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•s
Environm ental scanning - the internal communication of external inform ation abo
issues that m ay influence an organization's decision-m aking process - can identi
eme rg in g is su es, situ atio ns , a nd pote ntia l p itfa lls th at may a ffe ct a n o rg an iz atio n's fu tu
38 T h e I n f o r m o l i o n M an a g e m e n t J o u r n a l • M ay / J u n e 2 0 0 4
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May/JYne 200d • The Information Manogemen1 Jeur nel 39
At the Core
This article
defines environmental canning
explains why it i. vital to an
organization's strategic planning
describes the prace involved in
environmental scanning
rganizations today face unprecedented challenges in maintaining
commercial survival and success. This is true for organizations
both large and mall, for-profit and non-profit. ucces requires a
keen, trategic understanding of external influence in order to
respond in ways that will ensure the organization's urvival and
success. Environmental canning i one tool in an organization's ar ella! that can
be used to gain this understanding.
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What ' 5 Environmental
Scanning?
Environm ental scanning is th e
i n te rna l commun ic a ti on of external
inform ation about issues that may
potentially influence an organiza-
tion' decision-making pro e .
Environm ental scanning focu es on
th e id entificatio n of em erg in g issu es,
ituations, an d p oten tia l pitfalls th at
m ay affect an organization's future.
The inform ation gathered, includ-
in g th e ev en ts, tren ds, an d relation -
ships that are external to an organ-
ization, i provided to key m anager
w ithin the organization and is used
to guide management in future
plans. It i al 0 used to evaluate an
organization's strengths and w eak-
nesse in respon e to ex te rna l t hr ea ts
and opportunities. In essence, envi-
ronrnental scanning is a m ethod for
identifying, co llectin g, an d translat-
ing information about external
influences into useful plans and
decisions.
Why Environmental Scanning?
T here are m any im portant reasons
to do environmental scanning.
B ecause of rapid changes in today'
m arketplace and new and em erging
business practices. it is easy for an
organization to fall behind by no t
keeping up in areas uch as technol-
ogy, regulations. and various ri in g
trends. Environmental scanning
reduce the chance of being blind-
id ed an d resu lts in g reater an ticip a-
t or y mana gemen t
T he relationship am ong m arkets,
trategic planning, and the environ-
meat extern al to an o rg an iz atio n is
w hat defines an organization's suc-
cess. As e xt er na l f or ce s a re i de nt if ie d,
organizations have the opportunity
t o e xam in e their options in respon e
to the challenge and co nsid er the ir
internal strengths and w eakne ses to
respond to the e challenges.
According to lohn D . toffels
Stra teg ic Issues M {m age 11 1 en t: A
C om prehensive G uide to E nviron-
m enta l Scanning , environmental
scanning allows an organization to
a dd re ss e xtema l c ompe ti ti ve , ocial,
econom ic, and technical is su es th at
may be hard to identify and are per-
sistent. Specifically, its intent is not
m ere ly o ne o f in fo rm atio n g ath ering ;
rather, its purpo e i to focus on
future im pacts on the organization
rather than tho e centered on the
present situation. E nvironm ental
scanning helps an organization learn
about the potential influences from
external environment and how it
can respond trategically. Through
understanding these two elem ents -
ex tern al influ en ces an d th e orga niza-
tio n's in tern al p ro ce sses - the organi-
zation can respond in a m ore tim ely
and e ff ec ti v e manne r.
The focus of environm ental scan-
ning is on strategic thinking and
planning. Its value comes from the
identification and understanding of
com plex I sues facing the organiza-
tion. Environm ental canning helps
an organization form a trategic
position from w hich it c an a dd re ss
ex tern al fo rc es o ver w hich it h as little,
if any, control. T hrough consistent
m onitoring of external influences,
40 The l"form"I;O n M an"gement Journal • M ay/June 2004
organization can hape their own
internal processe to reflect neces ary
and effective responses. The process
of understanding the m atch betw een
external influences and internal
resp on ses assists in ad ju stin g o rg an i-
zational stru cture an d strate gic p lan
that are d esign ed to be m ore e ffective
and fle ible to changing market
force. Thus, the ucce sful organiza-
tion is focused 011 learning as w ell as
on flexibility and responsivene s.
