What is the purpose of environmental scanning How often shou

What is the purpose of environmental scanning? How often should it be done? Provide an example where a known company may have failed to understand their marketing environment, and the subsequent result.

Solution

Environmental scanning refers to the process of monitoring the relevant environment for an organization to identify opportunities and threats that affect the business in order to make strategic decisions. An organization should analyze the relevant trends (general tendencies in the market and competition), events (specific occurrences), issues (current concerns against the trends and events), and expectations (of the stakeholders) from the environment under the process of environmental scanning.

There is only one unique purpose of environmental scanning - to find the influence of the environmental factors that will affect the organizational strategic decision making in the future. Anything else such as political maneuvering of strategists or meeting functional goals should not be the purpose of environmental scanning.

There are two approaches to environmental scanning. Few companies perform it on a continuous basis i.e. collect information from the environment and analyze then as a systematic process. In such cases, the strategic decisions revolve around the changes in the environment. Some others take an Ad-hoc approach where they conduct the information collection and analysis activity after a certain period of time when they feel that there could be a substantial change in the environment. Within these two extremes, organizations keep their frequencies of scanning based on their own capability to strategy formulation and the nature of the industry. For very dynamic industries, it is recommended that the environmental scanning may be performed once a quarter.

Consider the example of Nokia. It was the number one hardware manufacturer in the World even ten years ago and now strives to exist in the mobile phone marketplace. This has happened because it has failed to assess the changes happened in the environment, The expectation of the market shifted from hardware or software to mobility as a package for which the company was not ready to adapt. Nowadays it is just prepared to compete with its new versions of smartphones while others like Apple and Samsung have already captured the market.