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Factors of Environmental Scanning

Following are the main factors of environment scanning.


1. Events

Past events of business environment is the main factor of environment scanning. For example, if Govt. has to control food prices, it has to scan every week prices of vegetables, fruits, milk and other food items. For more simplification of price rise, Govt. will calculate wholesale price index.


2. Trends

Not just to see the past events are effective but to establish the trends on the basis of events is also very important because this is important factor of business environment scanning. Suppose, you have to take decision relating to your vegetable prices, you have all the past market price data of same vegetable. Now, you will make a trend graph. If there is an increasing trend, you will fix your vegetable price according to this.

3. Issues 

Issues are also important factor of business environment scanning. As a good businessman, you have to scan both cold and burning issues on daily basis. For example, I can tell you following business issue which I studied today newspaper.

a) European union wrote down a 50% of Greece's debts.

b) Sony Corp. buys Sony  Erickson mobile phone joint venture for $ 1.45 billion.

c) Rajat Gupta is being charged for insider trading.

d) