Strategic Marketing: Planning and Control

An analysis of the external environment is undertaken in order to discover the opportunities and threats that are evolving and that need to be addressed by the organisation. A study by Diffenbach (1983) identified a number of positive consequences that stem from carrying out organised environmental analysis (see Figure 2.1).

Strategic Marketing: Planning and Control

An analysis of the external environment can be broken down into three key steps each becoming more specific to the organisation. The first step is an analysis of the macro-environmental influences that the organisation faces. This is followed by an examination of the competitive (micro) environment the organisation operates within. Finally a specific competitive analysis is undertaken.

Scanning

The environmental audit is reliant on the monitoring activity that is undertaken by the organisation. The process is normally referred to as scanning.
There are four forms of scanning according to Aguilar (1967). They are as follows:

1 Undirected viewing: This activity concerns the viewer exploring information in general without carrying a specific agenda. The viewer is exposed to a large amount of varied information but this is not an active search looking for particular issues, just a broad attempt to be aware of factors or areas that may have changed.

2 Conditional viewing: Again this is not an organised search but the viewer is sensitive to information that identifies changes in specific areas of activity.

3 Informal search: This is an organised but limited search for information to support a specific goal.

4 Formal search: This type of search is actively pursued and specifically designed to seek particular information. There is of course an unlimited amount of information that can be scanned.

Any organisation can only scan a certain amount of this information. Abalance has to be struck between the resources allocated to this activity and the potential benefits. More information also does not lead to better decision making. Understanding the dynamics of the environment is the critical aspect to this activity, not the volume of information reviewed (see the section on Market sensing in Chapter 6).

Managers search for information in five broad areas (Aguilar, 1967) (see Figure 2.2):
1 Market intelligence
2 Technical intelligence
3 Acquisition intelligence
4 Broad issues
5 Other intelligence