2.03 –Environmental Scanning EQ: How can acquiring information help with business decision making?

What is environmental scanning? An analysis and evaluation process that businesses use to understand their current environment The aim is to identify trends, gaps, events, developments, and issues that will impact the businesses.

Why is environmental scanning important to a business? It helps with the identification of a number of broad factors and issues that will have a significant impact on businesses and their plans for the future.

Environmental scanning helps to: Aids in anticipating changes Answers the question, “Where are we now?” Provides a starting point for businesses’ planning of goals, objectives, and actions that answer the question, “Where do we want to be?”

SWOT SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and for identifying both the Opportunities open to you and the Threats you face. The SWOT Analysis is sometimes called Internal-External Analysis Helps you to craft a strategy that distinguishes you from your competitors When carrying out your SWOT Analysis, be realistic and rigorous.

Strengths What advantages does your organization have? What do you do better than anyone else? What unique or lowest-cost resources can you draw upon that others can't? What do people in your market see as your strengths?

Weaknesses What could you improve? What should you avoid? What are people in your market likely to see as weaknesses? What factors cause you to lose sales?

Opportunities What changes in technology and markets on both a broad and narrow scale can you exploit? Are there changes in government policy related to your field? Changes in social patterns, population profiles, lifestyle changes, and so on? What local events can you participate in?

Threats What obstacles do you face? What are your competitors doing? Are quality standards or specifications for your job, products or services changing? Is changing technology threatening your position? Do you have bad debt or cash-flow problems?

Sources of info for SWOT or Porter’s Interviews with business officers, owners, managers National and local newspapers Trade publications Business magazines Websites: Hoover’s, Morningstar, brokerage firms, credible financial sites

Sources of info for SWOT or Porter’s Observations Research findings Input from professional organizations

Inside-Out Analysis An Inside-Out approach seeks to start with internal capabilities and match external opportunities to those capabilities This minimizes capital costs and increases efficiencies.