Using Environmental Scanning by Business Managers - Coursework Example

Environmental Scanning Your name Grade Course Tutor’s Name Date Owing to the inevitable paradigm shift that rocks the contemporary business arena, Kroon (1995) proposes that a study and interpretation of the political, economic social and technological events and trends which intrigue the business world has to be carried out, an exercise that he refers to as environmental scanning. However, he says, one has to be careful not to confuse issues with trends; therefore, a systematic fine tooth comb approach is most desired. For instance, for developing countries that experience technological changes regularly, managers have to be at breast by always reviewing the business niche. This way, the main objective of setting up of firms is achieved. This paper will attempt to explore this notion and examine how the tool can be used by business managers to improve organizational planning and performance. It will also delve into factors that undermine its value. Environmental scanning, a business gem that most managers should embrace, works in a pretty simple way. The analysis cannot be possible without looking at Okumus (2004) who adds a forecast dimension to Kroon’s definition. This makes the description wholesome because the future is the main focus of a business undertaking. To unwrap environmental scanning in terms of its importance, Costa, Wu and Teare (2008) assert that, one needs to look at its potential outcomes: identification of events and trends in the external environment and the possible relationships between them. They contend that even though environment scanning is a well established activity with well defined elements, it is underutilized by managers. They further say that different outcomes are realized depending on the points of departure of managers: some focus on the information gathering activities by top level executives while others pay attention to analytical techniques and formal strategic planning systems. Whichever way, a study carried out by Subramanian (1994) in hospitals in American Hospital Association points that the more advanced the techniques of scanning, the better the performance. This shows that an organization has to be serious in not only looking for but also looking at the information so gathered. Do all these efforts improve the organizational planning and performance? Research carried out by West (1988) in the relationship of organizational strategy and environmental scanning to performance in the US foodservice industry showed that this tool had a significant impact on sales and assets returns, a fact that braces the importance of embracing the tool. The implication of this is that, the firm’s commitment in research and the resources dedicated towards this have a big impact on the firm’s performance. At this point, we should also note, albeit against the grain, that though the main motive of a business establishment is profit making, other things like employee participation in decision making and response to transitional beckons also feature. This means that environmental scanning also has a bearing in this, in addition to the economic or financial position of the company (Murphy 1987). All these considerations bring forth the classic tool of strengths, weaknesses, opportunities and threats analysis in the business field. The scan, sometimes called browse, can manage all these. In an environmental scan, both external and internal environments have to be considered. Another important thing to note as Roberts and Clarke (1989) assert is that as well as the information analysis and processing, information collection has to be considered, a fact that is ignored by many with the assumption that information gathering does not need any specialized skill. Just like any science that needs an empirical twist, information collection is as important. There are many ways of conducting an environmental scan and many a business researcher have delved into this issue, coming up with a number of solutions that are going to be integrated in this paper. Choo (1998) observes that information gathered from environmental scanning can be of great value in driving the critical strategic planning process especially in developing countries. This information on external environmental factors helps the entrepreneur or manager to utilize available resources before the competitors, therefore remaining relevant. For instance, fast food joints may discover a change in customer demands for their products say indigenous delicacies. Because of the availability of raw materials locally, they can seize the chance and get more customers. This way in the long term, the firms stand a better chance to accrue returns as opposed to their competitors who probably did not their assignment in researching on customer trends. This is undoubtedly made possible by results of environmental scanning. However, the managers should tread carefully to avoid the inconveniences of misinterpreting the information they so gather. Another aspect that is deemed important is that of customer demands and needs. This affects fashion as an inevitable twist that rocks the contemporary business world. Research on the changes in demands of customers and their preferences may give a business establishment an edge as compared to their competitors (Boone and Kurtz, 2011). For instance, the introduction of strapless brassiere by Wonderbra brought a paradigm shift in the lingerie scene whereby there was unprecedented demand for the bras. Because Wonderbra had researched on the customer preferences, they benefitted by having an edge over the other competitors. This also led to the introduction of push up bra that hit the market some time later. However it was because of the product differentiation