Page 27 - DMGT401Business Environment

Business Environment

Notes (b) Forces driving change
(c) Type of future evolution.
Changes in the microenvironment may be systematic or discontinuous. Gradual changes,
changes in a phased manner, or those that are predictable are systematic changes. As after
liberalization, a change in the ratio of youth in population of India, rise in the income of
middle class and especially of the youth can be seen as systematic change. Unpredictable
or sudden changes are discontinuous, like the twin tower terror attacks in the US and its
aftermath.
Sometimes changes in one segment may be the result of driving forces in another segment.
The driving force behind the acceptance of packaged food in India could be because of the
purchasing power of the middle class, or because more women are working, or it could be
more awareness among the youth via the mass media. These driving forces constantly
interact with each other.
Environmental evolution can be completely predictable and sometimes it is dependent
upon actions of the firm or other entities in the environment.
2. Process of Environmental Analysis: The process of environmental analysis can be divided
into four parts:
(a) Scanning the environment to detect warning signals
(b) Monitoring specific environmental trends

(c) Forecasting the direction of future environmental changes and
(d) Assessing current and future environmental changes for their organizational
implications.

(a) Scanning: Environmental scanning is aimed at alerting the organization to potentially
significant external impingement before it has fully formed or crystallised. Successful
environmental scanning draws attention to possible changes and events well before
occurrence, giving time for suitable action. Scanning frequently detects
environmental change that is already in an advanced stage. Scanning is most ill-
structured and ambiguous environmental analysis activity. The data sources are
many and varied. Moreover a common feature of scanning is that early signals often
show up in unexpected places. Fundamental challenge for the analyst in scanning is
to make sense of vague, ambiguous and unconnected data and to infuse meaning
into it.

(b) Monitoring: Monitoring involves following the signals or indicators unearthed during
environmental scanning. In monitoring the data search is focused and much more
systematic than scanning. By focused, it is meant that the analyst is guided by a
priori premonition. Systematic refers to the notion that the analyst has the general
sense of the pattern and he is looking for and collects data regarding the evolution
of the pattern.
As monitoring progresses the data frequently move from the imprecise and
unbounded to reasonably specific and focused. The output or monitoring are
threefold:

(i) A specific description of environmental patterns to be forecast,
(ii) Identification of trends for further monitoring, and
(iii) Identification of patterns requiring further scanning.

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