Environmental Scanning - Essay Example

Environmental Scanning Introduction Organisations exist to meet some goals and objectives in accordance to thecharter of the organisations. To be successful, an orgnisation must meet some criteria, which include aligning the organisation's culture to the demand of the business, recruiting the best staff as well as empowering the staff through motivation, and involving the staff in decision-making process. Constantly the organisation is supposed to invest in knowledge management so as to empower its employees. Efforts to improve both internal processes as well as the external process in an organisation should also involve adopting the right technology so as to improve production and service delivery in the organisation. Of all efforts, which are aimed at improving processes in an organisation, it is the alignment of the organisation with its environment that is the single most important to an organisation's success. Therefore, in an effort to align an organisation with its environment, it is very important that an organisation carries out environmental scanning and scenario planning. According to (Saxby, Parker, Nitse, & Dishman, 2002) environmental scanning is quite an involving process, which requires strategic planning, and the involvement of heavy resources to execute. Environmental scanning for any given business involves acquiring and using information surrounding key organizational events, market trends and other important trends as well as external relationships between an organisation and its partners, shareholders, as well as the customers (Aguillar, 1967). Environmental scanning is important in that the knowledge an organisation acquires from carrying out the process enables the organisation to carry out strategic planning especially in regard to how the organisation should respond to future challenges, respond to competitor activity as well as respond to the market environment. This is very important to any organisation considering that for an organisation long term planning is as important as the short term planning. Therefore failing to carry out a thorough environmental scanning is likely to result into loss of business for the company or in some cases losing out on market shares. Environmental scanning is important in that it positions the organisation to foresee future threats; an environmental scanning helps the organisation to identify future opportunities occasioned by political, economical as well as social factors. Unless the organisation is able to identify what the future holds for the company, it is very unlikely that such an organisation would continue satisfying its customers. Lack of proper environmental scanning results into loss of market share something, which can adversely affect organizational expansion and extension plans. Therefore environmental scanning should be carried in such a way so as to enable an organisation to face the future with certainty as well as plan the possible scenarios and course of action incase things do not work according to plan. Environmental scanning involves several steps, which include undirected viewing, conditioned viewing, enacting as well as searching (Kohn, 2005). Environment requires the correct analysis of the industry, which the organisation belongs to. Therefore viewing involves actual observation of the organisation activities, noting any difficult or challenging situations, which seem detrimental to the organizational success. Viewing enables an organisation to take note of environmental factors or issues, which require be looking at and resolved. Viewing is the right step, which results, into identification of environmental issues, which are a threat to the organisation, or on the other hand, viewing generates information or insight into opportunities in the market which if further analysed can present the organisation with greater avenues for growth. Undirected viewing according to (Aguillar, 1967) involves a situation whereby an organisation fails to invest the necessary resources to investigate its environment. This in turn results into the organisation making decisions, which are not based on facts but on the contrary, are based on imagined situations. This is dangerous for the organisation as such an organisation is likely to make poor decisions. Undirected viewing implies that the organisation's environment is unanalysable (Aguillar, 1967) and therefore the organisation opts not to analyse the environment. Undirected viewing is beneficial to small organisations, which lack the resources, which go with real environmental scanning (Aguillar, 1967). Condition viewing according to (Aguillar, 1967) is not large scale viewing even though unlike undirected viewing appreciates the need for the environmental scanning. The fact that in condition viewing, an organisation is aware and willing to engage in collecting information from the environment implies that organisations, which adopt this approach, are more likely to benefit from environmental scanning. Enacting as (Aguillar, 1967) notes, involves acting on the perception that an opportunity exists in the market and instead of involving much resources into environmental scanning, the organisation goes directly for the market in an evidently risk taking move. If successful, an organisation benefits and ends up making profits, catching competitors unaware perhaps gaining a high market share. After several factors have been identified, environmental scanning moves into the next step in which searching is carried out to bring out factorial data on the prevailing situation. Searching involves a number of strategies and depending on the type and size of the organisation, environmental scanning could involve actual research as part of the searching for information. The aim of research is to bring out dependable and reliable information, which the management can rely on to come up with actual scenario cases. Unless the organisation depends on factual information to plan for the future, chances are that the organisation risks falling to benefit form the environmental scanning process. Kourteli (2000) adds that environmental scanning increases the chances of an organisation to respond fast and effectively to change, enables smooth communication process in the organisation, improves employee relations as