The purpose of the scan is the identification of opportunities and threats affecting the global business for making strategic business decisions. As a part of the environmental scanning process, the organization collects information regarding its environment and analyzes it to forecast the impact of changes in the environment. This eventually helps the management team to make informed decision globally.
As seen from the figure above, environmental scanning should primarily identify opportunities and threats in the organization’s environment. Once these are identified, the organization can create a strategy which helps in maximizing the opportunities and minimizing the threats.
Important Factors for Environmental Scanning
Before scanning the environment, an International organization must take the following actors into consideration:
These are specific occurrences which take place in different environmental sectors of a business. These are important for the functioning and/or success of the business. Events can occur either in the internal or the external environment. Organizations can observe and track them.
As the name suggests, trends are general courses of action or tendencies along which the events occur. They are groups of similar or related events which tend to move in a specific direction. Further, trends can be positive or negative. By observing trends, an organization can identify any change in the strength or frequency of the events suggesting a change in the respective area.
In wake of the events and trends, some concerns can arise. These are Issues. Organizations try to identify emerging issues so that they can take corrective measures to nip them in the bud. However, identifying emerging issues is a difficult task. Usually, emerging issues start with a shift in values or change in which the concern is viewed.
Some interested groups have demands based on their concern for issues. These demands are Expectations.
Monitoring Global Marketing Environment
The Global market environment is dynamic it is always changing. Whether the forces of the Global market environment fluctuate slowly or rapidly, they create uncertainty, obstacles, and opportunities. International Marketers must constantly monitor the marketing environment to be prepared to capitalize on opportunities and minimize adverse conditions. To monitor changes in the marketing environment effectively, marketing managers must engage in environmental scanning and analysis.
Environmental analysis is the process of assessing and interpreting the information gathered through environmental scanning. A manager reviews the information for accuracy, ties to reconcile inconsistencies in the data, and interprets the findings. Analysis allows a marketing manager to discern changes in the environment and, if possible, or predict future changes. By evaluating these changes, a marketing manager should be able to determine possible threats and opportunities associated with environmental fluctuations. Knowledge of current and predicted environmental changes aids a marketing manager in assessing the performance of current marketing efforts and in developing marketing strategies for the future.
Approaches for Responding to Environmental Forces
In responding to environmental forces, International marketers use one of two general approaches. In the first approach, International marketing managers view the forces of the marketing environment as uncontrollable. According to this traditional approach, an organization can do little to alter the influence of the taking this reactive approach tries to prepare itself to respond quickly to changes in the environment. For example, although an organization has little power to alter economic conditions new regulations, or the actions of competitors, it can monitor the environment closely and adjust its marketing strategy to counter the effects of inflation, a new product safety law, or product improvements by competitors.
A second response to the International marketing environment is to take a proactive, or aggressive, stance toward environmental forces. A growing number of marketing professionals argue that the forces of the marketing environment can be controlled, at least to some extent. They believe that marketing itself represents a significant force that can be used to create change and extend its influence over the environment. Through lobbying, legal action, advertising of key issues, and public relations, organizations can alter some environmental forces. For instance, a firm can control its competitive environment by using aggressive pricing or competitive advertising strategies to influence the decisions of rival firms. It can lobby political officials to repeal legislation that it believes will restrict its business. Likewise, a firm can use political skills and public relations activities to open foreign marketer to domestic business. Neither response to environmental forces is superior. For some organizations, the reactive approach is more appropriate; for other firms, the proactive approach leads to better performance. The selection of a particular approach is determined by an International organizations managerial philosophies, objectives, financial resources, markets and human skills, and by the composition of the set of environmental forces within which the International organization operates.