Introduction to Environmental Screening and Business Environmental Analysis

In this article, we will study the meaning of environmental screening and the methods for effective environmental screening. And we will also study the business environment analysis and its components and the process of business environmental analysis.

What is Environmental Screening?

The term, ‘screening’ means the process of evaluation or assessment of anything with the purpose of gathering data on any subject matter and coming to a conclusion.

So we can understand that environmental screening is a process in which an organisation makes an assessment or analysis of all the components of the environment and screens their impact on its functioning, stability, growth and profits.


Methods for Effective Environmental Screening

For an effective environmental screening, an organisation must follow the following steps:

  1. Explaining the Type of Business
  2. Explaining the Scope of the Project
  3. Explaining the Type of Environment
  4. Preparing a report
  5. Monitoring

Explaining the Type of Business

First, the organisation should assess what type of business it is dealing in and later on decide how the environment will impact it. The same environment affects the clothing business and food business differently.

Explaining the Scope of the Project

If screening is done for a particular project, then it is necessary to explain the scope of the project. The scope will decide how the environment will affect the project of the organisation.

Explaining the Type of Environment

It is important to explain what type of environment an organisation is working in. It is important to consider all types of components of the environment, such as physical, governing or social, and how the business will be affected due to them.

Preparing a report

A detailed Prepared report should be made on how the organisation will be affected by the surrounding environment.

Monitoring

The environment is not a static thing. It keeps on changing. For example, employees keep on changing their jobs, the government keeps on changing its policies, customers keep on changing their choices etc. Thus, the environment and its impacts should also be constantly monitored.


Business Environmental Analysis

The business environmental analysis is a dynamic process which may change from one business to another. For example, the business process analysis would be different for the airline services from that of the beauty salon services. A business manager plays a vital role in the analysis of the business environment.

He needs to very well apprehend the supply of opportunities and possible threats. According to the analysis, an agency wishes to work at the available opportunities in line with its strength and weakness.


4 Components of Business Environment Analysis

Following are four basic components of business environment analysis:

  1. Scanning
  2. Monitoring
  3. Forecasting
  4. Assessing

Scanning

The term ‘scanning’ means analysing all the elements or components of something in order to broaden some features of that factor. Being the primary component of the environmental analysis system, this analyses the environmental factors of an organisation.

The purpose of scanning is as follows:

  • Scanning enables the identification of the possibilities of environmental modifications which may additionally have an effect on the running of an enterprise.
  • Knowing the present changes in the environment.

Monitoring

Monitoring means retaining a steady eye or checking on something. therefore, in environmental analysis, monitoring keeps a check on environmental changes from time to time. for instance, employees keep on changing, natural resources keep on changing, and authorities and their guidelines keep on changing.

Forecasting

Scanning and monitoring are steps on those aspects which have already happened and the organisation cannot change them. These are sunk aspects, i.e., which have already taken place in the past and will not change in the future.

But when an organisation is formulating a strategy for its operations, it would require future prospects and future orientation too. Forecasting is, thus, making any predictions about the future and is, consequently, a part of business environment analysis. But results of forecasting are contingent on the future.

Assessing

After scanning, monitoring and forecasting the business environment, corporations have to make a proper evaluation or assessment of the gathered information within the above-mentioned steps. The corporation also needs to analyse what effect it will create on functioning.


Process of Business Environmental Analysis

The following steps need to be followed in the process of business environmental analysis:

  1. Scanning All the Required Components
  2. Grouping the Scanned Components
  3. Observing the Internal Components
  4. Monitoring External Components
  5. Outlining Variables for Analysis
  6. Usage of Different Techniques for Analysis
  7. Forecasting Future Outcomes
  8. Formulating Strategies
  9. Execution of Formulated Strategies
  10. Monitoring

Scanning All the Required Components

The environment of an organisation consists of various components. But, not all factors and aspects would be equally important or even important for the functioning of an organisation. A good administrator always distinguishes the relevant factors and scans them in detail.

He or she looks for all the required components of the environment and would study the relevant factors in detail. This way, he or she collects the required components and would present a scanned report.

Grouping the Scanned Components

In the first step, the required raw information is collected. And now in this step, the collected components are to be grouped; for example, what is affecting the stability, what is affecting the sales, what is affecting the growth, etc. Grouping is made from all of the collected facts.

Observing the Internal Components

After scanning and grouping the relevant components of the external environment, the administrator looks at the internal components of the organisation. For example, how the employees are reacting to the environmental changes and how smooth an organisation is functioning as the external components change in the environment.

Monitoring External Components

As an environment is not static in nature, it keeps on changing, for example, changing government policies, changing in supplier rates, changing in customer preferences etc. Thus, just one-time scanning is not a fruitful activity for the organisation. A business enterprise needs to constantly monitor and make aware of the upcoming adjustments.

Outlining Variables for Analysis

Variables are the components liable for bringing a change in an external environment. Some variables are national minimum wage, GDP, tax policies, competitors’ policies, customers’ preferences, etc. An administrator must outline all such variables and study them from time to time so that he could bring the necessary change in the functioning.

Usage of Different Techniques for Analysis

Different techniques are being used for a proper environmental analysis, such as benchmarking, scenario building, network methods, etc.

The term ‘benchmarking’ means setting the best standard as per the industry and then comparing the company’s performance with the set standards. Scenario building is the presentation of the overall picture of the system of the organisation along with the affecting components.

The network method is a complex process which is used to analyse the external environment of the organisation. This method helps in analysing the available opportunities in the market and studying possible threats.

Forecasting Future Outcomes

In a business environment analysis, it is necessary to make predictions about future outcomes. A good administrator will always make future predictions of how the environmental components may affect the functioning of the organisation. The assessment of past results can also be made in this step.

Formulating Strategies

It is also one of the important steps of business environmental analysis. After the assessment of all the above environmental components, an organisation formulates the required strategies for functioning.

Execution of Formulated Strategies

After the above steps, a strategist implements and executes the formulated strategies. The administrator always evaluates how he had formulated the given strategy and how that can be effectively implemented. He or she also makes the required future predictions.

Monitoring

The administrator must keep monitoring the external environment. As an environment keeps on changing, thus, it is necessary to have a continuous look at the changes and bring the required changes in the plan or strategy.


FAQ

What is Environmental Screening?

Environmental screening is a process in which an organisation makes an assessment or analysis of all the components of the environment and screens their impact on its functioning, stability, growth and profits.

What are the methods for effective environmental screening?

For an effective environmental screening, an organisation must follow the following steps:
1. First, the organisation should assess what type of business it is dealing with.
2. Second, is to explain the scope of the project.
3. Third, explain what type of environment an organisation is working in.
4. Forth, prepare a report on how the organisation will be affected by the surrounding environment.
5. Fifth, the environment and its impacts should also be constantly monitored.

What is the process of business environmental analysis?

The following steps need to be followed in the process of business environmental analysis:
1. Scanning All the Required Components
2. Grouping the Scanned Components
3. Observing the Internal Components
4. Monitoring External Components
5. Outlining Variables for Analysis
6. Usage of Different Techniques for Analysis
7. Forecasting Future Outcomes
8. Formulating Strategies
9. Execution of Formulated Strategies
10. Monitoring

What are the four components of business environment analysis

Following are four basic components of business environment analysis:
1. Scanning
2. Monitoring
3. Forecasting
4. Assessing

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