Environmental Scanning: Generate Successful Business Strategies

The five types of environmental scanning 

As mentioned previously there are various types, or modes, of environmental scanning, that can be conducted internally and/or externally. Today, many companies conduct a variety of environmental scans, both internally and externally. This is primarily due to the increasing competitiveness in business landscapes and the increasing amount of data, that can generate thoughtful insights, being created daily. Likewise, the five major modes of scanning include: economic, technological, legal, ecological, and sociological. 

1. Economic scanning involves evaluating how consumers are spending their money, which industries are outperforming others, and the financial health of various markets due to economic factors.

2. Technological scanning refers to the evaluation and tracking of new technologies, updated technologies, and consumer & business trends within tech. 

3. Legal scanning involves monitoring legislative changes and their overall impact on business rules and regulations, consumer activities, and public health and safety. 

4. Ecological scanning considers climates, natural disasters, and green issues as a whole.  

5. Sociological scanning involves deepening one’s understanding of current social movements, political climates (not related to legislation), and cultural impacts of business decisions. 

Internal vs. external environmental scanning

In order to conduct a thorough environmental scan, companies must take a look at both internal and external factors. Likewise, it is important that companies regularly gather, collect, and analyze both internal data (possibly from a CRM or from HR) as well as external data from third-party data providers. Let’s take a look at some of the internal and external factors (similar to the above-mentioned scanning types) that companies often examine when performing an environmental scan. 

Internal factors 

• Company’s organizational structure
• Business strategies, marketing strategies, etc. 
• Culture and workplace environment (including employee retention, turnover, etc.) 
• Overall company-wide leadership 

External factors 

• Economic conditions
• New technologies 
• Competitors’ performance 
• Global events (i.e. COVID-19)
• Political and legislative changes
• Workforce trends 
• Climate, natural disasters, etc. 
• Cultural trends (global and domestic)

The environmental scanning process

As one can see, the environmental scanning process can require vast amounts of data, resources, processing, and analysis. According to research conducted by the University of Toronto’s Information Studies Program, the environmental scanning process includes four major checkpoints: searching, enacting, conditioned viewing, and undirected viewing. 

• Searching relates to the perception and initiation of a necessary environmental scan. During this process, a company or organization will aim to collect as much data as possible to create an accurate business landscape. 
• Enacting relates to the initiation of an environmental scan without the necessity of one. For instance, if a company recognizes they don’t have the resources to conduct an accurate scan but proceed to do so regardless.
• Conditioned viewing pertains to companies that recognize the need for a scan, but are passive about the process and, in turn, don’t generate useful insights. 
• Undirected viewing is similar to enacting, however, the company or organization realizes there is not a need or they don’t have the ability to conduct a scan, so a scan does not take place. 

Benefits of utilizing environmental scanning

Environmental scanning provides companies with various benefits, beyond the above-mentioned advantages, such as strategic planning and overall business landscape research. Some additional benefits of environmental scanning include:

• Improves company-wide organizational strategies 
• Enhances market adaptability and boosts performance
• Helps generate unique proactive marketing and sales strategies 
• Benefits risk mitigation best practices and overall threat management

Wrapping up

In all, environmental scanning is a critical component of developing and implementing a successful business strategy. With the rise of public web data and an increasingly digital landscape, environmental scanning will continue to utilize non-traditional data sources, and businesses will rely on such indicators to develop strategies that keep them ahead of their competitors.