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Environmental Scanning is the monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation.
The nature and degree of competition in an industry hinge on five forces:
1) the threat of new entrants
2) the bargaining power of customers
3) the bargaining power of suppliers
4) the threat of substitute products pr services
5) the jockeying among current contestants.
To establish a strategic agenda for dealing with these contending currents and to grow despite them, a company must understand how they work in its industry and how they affect the company in its particular situation.
Hence, environmental scanning or external assessment is a step where a firm identifies opportunities that could benefit it and threats that it should avoid.
The factors that could influence a firm and its strategy cold be broadly divided into the following categories:
1) Economic Forces
2) Social, Cultural, Demographic, and environmental forces
3) Political, governmental, and legal forces
4) Technological forces
5) Competitive Forces.
Process of Performing an External Assessment
The process of conducting external environment assessment starts with collating information and intelligence on factors affecting the external environment as highlighted above: economic, social, political, technological factors etc.
Designated individuals will then monitor these factors though various sources like magazines, ...