SECOND UNIT of strategic management

2. ENVIRONMENT SCANNING
* MEANING :
It is a process of gathering information about event and there relationship
with internal and external environment scanning is to find out the future
prospects business organisation.
* DEFINITION :
The process of collecting, evaluating and delivering information for a
strategic purpose is defined as environment scanning.
The process of environment scanning both accurate and personalized
data on the business environment, in which the organisation is operating or
considering entry.

3. COMPONENT OF ENVIRONMENT SCANNING

4. COMPONENT OF ENVIRONMENT SCANNING
• Internal Environmental Component
• External Environmental Component
• Internal Environmental Component : The company that lie with in the organisation
are internal component and changes in these affect the general performance of the
organisation.
For example : HR , Capital Resources and Technological Resources are some of the
internal environmental component.
• External Environmental Component : The component that fall outside the business
organisation are called external environment component. Although, the component lie
outside the organisation, they still affect the organisation activities.
The external environmental component are divided into two parts :
• Micro Environment Component
• Macro Environment Component

5. • Micro Environment Component: It includes competitors, consumers, markets,
suppliers, organisation etc.
• Macro Environment Component: It includes economic, political, legal, socio-culture,
technological demographic factors etc.

6. • Economic Environment
It means all external economic factor that influence buying habits consumers and
businesses and therefore affect the performance of a company.These factors are often
beyond a company control and may be either large scale (macro) and small scale (micro).
• Macro factors :
• Income
• Inflation
• Tax rate
• Currency exchange rate
• Micro factors :
• Size of available market.
• Demand for company product’s and services competition.
• Availability and quality of suppliers.

7. Legal Environment
It is based on a set of conditions and those are social, legal, political,
economical, and institutional comditions. Akl of them based opn two
differentt position and that are internal and external environment .
• Internal Environment :
• It includes manpower, capital, machinery, raw material, and the last but
not least is the management.
• Generally controlled by business internally.
• External Environment :
• These factor are beyond the control of a certain enterprise.
• Govt. Policies, tax, legal factor, polotical factor, social events, economic
function and also geographical factors are main external factor of the
business .

8. Social Environment :
• These factors includes traditional, values, social
trends, level of education the standard of living
etc. All these have a vast impact of the business.
• Impact – more demand during festival provide
opportunity for various business.
• Values – moral principle prevailing in the society
such as freedom of choice in market , social
justice. Equally of opportunity, non –
discriminatory practices etc.

9. Technological Environment
• It consists of scientific improvement and
innovation which provides new ways to producing
goods, rendering services, new methods and
techniques to operate a business.
• It is very important for a firm to understand the
level of scientific achievement of a particular
economy before introducing its products.
• Example : E-commerce has changed the scenario of
doing the business, buying goods and availing
services at the click of a mouse or through mobile.

12. • It helps an organisation analys the impact of environment based on threat
and opportunity.
• Steps involves in the preparation of the ETOP dividing the environment into
different sectors :
• Analysing the impact of each sector on the organisation.
• Sub-dividing each environment factor into sub-factor for a comprehensive
ETO.
• Analysing the impact of each sub-factor on organisation in the firm of a
statement.
• Preparing a summary to show the major factor for the sake of simplicity.
ENVIRONMENTAL THREAT AND OPPORTUNITY PROFILE

13. QUICK ENVIRONMENTAL SCANNINGTECHNIQUES
This technique is design to analyse the environment quickly and inexpensively. So, that
business can focus on critical issue that have to be addressed in a short span.
• QUEST is a systematic as well as intensive process.
• QUEST are four types :
• Discovery
• Practice
• Design
• Reflection.
• The process of environment scanning start with the observation of the organisation
events and trends by strategist.
• After observation important issue that which have may impact the organisation are
considered using organisation appraisal.
• A report is created by making a summary of these issues and their impact.
• In final steps, planners who are responsibility for deciding the feasibility of the proposed
strategy review report.

14. SWOT
• It is an ecronium for strength, weakness, opportunities and threats analysis of the
environment.
• Strength and weakness are considered as internal factor where as opportunities
and threats are considered as external factors.
• These factors determined the course of action to ensure the growth of the
business.
• STRENGTH : Internal attributes and resources that support a successful outcomes.
• WEAKNESS : Internal attributes and resources that work against a successful
outcomes.
• OPPORTUNITIES : External factor that the entity can capitalise on or use to ist
advantages.
• THREATS : External factor that could geoparadize the entity success.

