For scanning the environment companies often use a number of techniques depending on their specific requirement in terms of quantity relevance, cost etc. The whole exercise is very demanding and involves sifting through a number of sources, carefully to draw a picture of the opportunities and threats present in the micro environment in which a company operates. The following techniques are generally pressed into service while carrying out environmental scanning.
SWOT (acronym for the internal strengths and weaknesses of a firm and the environment opportunities and threats facing that firm) analysis helps an organization match its strengths and weaknesses with opportunities and threats operating in the environment. An appropriate strategy is one that capitalizes on the opportunities by using organizational resources and capabilities to the best advantage and neutralizes the threats by minimizing the adverse influence of weaknesses.
1) Strengths: Internal capabilities of a firm which can be used to gain competitive advantage over its rivals.
2) Weaknesses: Limitations or constraints which tend to decrease the competencies of the firm particularly in comparison to its rivals.
3) Opportunities: Major favorable conditions in a firm’s environment which help a firm strengthen its position.
4) Threats: Major unfavorable conditions in a firm’s environment which may pose a risk of damage to the firm’s position in comparison.
Example: Doordarshan: A SWOT Analysis
1) Its 1000 transmitters cover 90% of the country’s population across 70 million homes against cable and satellite (C&S) tally of 30 million homes.
2) One of the largest and oldest studio setups in India.
3) Owns large physical and intellectual assets (best program in the country are made by D staff moonlighting for private producers).
4) Very strong regional channels.
1) Too much political interference
2) Overstaffing (21,000 employees).
3) Little stability
4) Muddled programming and commercial strategy
5) Low credibility.
1) Cable distribution along with MTNL and Dot
2) Leasing Infrastructure line blocks to other broadcasters (3 hours on DD Metro sold for Rs 120 crore to channel 9 Gold).
3) Digital terrestrial transmission
4) Syndication programming.
1) Producers and advertisers are deserting DD in droves.
2) C&S continues to attract a large portion of advertising and now pay revenues .
Conducting the Audit
While performing a corporate audit to find the strengths and weaknesses of a firm, the analyst can keep the following things in mind (Glueck).
Verbal Information: The analysts can seek information from internal as well as external groups through searching questions. Structured questionnaires, in depth interviews etc would help in gathering the required information from more than one source.
Spying: The spying can take place by contacting competitors, customers, dealers, suppliers, creditors etc. Crucial information could also be gathered by carrying out disguised research through outside consultants.
Company Records: Records offer an excellent source of information about the past performance of a firm and a number of other issues such as employee turnover, industrial relations, climate dear relations etc. Such information however, is difficult to obtain through surveys and perusal observations.
A good and comprehensive corporate audit would follow the above three approaches. In order to run through bundles of information reflecting opinions and reactions from various quarters management must be willing to spend time and energy in good measure.
ETOP is the acronym for environmental threats and opportunity profile. It is nothing but a summarized picture of the environmental factors and likely impact on the organizations ETOP is generally prepared in the following manner.
List Environment Factors:
List the different aspects of the relevant environment. For example, economic environment, may be divided into rate of economic growth, national income , savings, investments, rate of inflation, capital market reforms, fiscal policy, monarchy policy etc.
Source: Strategic Management