning is necessary because there are rapid changes taking place in the
environment that has a great impact on the working of the business firm. Analysis of business
environment helps to identify strength weakness, opportunities and threats. SWOT analysis is
necessary for the survival and growth of every business enterprise.
The following is the need and importance of environmental scanning:
1. Identification of strength:

Strength of the business firm means capacity of the firm to gain advantage over its competitors.
Analysis of internal business environment helps to identify strength of the firm. After identifying
the strength, the firm must try to consolidate or maximise its strength by further improvement in
its existing plans, policies and resources.
2. Identification of weakness:

Weakness of the firm means limitations of the firm. Monitoring internal environment helps to
identify not only the strength but also the weakness of the firm. A firm may be strong in certain
areas but may be weak in some other areas. For further growth and expansion, the weakness
should be identified so as to correct them as soon as possible.
3. Identification of opportunities:

Environmental analyses helps to identify the opportunities in the market. The firm should make
every possible effort to grab the opportunities as and when they come.

4. Identification of threat:

Business is subject to threat from competitors and various factors. Environmental analyses help
them to identify threat from the external environment. Early identification of threat is always
beneficial as it helps to diffuse off some threat.
5. Optimum use of resources:

Proper environmental assessment helps to make optimum utilisation of scare human, natural and
capital resources. Systematic analyses of business environment helps the firm to reduce wastage
and make optimum use of available resources, without understanding the internal and external
environment resources cannot be used in an effective manner.
6. Survival and growth:

Systematic analyses of business environment help the firm to maximise their strength, minimise
the weakness, grab the opportunities and diffuse threats. This enables the firm to survive and
grow in the competitive business world.
7. To plan long-term business strategy:

A business organisation has short term and long-term objectives. Proper analyses of
environmental factors help the business firm to frame plans and policies that could help in easy
accomplishment of those organisational objectives. Without undertaking environmental
scanning, the firm cannot develop a strategy for business success.
8. Environmental scanning aids decision-making:

Decision-making is a process of selecting the best alternative from among various available
alternatives. An environmental analysis is an extremely important tool in understanding and
decision making in all situation of the business. Success of the firm depends upon the precise
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decision making ability. Study of environmental analyses enables the firm to select the best
option for the success and growth of the firm

CHAPTER:-3 APPROACHES AND TECHNIQUES USED FOR

ENVIRONMENTAL SCANNING
The external environment in which an organization exists consists of a bewildering variety of
factors. These factors are events, trends, issues and expectations of different interested groups.
Events are important and specific occurrences taking place in different environmental sectors.
Trends are the general tendencies or the courses of action along which events take place. Issues
are the current concerns that arise in response to events and trends. Expectations are the demands
made by interested groups in the light of their concern for issues.
By monitoring the environment through environmental scanning, an organization can consider
the impact of the different eve trends, issues and expectations on its strategic management
process. Similarly any organization-facing environment as a complex the scanning is absolutely
essential, and strategists have to deal cautiously with process environmental scanning.
The effort has to be to deal with it is such a manner that unnecessary time and effort is not
expended, while important facts are not ignored. For this to take place, it is important to devise
an approach or a combination of different approaches, to environmental scanning.
Approaches to Environmental Scanning:
The experts have suggested three approaches, which could be adopted for, sort out information
for environmental scanning.
1. Systematic Approach:
Under this approach, information for environmental scanning is collected systematically.
Information related to markets and customers, changes in legislation and regulations that have a
direct impact on an organizations activities, government policy statements pertaining the

organizations business and industry, etc, could be collected continuous updating such
information is necessary not only for strategic management but also for operational activities.
2. Ad hoc Approach:
Using this approach, an organization may conduct special surveys and studies to deal with
specific environmental issues from time to time. Such studies may be conducted, for instance,
when organization has to undertake special projects, evaluate existing strategy or devise new
strategies. Changes and unforeseen developments may be investigated with regard to their
impact on the organization.
3. Processed-form Approach(SWOT):
For adopting this approach, the organization uses information in a processed form available from
different sources both inside and outside the organization. When an organization uses
information supplied by government agencies or private institutions, it uses secondary sources of
data and the information is available in processed form.
Sources of Information:
A company can obtain information from different sources, but it should be ensured that the
information is correct. The correct source should be tapped for specific information for more
accuracy. Information received form secondary sources may sometimes even misguide strategy
managers.
Hence it is important that information should be verified for correctness before it is
processed and decisions are taken based on it.
The various sources from where information can be gathered include:
1. An internal document viz, files, records, management information system, employees,
standards, drawings, charts, etc.