Environmental scanning is not a
ta gn an t p ro ce ss . It should be con-
stant and ongoing in order to main-
tain a p re pa ra ti ve s ta nc e a environ-
m ental influence arise. T his organi-
z ati on al le arn in g process isa ke y
component to organizational me-
ce . Through constant m onitoring
of the environment, managem ent
has the ability to make nece sary
adju tments in the organization'
response that can mean the differ-
en ce b etw een su ccess an d fa ilu re.
Ex te rna l Env ironments
T he re a re se ve ra l e xte rn al e nv iro n-
ment that may impact an organiza-
tion. These can be grouped into cat-
e go ri es i nc lu din g so ci al, re gu la to ry ,
tech nolo gica l, p olitical, ec on om ic,
a nd i nd us try . [S ee " Ex te rn al E nv iro n-
ment s Impa ct in g the M odern O rgan-
ization" 011 page 421. Influences of
each can negatively affect an organ-
ization, resulting in poor perform -
ance or ultimate failure. f these
environments, as Chun Wei hoo
notes in I ll fo rm a ti on Ma na gem en t
fo r th e in te llig en t O rg an iza tio n: T he
A rt o f S ca nn in g t he E n vir onm en t, th e
in dustry ' en viron men t is the mo t
significant, w ith its focus on cus-
tom ers, suppliers, and com petitors
a nd th ei r in tric ate re la tio nsh ip s.
It is in cre asi ng ly v ita l 10 the con-
tinued grow th and improved per-
formance of an organization to
monitor these external environ-
ments in order to make necessary
adjustments to these influence.
Environmental scanning offers a
process by which the value of an
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organization may be maintained or
enhanced even in the face of adver-
sa rial challenges. Environm ental
canning helps to fOCLlS th e o rg an i-
zation' strategic and tactical plans
on those external forces that may
threaten it stability and turn tho. e
potential problems to i ts a dv an ta ge .
An rganization manage this
proces. by identifying and examin-
in g those external events that may
otherwise be unpredi table an d
uncontrollable. The proces assumes
that potential im pacts on the organi-
zation may come from unexpected
ources, Therefore, environmental
scanning i in teg rally lin ked to org a-
nizational and strategic planning and
plan. for unexpected changes that
will affect the organization.
Environmental cans mu t be
conducted on an ongoing basis in
o rd er to effectively m on itor external
forces that are lik ely to impact an
organization. Issues for each of the
external environments should be
explored. A cornprehen ive envi-
ron mental scanning pro ess will
keep a " atchful eye on the potential
im pacts of the followi.ng different
e n: i ronmen t:
• I nd u st ry /Ma r ke t: Because the in-
dustry/market environment gen-
erally eems to be the most sig nif -
icant, it i useful to examine the
structure of the industry and
identify the key competition in
the in dustry. U nd erstan din g the
role of the competitor in the
market and their relationship
w ith each other, their ell torners,
an d their suppliers will provide
useful information on trends and
po ten tial pro blem s fo r competing
orga n izat ions,
Technology: The emergence of
n ew techn olog ies can impact
organizations' overall bus! ness
and p rod uctio n p ro cesses. lt is
II eful, therefore, to monitor
changes in te hnoL ogie , particu-
larly tho e that influence bu ine
efficiencies, changes in produc-
tion, ex istin g in fra structure (e.g.,
energy, transportation, and com -
munication), an d the rise of new
products or services.
Regu la to ry : Changes i n law and reg-
ulatory guideli nes may also h av e asig nifican t im pact o n the organiza-
tion. Communications m edia ow n-
ership laws, for example, can have
dramatic effects on the numbers of
tations on e ow ner m ay have, thereby
p ote ntia lly affe lin g th e overall mar-
ke t s tr uc tu re a nd market share. Laws
regarding m inim um wage and busi-
ness taxes can have direct bearing Oil
hiring pra ct ic es w i th in an organiza-
ti nn , Regula to r} ' information on
employment pr a ti ce , i ntell ec tu al
property, and tho c that are industry-
specific are im po rtan t to onsider.
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M a y / J u n e 2 0 0 4 • T h e I n lo r m o l i o n M a n a g e m e n t J o u r n a l 41
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• E co nomic: Local , r eg i ona l, n a ti ona l,
and international economies can
aff ect a n o rg an iz atio n, d ep en din g
o n its size , sco pe , an d market.Rates
of unemployment an d in flatio n can
help r hinder grow th if the organ-
ization is caught oIT-guard. Eco-
nomic information can help the
organization prepare for change
in these and other related i .ues(e.g., exchange rate and gross
national product of potential
t ra di ng n at io ns ).
ocial: M arket changes are som e-
t im e s d ri ve n by c ha ng es in so ci ety .
