The second component of environmental analysis is to develop information about the environment. Information has two primary strategic role - in objective setting and in strategy formulation. As managers scan the environment, they interpret environmental influence in the light of their own perceptions, expectations, and values.
Environmental scanning is the process of gathering information about events and their relationships within an organization's internal and external environments. The basic purpose of environmental scanning is to help management determine the future direction of the organization. The most widely accepted method for categorizing different forms of scanning divides into the following three types:
- Irregular scanning systems: These consist largely of ad hoc environmental studies.
- Regular Scanning systems: These systems revolve around a regular review of the environment or significant environmental components. This review is often made annually.
- Continuous scanning systems: These systems constantly monitor components of the organizational environment.
Forecasting The Environment
Macroenvironmental and industry scanning are only marginally useful if all they do is reveal current conditions. To be truly meaningful, such analyses must forecast future trends and changes.
Environmental forecasting is a technique whereby managers attempt to predict the future characteristics of the organizational environment and hence make decisions today that will help the firm deal with the environment of tomorrow.
Forecasting involves the use of statistical and nonstatistical, or qualitative, techniques. Four techniques can be particularly helpful: time series analysis, judgmental forecasting, multiple scenarios, and the Delphi technique.
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