2. Trade directories, journals, magazines, newspapers, books, newsletters, government

publications, annual reports of companies, case studies, etc.
3. Internet, television, radio news etc.
4. External agencies like customers, suppliers, inspection agencies, marketing intermediaries,
dealers, advertisers, associations, unions, government agencies, share holders, competitors, etc.
5. Market research reports, consultants, educational institutions, testing laboratories etc.
6. Spying considered as a powerful way of extracting information from other companies.
It is found that chronological order of information is also quite important for strategy managers.
Usually information received from government agencies is quite complex since processing takes
more time. The information received from competitors is quite expensive but it is usually fresh
and is quite useful.
Techniques Used for Environmental Scanning:
The techniques used for environmental scanning may be either very systematic to intuitive.
Selection of a technique depends on data required, source of data, timelines of information,
relevance, cost of information, quantity, quality and availability of information, etc.
Some of the methods widely used can be categorized as follows: Scenario Writing, Simulation,
Single Variable Extrapolation, Morphological Analysis, Cross Impact Analysis, Field Force
Analysis, Game Theory, etc. The techniques are either statistical or mathematical in nature.
However, judgmental and institutive techniques are also widely used.
The entire process consists of following steps:
1. Major events and trends in environment are studied.
2. A cause and effect relationship established with regard to events and trends for long and short
term. This is done through brain storming in a group.

3. Diagrams showing interrelationships amongst various factors are prepared and an attempt is
made to quantify the results.
4. The study is reviewed by a group of experts who deliberate on each aspect and on the possible
strategies that may be decided.

CHAPTER:-4 FACTORS INFLUENCING ENVIRONMENTAL SCANNING

INDIVIDUAL FACTORS
The individual factors identified as influencing the scanning activity were information
consciousness and exposure to information.

Information consciousness means the attitude towards information-related activities, denoting the
value attributed to information. This category emerged in the course of the analysis process, as a
result of grouping together events, and the concepts describing them, which were judged as
pertaining to the same category of events. Those concepts included the personal sense of
responsibility for environmental scanning and the communication pattern developed by the
individual. All the interviewees agreed about the vital role of information in business. Top
managers of large and medium-size companies operating in different sub-sectors described their
role, as far as environmental scanning is concerned, as a mix of personal monitoring and
dissemination of information among direct collaborators.

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Communication among managers was made up of a mix of oral information and written
information; the nature of this mix and the reasons that determine the choice of either of the
forms of communication was not entirely clarified. However, some interviewees associated the
choice of oral communication with the generic scope of the information or its potential for
starting action.

Exposure to information means the frequency of opportunities of contact with well- informed
people and information-rich contexts. The emergence of this category was based on the analysis
of the information networks developed by managers. All the interviewees played a very similar
role, since they were all managers, either chief executives or entrepreneurs, or functional
directors, mainly marketing and commercial directors. They were therefore in a privileged
position concerning the degree of exposure to information.

Exposure to information is strongly influenced by the 'outwardness' of the organization: some

organizations provide more opportunities of contact with well-informed people or informationrich contexts. It is also influenced by the role played by the individual within the organization:
marketing and commercial directors have a much greater exposure to information than financial
or administrative directors. But exposure to information is also influenced by the information
climate of the organizations, which differ in the range of conditions of access to and use of
information by their staff.

ORGANIZATIONAL FACTORS
The organizational factors identified as influencing the environmental scanning activity were
information climate and outwardness.

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The information climate means the setting of conditions that determine access to and use of
information in an organization. It was assessed through the information infrastructure
implemented, i.e., the processes, technologies and people used in information acquisition and
handling (collecting, organizing and making information available, and disseminating it). But it
was the emergence of evidence relating to the role of organizational culture in shaping the
information infrastructure that led to the creation of the construct "information climate".

