Environmental Scanning Is An Important Management Tool For Strategic Decision Making

Environmental Scanning Is An Important Management Tool For Strategic Decision Making

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Haase and Franco define environmental scanning as a methodology that deals strategically with issues from outside the firm (2011). Although external issues may be difficult to observe or diagnose, they cannot be ignored. Therefore, environmental scanning is an important management tool that uses outside information for strategic decision-making. Recognizing external forces allows an organization to quickly adjust its resources. Companies that do not perform environmental scanning expose themselves to unforeseen threats and fail to take advantage of temporal opportunities. In fact, Haase and Franco note that industry literature shows a strong correlation between organizational performance and the use of environmental scanning.
Organizations wishing to utilize environmental scanning have several methods to choose from, often with slight variations differentiating them. Methods include SWOT, PEST, PESTLE, QUEST, TOWS matrix, Industry Analysis, and Competitor Analysis. The most commonly known environmental scan, SWOT, builds a quadrant listing the Strengths, Weaknesses, Opportunities, and Threats that exist in the business environment (Brooks, Heffner, and Henderson, 2014). Perhaps, the simplest way to conduct environmental scanning according to Babatunde and Adebisi is through PEST Analysis (2012). PEST is the acronym used for describing the Political, Economical, Social-Cultural, and Technological factors that affect the organization. With a slight differentiation, this analysis incorporates legal (L) and environmental (E) factors to become the PESTLE model (Vascarelli, 2014).
Haase et al report that regardless of organizational size, "the three most frequently employed sources for a SWOT analysis are 'customers and suppliers ...

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...se traditional models are static in nature, which deals only with the internal and external environment of an organization. The SAP-LAP model gives better insights about the status of the case problem, expectations from that case problem, and how to change those expectations into reality.
According to Ventana Research, nearly a third of organizations queried reported that the results of such research could be transformative (2012). Ventana also reports that these organizations plan to invest in predictive analytics across all business areas with expectations of increased profitability and new revenue streams. Despite issues, such as those in the facility management case study (perhaps due to the current early stage of predictive analytics for environmental scanning), firms have high hopes that future applications will have a positive impact on their organizations.

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