BUSINESS ENVIRONMENT PRESENTATION

Presented by: VIDYA.V

Roll No: 83

S1 MBA

ENVIRONMENTAL SCANNING

MEANING

The process by which organizations monitors their environment to identify opportunities and threats affecting their business, is known as environmental scanning.

PURPOSE

 The basic purpose of environmental scanning is to help management determine the future direction of the

organization.

Factors affecting environmental scanning

EVENTS TRENDS ISSUES EXPECTATIONS

EVENTS

Important and specific occurrences that taking place in a certain sector . Past events of business environment is the important factor of business environment.

TRENDS

The general tendencies of courses of action along which these events take place. Not to just see the past events are defective but to establish the trends on the basis of events is also very important factor of business environment scanning.

ISSUES

The current concerns that arise in response to events and trends. As a businessman, have to scan both cold and burning issues on daily basis.

EXPECTATIONS

The demand made by interested groups in the light of their concern for issues.

Three approaches to scanning

Systematic : Information related to markets & customers , changes in legislation &regulations that have a direct impact on organization’s activities that could be collected continuously to monitor changes.

Ad-hoc: Conduction of special surveys & studies to deal with specific environmental issues.

Processed form: information available from different sources both internal & external of the organization in processed form.

Environmental scanning

External analysis Internal analysis

Macro environment Micro environment

PEST analysis Five force analysis

A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:

PoliticalEconomicSocialTechnological

The acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macro environmental factors.

Political Factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate

Economic Factors affect the purchasing power of potential customers and the firm‘s cost of capital.

Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets cost of capital.

Technological Factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions.

A scan of the external micro-environment in which the firm operates can be expressed in terms of five force analysis.

FIVE FORCE ANALYSIS

Threat Of New Entrants Threat Of Substitutes Bargaining Power Of Buyers Bargaining Power Of Suppliers Rivalry Among Existing Firms

CONCLUSION

Environmental scanning is one essential component of the global environmental analysis. Environmental scanning can be defined as ‘the study and interpretation of the political, economic, social and technological events and trends which influence a business, an industry or even a total market’.