Organizational culture emerged as an important factor in the analysis of information issues

within these organizations. The type of information culture that prevails in the pharmaceutical
companies analyzed is a formal information culture, meaning cultures "which exhibit extensive
formalization and systematization of information channels",

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CHAPTER:-5 SWOT ANALYSIS

Examining the strengths, weaknesses, opportunities, and threats (SWOT) of a company is an
integral part of strategic planning for that company. In many respects, the SWOT analysis is a
report card on where the subject company is positioned in the competitive marketplace. Any
attempt to identify the direction a company should take in the future must be grounded in an
honest understanding of where that company is now.
Without assessing each of the key areas of SWOT analysis, no effective strategic plan can be
formulated.

Strategic Planning and SWOT

This strategic planning process includes the following five elements:
1.

Mission and Objectives

2.

Environmental Scanning

3.

Strategy Formulation

4.

Strategy Implementation
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5. Evaluation and Control

SWOT analysis is part of the
environmental scanning step in the
strategic planning
process. Essentially, the
environmental scanning step is
broken down into three specific
activities:
1. A thorough internal analysis of
the firms strengths and
weaknesses.
2. A task environment analysis of
the firms industry that looks at entry barriers, suppliers, customers, substitute products,
and competitors.
3.

An external macro environmental analysis that focuses on opportunities and threats.

SWOT Analysis: Defined

SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project or in a business venture. It involves specifying
the objective of the business venture or project and identifying the internal and external factors
that are favorable and unfavorable to achieve that objective. The technique is credited to Albert
Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from
Fortune 500 companies.
A SWOT Analysis must first start with defining a desired end state or objective. A SWOT
analysis may be incorporated into the strategic planning model. Strategic Planning has been the
subject of much research.

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1.

Strengths: characteristics of the business or team that give it an advantage over others in
the industry.

2.

Weaknesses: are characteristics that place the firm at a disadvantage relative to others.

3.

Opportunities: external chances to make greater sales or profits in the environment.

4.

Threats: external elements in the environment that could cause trouble for the business.

Identification of SWOTs are essential because subsequent steps in the process of planning for
achievement of the selected objective may be derived from the SWOTs. First, the decision
makers have to determine whether the objective is attainable, given the SWOTs. If the objective
is NOT attainable a different objective must be selected and the process repeated. The SWOT
Analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities
and threats. It is particularly helpful in identifying areas for development.
SWOT Analysis Breakdown
Strengths
Strengths must focus upon what the firm can do with its internal resources. Any asset that the
firm owns could certainly be classified as a strength, but the degree of each assets contribution
to the competitive position of the firm may vary greatly. Newer assets such as state-of-the-art
production line machinery would provide greater strengths to the firm than older assets such as
an aging truck fleet. Not all strengths are physical in nature. A strong brand-name presence,
recognized customer service excellence, and/or exclusive access to a strong supply chain
network are all examples of nonphysical asset strengths.
One type of strength that is often overlooked is well-trained and experienced staff. Good
employees can substantially benefit the firm.
Weaknesses

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Weaknesses can include any area in which the company lacks strength. Poor product positioning,
deteriorating physical assets, out-of-date production equipment, and poor customer service all
are among the weaknesses of the firm. High employee turnover that causes the firm to lose
talented people can be a major weakness of the firm. Talent is hard to replace, especially in the
innovative environment of today. Sometimes a strength can be a weakness, such as if the firms
physical plant is state of the art but saddles the firm with a large amount of debt that limits what
the company can invest in to improve earnings.
Opportunities
Opportunities can be subject to interpretation. In general, any changes in the external
environment can be an opportunity to the firm. If competitors are weakened by a poor cash-flow
position, it is an opportunity for the firm to capture market share. Changes in tax structure,
improvements in economic trends, or the passage of favorable laws can all be opportunities of
which the firm should take advantage. Market positioning, new technologies, and international
trade agreements can provide substantial opportunities as well.
Threats
Threats arise from a lack of opportunities or from the strengths of competitors that may place the
firm at an extreme disadvantage. Changes in consumer preferences, new competitor innovations,
restrictive regulations, and unfavorable trade barriers are all examples of threats. Loss of
favorable distribution networks and the restrictions on the firms cash flows can threaten the
firms market position. Changes in the economic climate can also put a substantial strain on the
firm.
Optimizing After SWOT
After completing the SWOT analysis, the firm should try to configure its overall position in the
marketplace by seeking the best combination of strengths and opportunities that can optimize
returns. Not every opportunity can be pursued and every strength is not necessarily an
exploitable advantage to the firm. Choices need to be made by the firm to take complete

