Page 71 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 4: External Assessment

Exploratory Process Notes

Environmental analysis is an exploratory process. A large part of the process seeks to explore
the unknown terrain and the dimensions of possible future. The emphasis must be on speculating
systematically about alternative outcomes, assessing probabilities, questioning assumptions
and drawing rational conclusions.

4.5.2 Techniques of Environmental Scanning

So far, we have discussed the constituents of macro and operating environment and how these
can become a threat or opportunity. As a corporate strategist, one has to identify the impact of
these environmental forces on firm’s choice of direction and action.
Environmental analysis involves two phases, viz; information gathering and evaluation.

Glueck and Jauch mention the following sources for environmental analysis:
1. Verbal and written information: Verbal information is generally obtained by direct talk
with people, by attending meetings, seminars etc, or through media. Written or
documentary information includes both published and unpublished material.
2. Search and scanning: This involves research for obtaining the required information.
3. Spying: Although it may not be considered ethical, spying to get information about
competitor’s business is not uncommon.
4. Forecasting: This involves estimating the future trends and changes in the environment.
There are many techniques of forecasting. It can be done by the corporate planners or
consultants.

For the above purpose, firms use a number of tools and techniques depending on their specific
requirements in terms of quality, relevance, cost etc.
Some of the techniques which are generally used for carrying out environmental analysis are:

1. PESTEL analysis
2. SWOT analysis
3. ETOP
4. QUEST
5. EFE Matrix

6. CPM
7. Forecasting techniques
(a) Time series analysis
(b) Judgmental forecasting
(c) Expert opinion
(d) Delphi’s technique

(e) Multiple scenario
(f) Statistical modeling
(g) Cross-impact analysis

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