that they managed to score an all time high in their market niche. This does not mean that the bra design was formerly non existent. It only means that the company could actually rise to the occasion of their customer base. Because of this development, Wonderbra now boasts the highest customer base in that piece of lingerie. That makes the long term benefit from market research. Another example that emanates from research on customer demands is that of the effects of climate change. A well established company that has researched on the changes in climate can prescribe the best crop planting materials in different conditions. When farmers, for instance in tropical Africa discover that a certain variety of seeds give a better yield than others, it is possible for their demand towards that direction. When demand for that increases, the sales will definitely increase, leading to an increase in returns for the company. The company therefore develops a better opportunity than other companies. All this happens because of making the right decisions on the information got from the research. Therefore the final gain or effect is a function of the way one looks for a most importantly at the information (Roberts and Clarke 1998). Customers, the main focus for establishment of firms, are therefore an important consideration. Analysis of the future events, a process necessitated by customer satisfaction need, is made possible by considering the results and insights obtained from environmental scanning. For instance, when there is a forecast demand for a certain commodity due to environmental, climatic, natural disaster or season, a company may invest in acquiring raw materials for the commodity or the needs to invest in it. A case in point, here, is when a real estate company seizes an opportunity to invest in a certain area because of future projections. For instance, a company may consider putting up a hostel or residential area or buying a plot where an institution of higher learning is expected to be built. The institution will definitely create demand for accommodation which will in turn bring returns to the company that invests in that market niche. All this is made possible by the research that is conducted through environment scanning. Rocking the environmental scanning value boat, though, are a few factors that are to be discussed in this paper. First of all, as Choo (1998) puts it, the managerial body has to get involved in the process by designing a good implementation formula. The company outfit has to be moulded into taking the changes as desired by the research outcomes. The final decision of the manager will have a bearing on how the company will fair. For instance, if the decision is to procure raw materials for production of a certain commodity, the choice of the material matters. If, by any chance, a wrong choice of material is made, the whole process will backfire. On the other hand, if the right choice is made, the journey to prosperity begins. In addition to this undermining factor, the time factor also comes to frame. For instance, if the decision takes too long to implement, the firm might be time barred and therefore lead to failure in the business. According to Okumus (2004), time is of great essence just like the two processes of looking at the future are. The difference in time, therefore, between the time of getting the information and acting upon it should be watched to avoid tampering with the process. This calls for dedicated managers who have the interest of the company at heart as opposed to those who don’t care what happens to the company. Another undermining factor that comes up, as Kroon (1995) notes, is the involvement of the working staff in the firm. When managers develop a working relationship with their employees and senior staff members, it is easier to implement decisions as opposed to when a cold relationship exists between the two. This becomes unfortunate to the company especially because they will experience diminishing profit margins. The staff therefore has to be motivated. Success of the process of looking for and looking at external information about factors affecting a business undertaking, therefore depends on a myriad of factors that have to be paid attention to. In conclusion, environmental scanning is very important in clinching a business niche in the contemporary arena. List of references Boone, L. E. and Kurtz, D. L., 2011. Contemporary marketing. Mason, OH: South-Western Cengage Learning. Choo, C. W., 1998. The Knowing organization: How organizations use information to construct meaning, create knowledge, and make decisions. New York: Oxford University Press. Kroon, J., 1995. General management. Pretoria: Kagiso Tertiary. Murphy, M. F., 1987. Environmental scanning: a case study in higher education. Ph.D. University of Georgia. Okumus, F., 2004. Potential challenges of employing a formal environmental scanning approach in hospitality organizations. International Journal of Hospitality Management, 23, pp. 123-143. Roberts, N. and Clarke, D., 1989. Organizational information concepts and information management. International Journal of Information Management, 9 (1), pp. 25-34. Subramanian, et al., 1994. The scanning of task environments in hospitals: An empirical study. Journal of Applied Business Research, 10 (4), 104-115. West, J. J. 1988. Strategy, environmental scanning, and their effect upon firm performance: an exploratory study of the food service industry. Ph.D. Virginia Polytechnic Institute and State University. Wu, A, Costa, J. and Teare, R., 1998. Using environmental scanning for business expansion into china and Eastern Europe: the case of transnational hotel companies. International Journal of Contemporary Hospitality Management, 10 (7), pp.257- 263. Read More