Demographic shift in the popula-
tion may cause an incrca T or
decrease in demand for a given
product o r s erv ic e. Demographic
inform ation should b m onitored
[or changes in variables uch as size
a nd distrib utio n o f p op ulatio n, ag e,
e du ca ti on , a nd i nc om e. A dd itio na l,
qualitarive jndlcators (e.g., con-
sumer attitudes) a re a ls o impo rt an t
a nd sh ou ld b e m on ito red .
• P ol iti ca l: Loca l, na tional , an d inter-
national politics call influence an
organization in ways that may be
direct or indirect. Certainly, theacts of terror on epternber II,
2 0 0 I, di r ectly affected man)'
national and international busi-
ness practices. Tariffs c an c on ce rn
organizations by e it he r r es tr ic ti ng
trade now or by encouraging
them , depending on how they are
et, It is u se fu l fo r an organ ization
to ha e a lear understanding of
the political climate in which it
operates so that it can be prepared
for udden changes that re ult
from elections or changes in exi t-
ing policies or law .
How Does Env ironmenta l
S ca nn in g W o rk ?
Executives and other deci ion-
maker w ithin an organization
mu t not pend their entire time
monitoring the environment. The
environmental scanning [unction
can be set up as a distinct unit, scm-
tinizing development based upon a
set of criteria developed in conjunc-
tion w ith the primary deci ion-
m akers in the organization. priori-
tizing those trends and events w ith
the potential for the most critical
impact .
Scanning the external environ-
m ent ident ifics potential threats tD
and opportunitie for a n o rg an iz a-
tion; an internal a e merit of an
organization id en tif ie s its s tre ng th s
and weakne ses, J nformal ources
and the information they produce,
emerging i sues, a well as the
strengths and weaknesses of an
existing sy tern, can be identified. A
more formal scanning system can
be used to correct th e weaknesses.
A form al environm ental scanning
process has five basic steps that arc
integrally linked and may overlap
w ith o th er:
1) Id en tify th e e nviro nm en ta l s ca n-n in g n ee ds 0 / th e organization.
The overall purpose of the
c an n i ng , p arti ci pa nts in th e
pro ess, and allocation of tim e
and res urces must be deter-
m ined prior to beginning the
scanning pr cess. Thi mean
that enior management has to
re ognize the need [or scanning
in order for it to be successful.
It is u sefu l to h ave p articip an ts
42 T h e l n ir m o + i c n M a n o g e m e n l J o u r n a l . M e y / J u n e 2 0 0 .4
m eet to initially discuss poten-
ti al c ha ng es that may influence
the organization ba ed upon
their tacit know ledge and expe-
rience .
21 Gather the i , l !ormntiol l . The
organization's needs m ust then
be translated into specific ele-
ments of informat ion that w ill
be required. A list of que tions
and selected urces should be
prepared in advance in order tom ake scanning activities m ore
ta rg ete d a nd e ff ec tiv e.
3) A nalyze /he in/ormation. Once
info rm atio n h as b een co lle cte d,
it should be analyzed for issues
and trend that may in flu en ce
the organization. This step m ay
need to be repeated if th ere a re
gap in the information or if
new que lions arise from the
c omp il ed i nf ormat io n.
4) C omm un ic ate th e re su lts" lnfor-
marion that has been analyzed
and translated into potential
effects on the organization can
next be reported to the appro-
priate decision-m akers w ithin
the firm . Because managers
prefer to m inim ize the am ount
of tim e necessary to study
information and make deci-
sions, reports sh uld be pre-
sented in concise format and
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ences of other organizations. This
allo ws th em to e xam in e a lt er na ti ve
o lu tio ns, th en d ev elo p effectiv e p li -
des a nd d ec is io n s.
M a n ag ers o bta in th eir in fo rm ati on
from a variety of ources, including
print and online material . Chao ay.
th ey o ften rely 1110St heavily , howeve r,
on a mall group of individuals who
serve as th ei r n etw o rk of resource.