15. ORGANISATIONAL CAPABILITIES
The factors which are strategic strength and weakness in
different functional area with in organisation which are crucial
importance to strategic formulation and implement.
These are divided into six largely accepted and commonly
understood functional areas.
• Financial Capability
• Marketing Capability
• Human Resource Capability
• Operational Capability
• Information Capability
• General Management Capability

17. MARKETING CAPABILITIES
The factor is related price, promotion, product and place and
integrating and systematic aspect.
• Typical strength that support marketing capability are wide
variety of products (PNG and Hindustan Lever).
• Better quality of products (Toyota and sony)
• Sharply focused position ( Amway and tupperware HDFC)
• How pricing to similar product (Walmart)
• Price protection due to govt. policy. (Farm produced global)
• High quality customer service (Fedex)
• Effective distribution ( Bisleri )
• Effective sales promotion (Tata salt and Swaach bharat)
• High profile advertising ( Mercedes , Rolex)
• Favourable company product image (TATA and GE)
• Effective MIS (Coke)

18. OPERATIONAL CAPABILITY
These factors related production system, operation and
control system and related to the research and
development and new product development system typical
strength that supports operation capability are :
• High level of capacity utilisation express.
• Reliable sources of supply effective :Wallmart,Toyota’s
andTata motors.
• High level calibres.
• Technological collaboration with reputed firm with other
companies :Toyota

19. HUMAN RESOURCE MANAGEMENT
HR capability related to personal system
organisational and employee characteristics and
related to industry relation.
Typical strength that support capability are
genuine concern for HRM and development:
• Efficient and effective HR system (Tata steel)
• Organisation perceived as a fair and a model
employee ( infosys)
• High level of organisation loyalty (TCS)
(Foreign banks)

20. INFORMATION CAPABILITY FACTOR
It related to the acquisition and retention of information
retrieval usage transmission and dissemination of information.
Also, the factors related to the integrative systematic and
supportive elements.
Typical strength that support the information.
Marketing capability are ease and convenience of access to
information system and access availability to employee,
customer suppliers etc.
• Widespread usage of computerized information and
operability of high tech equipment.
• Positive attitude sharing and dissimating information.
• Proof information security system top management.
• Understanding of and support to its application.

22. BALANCE SCORE CARD (BSC)
Identifying and improve various problem.
The term BSC is refer to the SM performance
metric used to identify and improve various
internal business function and their resulting
external outcomes.
• Used to measure and provide feedback to
organisation.
• BSC are common among companies and UK,
Japan, and Europe.
• Data collection is crucial to providing
quantitative results as manager executive
gather and interpret information.
• Company personal can use these information
to make better decision for the future of

23. CRITICAL SUCCESS FACTOR ( CSF)
Critical Success Factor also known as key success factor are
condition that a team or organisation must meet for a
company overall business strategy to be successful. For
Example :
• A company strategic goal is to increase market share to
help them reach this goal, they identify increase brand
loyalty as a CSF. CSF‘s are often supported by key
performance indicators(KPI’s) metric that help determine
the success of a project.
• In this example a KPI could be making the brand more
recognisable and gaining new customer through strategic
marketing campaign KPI support CSF.Which in turn support
the company strategic goals.

24. IDENTIFICATION OF CRITICAL SUCCESS FACTOR
There is how to identify critical success factor for your
business.
• INITIATE STRATEGIC PLANNING : Before you
can find your critical success factors, you need a
strategic plan. A strategic plan outlines where your
organisation hopes to go and how it will get there.
The lead strategic planner, be it a project manager or
chief executive business strategy.
• IDENTIFY KEY RESULT AREA : Key Result Area
are broad generalized goals for your organisation
management team populated by key stakeholder to
determine the KRAs. Some example of KRAs includes
profitability, efficiency, customer satisfaction etc.

25. • DETERMINE YOUR SUCCESS CRITERIA :Once you have
established your KRAs and have a strategic plan in place, you
are ready to determine your critical success factor including
increase marketing share. Attracting new customer or launching
new product. Once you have determined your CSFs you can set
key performance indicators which will establish deliverable and
specific criteria to measure project performance.
• TRACK AND MEASURE YOUR PROGRES : With your CSFs
and KPIs established, you can ready to begin working towards
meeting your goals. Set up a performance management process
for measuring success to ensure that the project team stays on
task.