Professional Documents
Culture Documents
Objectives
of
Environment
Scanning/ Analysis:
1.To
Understand
Current
and
probable Change In environment: it
is importance that one must be aware
of existing environment and changes in
various factors of environment likechanges in economic environment,
technological environment, political
environment, global environment, etc.
Other Objectives:
1. To identify the threats and opportunities
of environment.
2. To identify the strengths and weakness
of the business.
3. To diversify the business in new areas
and to keep the business dynamic.
4. To forsee the impact of various helps the
organization of business environment.
d) Institutional
publications:
e) International
publication:
International
institutions
like
World
Bank,
International
monetary
fund,
World
trade
organization. United Nations Conference on trade
and Development (UNCTAD), United Nations
organization (UNO) etc., conduct surveys and
publish their reports. Some of the publications are:
1. World Development Reports
2. Human Development Reports
3. UNCTAD handbook of Statistic
4. World Trade Report
5. World Investment Report
Monitoring,
scanning and forecasting are not ends in
themselves. They simply provide information
regarding current business environment and future
business environment. But in assessment, we
identify and evaluate as to how these
environmental changes will affect our business so
that appropriate counter strategies can be made
well in time. Assessment provides us answer to the
key issues presented by the environment and their
impact on business.
scanning
refer
to
methods
of
monitoring various sources of relevant
information, searching the required
information and making forecasts on
the basis of information so collected.
Various
methods/techniques
of
environmental scanning are discussed
below;
In this
method, business forecast is based on the
opinion of outside experts. Opinions of
outside experts or specialists form the basis
of this method. These experts have best
knowledge about the market conditions,
tastes and preferences of target customers,
level of competition, governments policies,
political conditions etc. in this method also;
panel of outside experts is made.
3. Delphi
Method:
Delphi method of
forecasting is an extension of experts opinion
method. This method is used to consolidate the
different expert opinions so as to reach a common
estimate. This method involves no panel formation.
In this method, consensus of different experts is
reached without direct interaction among them. In
this method, opinion of first expert is provided to
second expert and second expert is asked to form
his opinion on the basis of his knowledge and
considering opinion of the first expert.
5.
The
assumption of this method is that past events
will have their impact on future. In his
method, results of immediate previous years
or average of past few years are taken as
base. Estimates made using this method are
more reliable and are free from guesswork.
But if there are major changes in components
of business environment, then forecasts of
this method may not prove useful.
Past
Projection
Method:
6.
Y
Y
X
a
= a + bX, where
= Dependent Variable
= Independent variable
= value of dependent variable on the
basis of given change in
Dependent.
b = Rate of change is dependent
variable on the basic of given
change in dependent variable.
In this
method, simple and multiple
regression equations are used
to estimate the value of
dependent variable on the basiS
of given value of independent
variable /variables.
b)
Regression
Analysis:
7. Scenario
Development
Method:
Scenario development method is a popular
method of forecasting when it is possible to
make precise forecast of future. It is used for
scanning complex environmental events.
While analyzing socio-cultural and political
environment, this method is much used. In
this method, different alternative scenarios
are developed. Generally, three possible
alternative scenarios are developed:
Other Techniques:
1. SWOT Analysis: SWOT analysis is
an analysis undertaken by business firms to
understand their external and internal
environment. The terms SWOT consist of
four words.
S = Strengths
W = Weakness
O = Opportunities
T = Threats
1. Personal
Strategist:
Ability
of
based
on
various
inputs,
while
environmental analysis is only one of these
inputs. Hence it is not sufficient guarantor of
organizational effectiveness.
3. Inaccurate
Data:
The
result
of
environmental analysis will be reliable only when
the data used in forecasting is correct. But it is
quite possible that data used in forecasting is
inaccurate. It may reduce the effectiveness of
environmental analysis.
Strengths
and
Weakness
of an
organization
are
related
to
internal
environment. Strengths and weakness can
be in the form of :
Technological Capabilities
Human resources
Production Facilities
Financial Resources
Marketing Capabilities
2. Weakness:
Opportunities:
The availability of
opportunities is a favourable condition in the
organizations environment. If a company has
enough strength to avail the opportunities. It can
generate extra profits. For example, government
has made it mandatory for two-wheelers driver
to wear helmet while driving the vehicle. This
has created opportunities for helmet industry.
Similarly, reduction in custom duty and excise
duty by government on telecommunication
products and electronic products has lead to
increase in the demand for these products.
3.
4. Threat:
It is unfavourable conditions in the
organizations environment. It creates a risk for the
organization. Threat can be in the form of growing
competition, change in fashion, unfavourable changes
in government policy, raw material shortages etc. For
example, maruti-Suzukis swift and wagon R cars are
facing threat in the form of increased competition from
Hyundais i-10, i-20, Ford figo, volkswagen polo, Toyota
Etios, Chevrolet beat, Tatas Indica etc. Similarly entry of
Reliance and Tata in telecommunication sector has
posed threat to existing companies. Honda Activa
Scooter has captured the market share of kinetic
scooter. Liberal import of chines toys is posing threat to
Indian toy industry.
To
ensure
optimum
utilization of resources: The study
2.
To
Analysis
competitors
strategies and formulate counter
measures: By environmental study,
we come to know about the strategies
of competitors and we can formulate
effective counter-plans to face them.
These counter plans will help the
business enterprise in protecting and
increasing its market share.
3.
4.
To keep Business dynamic and Innovative:
Awareness of environmental changes makes the
business managers more alert and dynamic. They
can expand their business as and when any
favourable change is taking place in the market; and
if any unfavourable change is taking place in the
market, then they can prepare themselves for facing
these unfavourable changes with well planned
strategies.