M a nagers prefer to receiv e in form a-
ti on th at i5 p resen ted in p erso n rath er
Ulan through readin g. T hi method
allow managers to get only that
information that they determ ine is
necessary for making decisions, to
as k question, and to control th e flow
o f info rm atio n, w hich is n ot po ssible
w hen depending on a book or report.
cu tomized to m eet in dividu al
ma na ge rs ' p re fe re nc es .
5) f ak e i nf or m ed d ec is io ns . nee
the env iro nm ental scann in g act-
i vi ti es h av e b ee n p re e nte d.o rg a-nizational leadership can lake
appropriate step to position the
o rgan izatio n in th e m an ner that
will be most re pensive to the
opportunitie or threats that
h av e b ee n i de nt if ie d.
I nf orma tion Sources for
Envi ronmenta l Scanning
T here are a v ari ety o f ource com-
monly used in environmental- an-
ning practices. These include both
external and internal inform ation .
External information source can
include a w ide range o f m ate rial
such as prin ted new spaper articles
and experts in the field . External
ources do not have to be publ ished;
in fact, most managers get much of
their information from word-of-
mouth through a p rsonal network
f contacts, In te rn al in fo rm atio n
in clu de s o rg an iz ati on -sp ec if ic in fo r-
mation that can be compared to the
finding of external scanning in
order to m axim ize organizational
resp on siv en e s. E xam ples o f ex tern al
and internal info rm atio n sou rces are
listed in th e tab le ab ov e.
Generally, the planning pha e of
the environmental scan produces
t ar ge te d i ss ues like! to h av e an effect
on th e org anization . Selectin g w hich
sources to use w ill depend on the
potential point of impact on the
organization . Early warnings w ill
com e from inform al sources such as
d irect in teractio n w ith a CD tom er or
from experts in the field. later indi-
cator may come from ources such
as newswires or pre s releases. By th e
t ime inform ation has been pub-
lished, its effect will h ave lik ely
already made their way into the
organization and may be too late to
cou nt raci,
H ow D o M anagers U se
Information?
O rg anization al m anag er and ex ec-
lItivesare responsible for m aking
quick d ec is io n s th at ma y s ig n if ic an tl y
change an organization. Environ-
mental c an ni ng o ff ers a nti cip ato ry
and forecasting in form atio n to assist
manager in making these de isions
whi le attempting to identify cri es
before they occur. M anagers are also
responsible for m alting m any deci-
sions and, therefore, do not have
m uch tim e to d ev ote to systematically
earching for inform ation. instead,
th ey n ee d t imely in fo rm atio n th at h as
been di tilled down to the main
po ints that are relev ant to the o rgan i-
zation.Manager h av e c er ta in preferen es
for h ow to receive in form ation . C hao
says that m anagers prefer inform a-
tion that is pr e ented in oncrete
term s, dearly focu ed with attention
given to detail, and in a way that
allow s them to scan and absorb the
information quickly. Ca e studies
an d ex am ples are p articu larly useful
becau e managers often learn
thro ugh co rnp ari 011 w ith ex peri-
44 The Information M anogemenl lournal . Mo'lIJun~ 2004
Which Organizations Should
Consider Scanning?
O rganization con idering the
e st ab li s hmen i or fo rm alizatio n o f an
environm ental scanning function
sh ould ask th em selv es the fo llow in g
qu e tions:
Does th e o rg an iz atio n c urre ntly
capture environm ental inform a-t ion? In w hat w ays? I it formally
structured?
Js environm ental canning infor-
mation can idered to be impor-
tan t to strateg ic d ecisio n-m ak in g
and planning? To operations?
I the organization flexible and
open to new ideas?
• Doe the organization' senior
management upport the idea of
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the assessm ent of new inform ation.
and the adjustment of internal
operations to meet new challenges
as theyarise. It can identify an
organization's unique strengths.
find weaknesses in i ts compe ti to rs ,
and identify new markets, prospec-
tive u stomer s, a nd em erg ing tech-
nologie .
E nv iro nm en tal cann in g s er ve s a an
early w arn ing y st er n, i de nti fy in g
potential threats t t he organiza tion.