16

advantage of its position; likewise, the firm should seek to improve its weaknesses and minimize
its threats.
Internal and External Factors
The aim of any SWOT Analysis is to identify the key internal and external factors that are
important to achieving the objective. These come from within the companys unique value chain.
SWOT Analysis groups key pieces of information into two main categories:
1.

Internal Factors The strengths and weaknesses internal to the organization.

2.

External Factors The opportunities and threats presented by the external environment to
the organization.

The internal factors may be viewed as strengths or weaknesses depending upon their impact on
the organizations objectives. What may represent strengths with respect to one objective may be
weaknesses for another objective. The factors may include all of the 4Ps (product, price, place,
and promotion); as well as personnel, finance, manufacturing capabilities, and so on. The
external factors may include macroeconomic matters, technological change, legislation, and
socio-cultural changes, as well as changes in the marketplace or competitive position. The results
are often presented in the form of a quadrant matrix chart.
SWOT Analysis is just one method of categorization and has its own weaknesses. For example, it
may tend to persuade companies to compile lists rather than think about what is actually
important in achieving objectives. It also presents the resulting lists uncritically and without clear
prioritization so that, for example, weak opportunities may appear to balance strong threats.
It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of
individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that
produces valuable strategies is important. A SWOT item that generates no strategies is not
important.
SMART Marketing Objectives
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All businesses need to set objectives for themselves or for the products or services they are
launching. What does your company, product or service hope to achieve?
Setting objectives are important. It focuses the company on specific aims over a period of time
and can motivate staff to meet the objectives set.
A simple acronym used to set objectives is called SMART objectives.
SMART stands for:
1.

Specific Objectives should specify what they want to achieve.

2.

Measurable You should be able to measure whether you are meeting the objectives or
not.

3.

Achievable (Attainable) Are the objectives you set, achievable and attainable?

4.

Realistic Can you realistically achieve the objectives with the resources you have?

5.

Time (Traceable) When do you want to achieve the set objectives

CHAPTER : -6 ADVANTAGES & DISADVANTAGES OF SWOT ANALYSIS

The small business owner's challenge is to create products and services the customer values and
the means to produce and deliver those products and services in ways that are exceptional
compared to the competition. To address these challenges, a company must define business
objectives and address operational issues based on its current situation and the factors that impact
its financial and operational goals. Such decision-making processes are frequently supported by
structured brainstorming, which, in turn, can be supported by a Strengths, Weaknesses,
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Opportunities and Threats (SWOT) analysis. The advantages of the SWOT methodology, such as
its appropriateness to address a variety of business issues, make it a desirable tool to support
some brainstorming sessions. However, the tool's disadvantages, such as the subjective analysis
of an issue, make it less desirable for others.
The SWOT method is not a process in itself, such as strategic planning, opportunity analysis or
competitive analysis. Instead it's a tool used to structure a particular brainstorming session. As a
result, a problem or process that's addressed using the SWOT tool may itself be thought of in
terms of phases or a life cycle. For example, strategic planning is a process consisting of multiple
steps or phases. However, the SWOT analysis, like a brainstorming session, is simply a tool that
may be used one or more times to gain a collection of ideas regarding a particular issue or
problem. For example, a business determines on each occasion, if a brainstorming session is
appropriate to address a strategic plan or competitive analysis. If so, the business then decides if
it will use the SWOT method or an alternative tool to facilitate the session.
Advantage: Problem Domain
SWOT analysis can be applied to an organization, organizational unit, individual or team. In
addition, the analysis can support a number of project objectives. For example, the SWOT
method can be used to evaluate a product or brand, an acquisition or partnership, or the
outsourcing of a business function. In addition, SWOT analysis can be beneficial in evaluating a
particular supply source, a business process, a product market or the implementation of a
particular technology.
Advantage: Application Neutrality
SWOT analysis is conducted by specifying an objective and conducting a brainstorming session
to identify internal and external factors that are favorable and unfavorable to the objective's
achievement. This approach remains the same whether the analysis is used to support strategic
planning, opportunity analysis, competitive analysis, business development or product
development processes.

