Environmental scanning is a term used in business management to refer to a process through which businesses collect information from the external environment which they use to better achieve a sustainable competitive advantage in the market (Martin, 2007). The company then uses this information to change its strategies and plans so as to stay ahead of its competitors. This paper will discuss the various methods organizations can use to carry out Environmental scanning for new product development techniques. Methods which a firm can use to evaluate its product management style will also be discussed.
To carry out environmental scanning successfully, the firm engages in both looking at information (viewing ) and looking for information (searching). The environment is quite important to any business since its is a source of resources upon which the organization is dependent. There are basically four modes of scanning: undirected viewing, conditioned viewing enacting and searching (Martin, 2007).
Organizations normally differ in their modes of scanning since different managers hold different beliefs concerning the analyzability of the external environment. Difference in scanning methods can also be attributed to differences in the amount of resources which organizations allocate to the process of information search (Serita, 2010). The more the organization is depended on the external environment, the higher the amount of resources it allocates to this process of information search. An organization located in an hostile environment is likely to devote more resources to information search in an effort to identify new opportunities and niches (Serita, 2010).
Undirected viewing:- this occurs if the organization views the environment as unanalyzable and therefore does not intrude into it to gather information. The organization therefore relies on information that is informal and nonroutine which is gained through chance encounters (Vineet, 2010). Such an organization is complacent with its limited information and does not dedicate any resources towards the acquisition of comprehensive information regarding the environment. The little information that the organization gets through luck may be from buyers, suppliers, sales personnel and partners in other firms. Such information is too little so it doesn’t prompt the organization’s action (Vineet, 2010). The organization acts when such information builds up and reaches noticeable levels. The main advantage of this scanning method is that, the organization does not incur any expense on formalized scanning. Such recourses can therefore be directed towards other endeavors in the organization. The organization however pays an heavy price since it can be caught off guard by forces from the external environment. Such an organization relies on stimulus- response modus of learning. In this mode, the organization is forced to respond to a strong stimulus, otherwise it maintains status quo (Vineet, 2010).
Conditioned viewing:- an organization which indulges in this is one that perceives the environment as analyzable. Such an organization however is reluctant as far as information gathering is concerned despite holding the view that the environment can be analyzed. Information need for such an organization targets a small number of issues or areas of concern (Srikant, 2010). To seek information, such an organization makes use of standard procedures through employing internal but non people sources. The organization also relies on external reports, databases and other high profile sources used in the industry which have been used over a long time. An organization which practices this method has established procedures and therefore reliance on this may see it fail to detect new technologies and developments in the market which may be disruptive (Srikant, 2010).
Enacting:- this occurs when the organization perceives the environment to be unanalyzable but still intrudes into it to gather information which it uses to influence market events and outcomes. such an organization needs information for experimentation and testing the environment only (Vineet, 2010). Information for such an organization comes from external sources as well as channels which the organization has come up with. For instance, information can come from the feedback the organization gets as people react to an action the organization may have taken. The organization can decide to try a certain behavior and then collect peoples reaction to it (Vineet, 2010). Such an organization would for instance develop a new product without necessarily carrying out research to investigate the demand of the product. Such an action by the organization is based on the fact that the organization believes it can produce and sell that particular product as opposed to making the product because it is in demand. Such an organization constantly influences and shapes the beliefs of its share holders. The organization may decide to test-market a new product or even organize a seminar or a workshop to gather information which would constitute a raw material for sense making (Martin, 2007).
Searching:-here, the organization perceives the environment as analyzable and then intrudes into it actively to gather information about it. The firm’s information needs are based on clear, broad, detailed and open-ended search goals (Martin, 2007). The organization devotes adequate resources to gather information which is hard, formal, and quantitative. Surveys, and market research activities are some of the information sources. Such an organization treats this issue so seriously that it has a scanning unit with qualified staff who systematically analyze data with the aim of coming up with market forecasts, trend analysis as well as intelligent reports. The driving force here is the will to revise or update existing knowledge (Vineet, 2010).
To evaluate the firm’s product management style, the firm can make use of customer satisfaction levels. If the customers of the product can recommend it to others, then it means that they are satisfied with it. This evaluation method is called Net Promoter Score (NPS) (Srikant, 2010). If customers are happy, the it means that the product is meeting their needs. The number of sales calls invitations the management gets can also be used as an evaluation method. The firm can also place an evaluation page in their website for customers to comment on the same (Srikant, 2010). This can then be used as an evaluation method.
This paper has discussed the various methods organizations can use to carry out Environmental scanning for new product development techniques. These have included: undirected viewing, conditioned viewing enacting and searching. Methods which a firm can use to evaluate its product management style have also be discussed. They have included customer satisfaction, website reviews and sales calls invitations.