By a lertin g th e o rg an iz atio n to p os si -
ble changes in th e e nv ir onmen t,
environm ental scanning helps it
modify it strategies to th e external
environment. The ultimate goal of
en viro nm ental cann in g i to help an
organization learn about the external
environment in order to increase its
responsiveness an d flexibility in deci-
sion-making p ro ce se s. P l J
tion of relevance, fam iliarity with
th e topic and information sources,
language usage, tim e lim itations,
and accuracy of information all play
a role in the analysis proce s. In
addition, an overem phasis on scan-
ning could have negative effect on
an organizati n. This could be due
to the focus on a defen ive trategy
to ex ternal f or e rather than a con-
tinuation of process improvement
an d g rowth w ith in th e organization.
E nvironm ental scanning offers
m any advantages [or modern
organizations. It contributes to an
organization's transformation into a
learning organization, one that con-
tinually seeks new inform ation that
may change it overall position in
th e m arketplace. Environmental
scanning also a s its in th e develop-
ment o f strateg ic p lan s and po licies.
environmental scanning at the
h ig he st le ve ls ?
., Are the organization's comm uni-
cation ch an nels o pen to envi ron-
mental canning activities?
Is th e le ve l of i nv es tmen t a llo ca te d
to en ironmental scanning uffi-
cient to b en ef it th e o rg an iz ati on ?
Where in the organization hould
this function be coordinated. and
located?
If the organization'S senior man-
agem ent or executive staff is strong-
ly in favor of an environmental
SC31111ingfunction, then it is m ore
likely to receive adequate invest-
ment. In addition, managers who
upport the canning function ar e
more likely to integrate it into th e
full strategic planning function of
the organization. Thi s a ss im ila ti on
will i nc r ea e t he l ikel ihood of suc-
cess in both t he environmenta l scan-
n in g f un ctio n as w ell as the overall
organization.
Kendra S. A J b r : i g n t i s A s si st an t P r o f e s s o r in the Schoo! o f l i 1 f or m a t i o n
S cie nc es a t th e U niv er sity a /T en ne sse e, K n ox ville . S he m a y b e c on ta cte d a t
Barriers to
Effective Scanning
There ar e several reasons why
environmental scanning may not beeffective in an organ izarion. Th e
sheer volume of information may be
overw helm ing, resulting in an infor-
mation overload in which important
pieces of information may be over-
looked or missed. There are also
many sour e of information that
. c anners may not be aware 0[, and 0
they may m iss p oten tially i mp ortan t
information. Nav ig ati ng th e o ce an of
existing in fo rm atio n is also d ifficu lt
because of the ornetirne lack of
organization and completeness of
that which is presented. E ven in the
best of circum stances, inform ation
may no longer be timely by th e tim e
canners are able to lo cate it. This is
p articularly tru e o f rapid ly ch an ging
m arket that are influenced by tech-
n olo gyo r reg ulato ry hanges,
There are also problems with
environmental scan nin g related to
i n t e r p r e t a t i o n of th e information
that ha s been g ath ere d. Dete rr ni na -
ReferencesAbels, Ei leen. "Hot Top ic s: Env iro nmen ta l c anni ng ." B uuetin of the A l 1 1 e r i c a n Society
jor Information de/lce ami Teclw ology 2 8 [P eb ru ary /M a rch 2 0 02 ).
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Company, 1967.
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S ca n n in g t h e Environment. Medford, N.J.: Information Today Inc ., 200 l ,
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l Ipaper/12.hlml (ac c sed 5 M arch 2004 ).
nyder , Ne il H . "Env ir onmen ta l Volatility, Scann ing I nt ensi ty , a nd Organ iz . . .t innal
Performance. Joumal of C o u t e m p o r c r » Business 10 ( 1981) .
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Env ir onment nl S ca nn in g. Tarrytown. N.Y.: Elsevier Science Inc., 1994 .
Read More About ItFahey, Liarn, William R . K in g, a nd V ad ak e K . N aray an an . " En viro nm en tal S ca nn in g
and Forecasting in Strategic Planning: The tate of the Art." L ong R tlllge Planlling 14
(198] J.
Kumar, Karna lesh , R am ubram an ian , an d K aren S tran dh olrn . " Comp etitiv e
Strategy, E nv iro nm en tal can nin g and Perform ance: A ontext pecific Analysi of
thei r Re la tionship. " I nt er na ti on ai J o urna l oJ Commerce &Man ag em en t ] ] ( 20 0 I) .
T homas, P hilip . . " E nv iro nm en tal S can nin g: The S tale o f th e Art," L ong R ange
Plal ln ing 13 (F eb ru ary 198 0 ).
Moy/June 200~ • The Information Manogement Jour nul 45
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