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Advantage: Multi-Level Analysis

Valuable information about your objective's chances can be gained by viewing each of the four
elements of the SWOT analysis -- strengths, weaknesses, opportunities and threats -independently or in combination. For example, identified threats in the business environment,
such as new government regulations regarding a product design or the introduction of competing
products, might alert the business owner that a proposed investment in a new manufacturing
production line should be more carefully evaluated. In addition, an awareness of a company
weakness such as a lack of qualified employees might suggest a need to consider outsourcing
particular functions. In turn, opportunities such as the availability of low-interest loans for
startups might encourage the entrepreneur to pursue the development of a new product to meet a
rising customer demand. In contrast, identified strengths, such as extensive experience in an
industry experiencing rapid international growth, might suggest the need to partner with foreign
companies.
Advantage: Data Integration
SWOT analysis requires that quantitative and qualitative information from a number of sources
be combined. Access to a range of data from multiple sources improves enterprise-level planning
and policy-making, enhances decision-making, improves communication and helps to coordinate
operations.
Advantage: Simplicity
SWOT analysis requires neither technical skills nor training. Instead, it can be performed by
anyone with knowledge about the business in question and the industry in which it operates. The
process involves a facilitated brainstorming session during which the four dimensions of the
SWOT analysis are discussed. As a result, individual participants beliefs and judgments are
aggregated into collective judgments endorsed by the group as a whole. In this way, the
knowledge of each individual becomes the knowledge of the group.

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Advantage: Cost
Because SWOT analysis requires neither technical skills nor training, a company can select a
staff member to conduct the analysis rather than hire an external consultant. In addition, SWOT
is a somewhat simple method that can be performed in a fairly short time.
Disadvantage: No Weighting Factors
SWOT analysis leads to four individual lists of strengths, weaknesses, opportunities and threats.
However, the tool provides no mechanism to rank the significance of one factor versus another
within any list. As a result, any one factor's true impact on the objective can't be determined.
Disadvantage: Ambiguity
SWOT analysis creates a one-dimensional model in which each problem attribute is viewed as a
strength, weakness, opportunity or threat. As a result, each attribute is seen to have only one
influence on the problem being analyzed. However, one factor might be both a strength and a
weakness. For example, locating a chain of stores on well-traveled streets that grant easy access
to customers might be reflected in increased sales. However, the costs of operating high-visibility
facilities can make it difficult to compete on price without a large sales volume.
Disadvantage: Subjective Analysis
To significantly impact company performance, business decisions must be based on reliable,
relevant and comparable data. However, SWOT data collection and analysis entail a subjective
process that reflects the bias of the individuals who collect the data and participate in the
brainstorming session. In addition, the data input to the SWOT analysis can become outdated
fairly quickly.

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CHAPTER:-7 DIFFERENCE BETWEEN AN ENVIRONMENTAL

ANALYSIS & A SWOT ANALYSIS

Companies use several types of analyses as barometers of business health. Some reveal how the
company can better utilize cash flow, while others show how the price of inputs may double in
the coming months. A SWOT analysis and an environmental analysis are additional tools used by
organizations. Though both give businesses insight into potential barriers and shortcomings,
these reports differ in subtle ways.

Environmental Analysis
An environmental analysis surveys the business landscape to determine how external variables
will affect its decision-making. Robert Grant, author of the book, Contemporary Strategy
Analysis, categorizes environmental influences as either source or proximity. Grant explains
that sources include political, economic, social and technological factors; these factors form
whats known as a PEST analysis. The business is not always in a position to control these
variables; it can only plan for them and make decisions accordingly. Companies use an
environmental analysis to prepare for a variety of potential scenarios. For instance, an
organization may prepare for a downturn in the economy by drafting several production
schedules that are contingent on different levels of consumer demand.

