What do companies across industries have to do today to stay ahead of the competition, attract new customers, retain the existing ones, and stand out from the crowd? Well, apart from using modern technology and conducting huge advertising campaigns, they must be able to adapt to the rapidly changing business realities. That won’t be possible, however, without monitoring and analyzing the changes that are taking place. And this is where environmental scanning comes in. In today’s blog post, we will explain what environmental scanning is and why it is one of the most important strategic management tools for contemporary companies. Read on to find out more.
Environmental scanning in strategic management – table of contents:
What is environmental scanning?
Environmental scanning refers to the process of collecting data about the business environment (e.g., customers, competitors, or market trends) using various technologies and tools. This technique aims to provide information that will let companies make better strategic decisions and adapt to changing market conditions. This, in turn, will help them take advantage of the opportunities that arise and minimize emerging threats, which will contribute to their overall success.
Examples of environmental scanning
The process of environmental scanning depends on a company and the objectives it wants to reach. Different actions will be more important for companies just entering the market than for established organizations that want to launch new products, reach wider audiences, or outrun the competition. Most often, however, the process looks like this:
- Competitor analysis – by keeping track of their competitors (their strategies, products, and marketing campaigns), companies may identify their strengths and weaknesses and then use this knowledge to their benefit.
- Market research – to adapt their offerings to changing customer needs, companies should monitor changes in the market, for example, consumer trends, customer preferences, new technologies, and planned or implemented regulations,
- Macroeconomic analysis – companies must take into account macroeconomic factors such as inflation, interest rates, exchange rate changes, or fiscal policy, as these elements can affect business costs and demand for products or services,
- Trend analysis – observing changing regulations, consumer behavior, or technologies (e.g., sustainable development and CSR) allows companies to grow in new directions.
- Socio-economic analysis – understanding the cultural and social differences between markets can help companies tailor their products and marketing strategies to different customer groups, which is especially important for companies planning to expand overseas.
Benefits of environmental scanning
The information gathered in the process can be used for various purposes, from identifying growth opportunities (new markets, products, audiences, etc.) to conducting risk assessments. However, the greatest benefit of environmental scanning is helping companies develop business strategies tailored to consumer needs and the market, as having up-to-date data about external parties allows them to make more informed decisions. With environmental scanning, organizations can respond flexibly to changing market conditions and maintain business stability.
Undoubtedly, environmental scanning is a useful tool for companies that want to gain a competitive edge in a dynamically changing business environment. However, the process can’t be a one-off thing. It should be regularly repeated to allow companies to identify new opportunities and potential threats. After all, the market has never been as dynamic as it is nowadays. If you stop for a moment, you may fall behind and lose your position in the market. Use it, then, not to let it happen.