Understand your current position

“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change” - Charles Darwin

We can only hope to get a better understanding of our current position by scanning our environment and bring some context to our position relevant to the rest of the world we find ourselves in or plan to participate within. Most people do not bother much with this very important element of moving from one given state to a desire state resulting in inevitable failure. How many entrepreneurs have lost their lifesavings in a venture because they have not made the time to understand the environment that they will have to function in? Most investors also have an issue to support or invest in other people’s dreams if those that seek financial or other forms of support does not understand their environment themselves – would you ?

Business scanning is a process used to observe and record activities in the external and internal environments with the intention to better understand these environments and to assist in decision making about threats and opportunities. There are several methods that could be used for this process from common-sense to more formal activities such as the macro and micro market, customers, competitors, suppliers and swot analysis. Following the clarification of the business Vision, Mission and Objectives is the process of business scanning.

Debate
Debate with your team members when last you or your organisation have conducted a business scanning process to observe and record activities in the internal and external environments with the intention to better understand these environments and to assist in decision making within your organisation? Have you been able to position your business or organisation relevant to the environment? Being able to respond fast to changing environments provide organisations with a competitive advantage . Do you or your management team understand the value of environmental scanning? What benefits do you foresee from observing and record activities in the internal and external environments?

Watch: Environmental scanning - YouTube
Watch this short 4.5-minute video by Teo Hiro, How Internal and External Factors Drive Organizational Change to obtain a better understanding of environmental scanning and its benefits to an organisation, https://www.youtube.com/watch?v=Kt6J-jCcdXk

The above is by no means a complete list of factors or elements for consideration when evaluating your current level of environmental scanning, but it will get you thinking of the importance of updated data and information obtained from regular scanning.

5 - Point plan
An environmental scan is an assessment and analysis of the conditions, circumstances and influences, both internal and external to the organisation, which may affect the organisation’s ability to achieve its objectives, however before starting the process you need to make a few decisions regarding the process and methods you will follow during the scanning process:

1. What types of environmental scanning will you use?
2. What process of environmental scanning do you plan to follow?
3. What techniques and or methods of environmental scanning will best suite your needs?
4. What is the importance of environmental scanning for you and your organisation?
5. What advantages will the process of environmental analysis bring to you or your organisation?

Read
Read and enjoy an article written by Vibhav Srivastava, Importance of Understanding Business Environment , http://in.viadeo.com/en/groups/detaildiscussion/?containerId=0021t7mup2amy1o5&forumId=00218vlbvy...

Entrepreneurs and business managers need to understand that the creator of the business and or marketing plan is the owner of the plan and the implementation thereof and therefore need to do some homework with regards to the critical elements of a plan. Strategic analysis focusses on the analysis of the External environments: Macro, Markets, Customers, Competitors and Internal environment: Resource allocation and focusing on how the organisation will respond to the changes in the external environment supported by a SWOT analysis. Let’s start with the macro environmental analysis.

“The opportunities and threats existing in any situation always exceed the resources needed to exploit the opportunities or avoid the threat. Thus, strategy is essentially a problem of allocating resources. If strategy is to be successful, it must allocate superior resources against a decisive opportunity”

William Cohen

The Macro environment refers to all the elements that exist outside a company, but that have an influence on a company’s performance. These elements such as economy, government policies, technology, legal, social conditions and nature to name but a few are outside the control of a company or an individual. Not understanding them or being ignorant of its existence and the impact of these elements on a company’s ability to be competitive could be disastrous and would not assist in attracting investors.

Entrepreneurs, marketing and sales people hoping to establish new business ventures or gain new customers need to review the elements relevant to its industry or situation. The success of an organisation to survive consists of two dimensions: its ability to scan and analyse the environment at a macro and micro level, but most important to respond timeously in an appropriate manner to capitalise on the constant changing environments.

Debate
What would the cost be to conduct a formal scanning project and what competitive advantage could be gained from this activity. Do you have the resources to scan the macro environment or would you have to make use of external resources? Does the organisation have a culture to respond with speed to changes in the environment? What would the cost be of not doing a macro (external) analysis?

Watch: Macro Environmental Forces - YouTube
Watch this short 4.5-minute video by Art Mollengarden, Macro Environmental Forces , https://www.youtube.com/watch?v=lgzeSkil1SE

Do
As an individual, entrepreneur planning to establish a new business or acting as a business leader within a larger team ask yourself; “Are you aware of the external forces that could have an influence on your business success, and if yes, when last have you reviewed them and what was your response to these forces?” Use the table below to do a quick assessment:

2 - Point plan
Entrepreneurs and business leaders need to constantly be aware of changes in our external environment and be able to pre-empt some of these changes and have mitigations in place to manage or capitalise on these ever-changing forces. With the external environment being divided into two parts ensure you understand the short term and long-term impact of these forces:

1. Directly interactive: This environment has an immediate and first-hand impact upon the organisation. A new competitor entering the market is an example. This might require urgent action from entrepreneurs or business leaders.
2. Indirectly interactive: This environment has a secondary and more distant effect upon the organisation. New legislation taking effect may have a great impact. For example, complying with the new Consumer Protection Act requires organisations to display the country of origin on product packaging. Organisations might have longer lead times to respond to these requirements and should be plan for it accordingly. Understanding the urgency will allow you to plan and respond accordingly with specific focus on resource allocation.
   

Reviewing some of the following Macro environmental elements (Political, economic, social, technology, environmental and legal) in more detail would be beneficial in building an understanding of the macro environment for most organisations. We will unpack these in more detail as part of the analysis process going forward.

About Dr Gerhard van Wyk
Author of: So What's your Plan ? Your Entrepreneurial Guide

Dr Gerhard van Wyk`s area of expertise relates to Marketing and Sales Management with specific focus on Strategy, Business to Business, Marketing, Sales and Franchising. Gerhard`s working experience exceeds more than twenty-five years in the petrochemical and chemical sectors. He is involved in the identification of growth opportunities and the development of marketing and sales strategies to unlock sustainable wealth. Being a part time academic Gerhard Lectures Marketing and Sales management, both face to face and online to MBA students and act as supervisor during the creation and completion of dissertations. Gerhard is also an accomplished author of several academic and other articles on marketing, strategy, B2B and franchising.

Follow him on Twitter: @4Vision4Growth or email Gerhard.vanWyk@icloud.com