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SWOT Analysis
A SWOT analysis reviews the businesss strengths, weaknesses, opportunities and threats. As is
the case with an environmental analysis, a SWOT analysis also surveys external circumstances.
However, this type of analysis also takes into consideration internal components. Within the
strengths and weaknesses section of the SWOT analysis, the company assesses factors unique to
the organization. Examples of these components may include the businesss leadership abilities,
patents and intellectual property, technology available within the company and the strength of its
brand name. The company can control these factors, so it attempts to strengthen its best assets
and improve its apparent weaknesses.
Benefits of Environmental Analysis
A PEST analysis prepares the business for handling external factors. Robert Chapman, author of
the book, Simple Tools and Techniques of Enterprise Risk Management, explains a PEST
analysis helps the business be proactive with market trends. Instead of reacting to market forces,
Chapman explains a PEST analysis gives the business the tools to prepare for potential risks. For
instance, this type of analysis may disclose that government legislation will increase the cost of
raw materials by 20 percent. If the business can preempt this as a possibility, it can switch
vendors, stock up on raw materials or find cheaper alternatives. Such preparation ultimately
saves the company money and in turn gives it a competitive advantage.

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Benefits of a SWOT Analysis

A SWOT analysis offers a well-rounded, holistic picture by revealing both internal and external
issues. Though the "opportunities" and "threats" sections of the analysis do not differ much from
a PEST report, the "strengths" and "weaknesses" components highlight the internal issues of the
organization. Carlos Moore advises in his book, Small Business Management, to ask additional
questions about how these strengths, weaknesses, opportunities and threats can help the business
prepare for future events. This turns the SWOT analysis into an insightful tool that allows the
company to capitalize on future possibilities and avoid potential pitfalls.

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CHAPTER:-8 CASE STUDY

The three members of the leadership team at a small marketing consulting firm were interested in
expanding their offerings to their clients. Currently the firm has 20 employees (including the
three members of the leadership team) many of whom are consultants with the balance being
administrative and marketing staff.
The last time the company had done a SWOT analysis was when they were first starting up in
business and were working on their business plan. The SWOT session enabled them to develop
their business plan by having them think through their business goals and objectives for viability
and feasibility. At the time, the three of them, plus a few members of their Advisory Council
participated in the SWOT analysis.
The goal of this SWOT session would be to:

Determine ways to better position the company in marketplace.

Determine new products and services to offer clients to better compete in a crowded
marketplace.

Preparing for the SWOT session

The leadership team wanted to set aside 3 hours for the SWOT session. Given that the business
was small, the leadership team felt that everyone should participate. The following decisions
were made:

All 20 employees would participate in the SWOT session

A Friday morning in mid-summer would be set aside for the session (andas a thank
you for participating employees would be given the balance of the day off to spend
with family and friends)
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The focus of the SWOT session would be toward determining products and services to
offer to clients and that information would be provided to participants beforehand so they
can begin to think about it

A professional facilitator would be brought in to lead the session since this SWOT
exercise was essential to the companys continued growth and success

Additionally, the leadership team was going to provide all participants with a copy of the SWOT
analysis done at the very beginning before the business venture began. While it had a different
purpose, it would be valuable for the SWOT session participants to view it and, from the
leadership perspective, it would be interesting to compare then to now.
The SWOT session
Brainstorming was used during the SWOT session to gather data for the companys strengths,
weaknesses, opportunities and threats. The facilitator led the group starting with strengths and
working through to threats. An hour was allocated for this task.
Each participant spent time writing on sticky notes their thoughts, ideas, opinions, beliefs and
known truths regarding the companys strengths, weaknesses, opportunities and threats. When
done, all of the information was posted on the walls under the appropriate heading (e.g.
Strengths, etc.)
Prioritizing the information
The next hour and a half was spent reviewing the data with an eye toward:

Looking for themes/commonalities combining similar sticky notes under themes (e.g.,
Customer Service)

Prioritizing based on:

o Significant information/data provided by large numbers of participants (e.g,
ineffective use of social media was mentioned 15 times!)
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o What could be quick hits for the company to start to effectively compete against
the competition
o Products and service ideas that can be created within a years time frame
The table below is a small sampling of the data gathered during the brainstorming session. This
particular data is selected as when they prioritized their efforts these were the areas of focus.