well as the fact that environmental scanning helps employees to become more focused towards the organizational goals hence improved performance and profitability. Environmental scanning however is faced with difficulties especially in terms of uncertainty, which is difficult to predict correctly no matter the amount of effort invested in the environmental scanning process. The other major shortcoming of environmental scanning arises from the fact that, the reliability of the environmental scanning is largely dependent on the tools and methods applied in the scanning process and therefore the results of the scanning may vary depending on methods used in the scanning. The amount of resources at the disposal of an organisation also determines the effectiveness of the environmental scanning. Therefore the outcome of an environmental scanning is dependent on how much resource an organisation is willing to put into the process (Hodgkinson, & Wright, 2002). Despite the challenges an organisation faces in the process of environmental scanning, the management must always bear in mind that the process is so integral to the success of an organisation that it is unavoidable. Schriefer,(1995) defines scenario planning involves analyzing past mistakes inorder to gauge where the organisation could have made a mistake so as to avoid such mistakes in the future. Like environmental scanning, scenario planning aims at adjusting and preparing for change, as well as positioning for the future. Scenario is a thought provoking strategy which calls for the management to prepare and foresee future trends, put in place appropriate measures to deal with such uncertain failures as well as set aside the necessary contingency plans for the eventualities. Lozada, & Calantone, (1996) notes that, scenario planning requires managers to prepare for both the worst and best future scenarios as preparing only for likeable or pleasant future trends is tantamount to wishful thinking and Incase such future situations result in unlikable scenarios the organisation risks being disoriented. Therefore scenario planning involves inventing and brainstorming several different scenarios the organisation is likely to encounter in future (Lozada, & Calantone, 1996). Scenario planning is basically concerned about future planning but with more concerted planning than environmental scanning. Scenario planning enables managers and the organisation at large to respond to the environment by taking into consideration all possible scenarios (uncertain) an organisation is likely to be faced with in future. Scenario planning results into a realistic way of looking into things considering that the quality of decisions highly depends on the clarity of the scenario for which the planning is being done. Therefore scenario planning enables an organisation to put in place emergency funds to deal with foreseeable and unforeseeable scenarios. Scenario planning ensures that an organisation obtains time value for its investments by prioritising resources inorder of the present opportunities (Schriefer, 1995). Scenario planning therefore incorporates management tools such as SWOT analysis, PRESTCOM analysis, Beyond Budgeting Management Model as well as the use of Balanced Scorecard (Schriefer, 1995). Scenario planning calls for clear understanding of events, industry activity, business risks, as well as barriers originating from social, cultural, technological, as well as political environment. Good understandings of external and internal factors which can influence outcome of the organisation's activities are likely to influence the scenario planning efforts of an organisation. Scenario planning therefore calls for gathering of relevant information, which informs the possible scenarios an organisation anticipates. Scenario planning also requires the managers to diversify their thoughts and imagine wide perspectives and spectrums, which covers all possible and seemingly impossible scenarios. Finally scenario planning calls for the anticipation of uncertainties which are beyond the control of the organisation but if they occur can adversely affect business and if not well planned for can even ground the organisation or atleast result into unforetold losses. Finally scenario planning calls for an exploratory approach in which the management explores all important avenues for surprises and design scenarios based on such unexpected scenarios. This guarantees the organisation of surviving in unfriendly organisation environment as long as the managers know which indicators to look for and which scenarios result from which indicators. Conclusion Inorder to be responsive to the environment an organisation must engage environmental scanning and scenario planning so as to respond to volatile and complex environment. Based on evidence of increased performance for those organisations which utilize environment scanning and scenario planning, it is imperative for organisations to engage the necessary resources to execute both strategies for successful market penetration and sustenance of market control. Environmental scanning will assist an organisation to remain steadfast in the face of threats while at the same time enjoying competitive advantage over other competitors. Reference Aguillar, F. (1967). Scanning the Business Environment. New York, NY: Macmillan Co. pg.24-65. Kohn K (2005) Idea generation in new product development through business environmental scanning: the case of Xcar Marketing Intelligence and Planning Vol 23 No 7 pp688-704 Hodgkinson, G and Wright, G. (2002) Confronting Strategic Inertia in a top management Team: Learning from Failure Vol. 23/6 pp 949-77 Pages 952-6 Kourteli, L (2000) Scanning the business environment: some conceptual issues. Benchmarking Bradford .Vol 7 Issue 5 pg 406 Lozada, H. and Calantone R. (1996) Scanning behavior and environmental variation in the formulation of strategic responses to change Journal of Managerial Issues Vol 8 (3), pp. 310-325. Saxby, C. Parker, K., Nitse, P. and Dishman, P.(2002) Environmental scanning and organisational culture, Market Intelligence & Planning 20 (1), pp. 28-34. Schriefer, A. 1995. Getting the most out of scenarios: Advice from the experts planning review Dayton Vol 23 Issue 5 pg 33-6 NAIROBI MUNICIPAL COUNCIL NBNHFNHH HHBHRHRG OF KHNFHGGH HNFFH RN Read More