STRENGTHS

Long-term

WEAKNESSES

employees

OPPORTUNITIES

No blog on the
website

by the

local

media and

competitors

No global

blogging to

were already

customers

build brand

blogging and

name and gain

utilizing social

new customers

media

The business

Customer

hasnt

retention is

expanded in

high

the last few

business

customers

years and

nationally

wanted social

Well-known

Current

media

Target smaller

consulting and it

No presence at

start-ups who

was difficult to

trade shows or

needed strong

do so when the

Company has

industry

marketing to

company

made a profit

events/

get their

doesnt do

every year in

conferences

business off the

social media

ground

themselves

local area

business

Expand

seems stagnant.

brand in the

A number of

Use social

company

was increasing

Ineffective use

Customers love
the work done

Competition

refer business

of social media

customers to

committed to
the company

Ask current

THREATS

Client base

No new

blood
bringing in

Provide sales
support

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Lots of
individuals and

was growing

fresh ideas

services for

other new small

clients

businesses

Client base not

popping up

Offer

who do

quickly as in

dashboards for

marketing

past

tracking

consulting

growing as

marketing

Based on the information gathered during the brainstorming sessions and what the participants
believed could be accomplished in a one to two year timeframe to have a significant impact on
the business, the following was decided to meet the objectives:

Objective: Better position the company for

Objective: New products and services

success in the marketplace

Develop a blog

Develop and offer dashboards for

customers to manage marketing

Assign responsibilities for social

initiatives

media accounts: LinkedIn, Twitter,

Facebook

Provide services to start-ups who

need a strong marketing initiative

Ask current customers to refer

business

Provide social media services and

support

Expand business nationally

Next steps
The companys next steps were to take the projects they decided to accomplish toward achieving
their goals and:
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Assign responsibility for that project

Develop a project plan including a timeframe and budget needs

Prioritize the projects further

Begin work!

A survey done of all participants after the SWOT session showed that they were excited about
the process and the path they had developed to help meet company goals. By getting all
employees involved, the leadership team showed that they valued all employees and wanted their
contributions to help make the company a success.
Once a month the leadership team would meet with each project lead to check on project status.
It was decided that on an annual basis employees would participate in SWOT sessions to work
on strategy for the upcoming year. As the company grew, employees would have the opportunity
to participate on a rotating basis.

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CHAPTER:-9 CONCLUSION

Companies that use environmental scanning can move quickly when they identify a problem or
an opportunity. This includes everything from a product release by a competitor that might
threaten a company's market share to a security issue in an office. The data gathered in
environmental scanning can be processed to develop an organized report to provide information
to managers and other officers of the company who may be interested. Dispensing the
information effectively is an important part of this practice, as data is useless if it never gets into
the right hands.
Numerous tools can be used for environmental scanning. These include surveying employees to
get information about working conditions, considering a workplace within a larger social and
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economic context, and evaluating company communications to determine what kinds of

messages the company sends to the public. A third party may be called in to objectively evaluate
or a company may scan internally. Using insiders can sometimes result in getting more
information because insiders know where to look, but their bias can also affect the outcome of
the scanning.
Organizational environment consists of both external and internal factors. Environment must be
scanned so as to determine development and forecasts of factors that will influence
organizational success. Environmental scanning refers to possession and utilization of
information about occasions, patterns, trends, and relationships within an organizations internal
and external environment. It helps the managers to decide the future path of the organization.
Scanning must identify the threats and opportunities existing in the environment. While strategy
formulation, an organization must take advantage of the opportunities and minimize the threats.
A threat for one organization may be an opportunity for another.

CHAPTER:-10 BIBLOGRAPHY
http://www.shrm.org/templatestools/hrqa/pages/cms_021670.aspx
http://www.yourarticlelibrary.com/environment/approaches-and-techniques-used-forenvironmental-scanning/23556/
http://smallbusiness.chron.com/advantages-amp-disadvantages-swot-analysis41398.html
http://smallbusiness.chron.com/difference-between-environmental-analysis-swotanalysis-20684.html

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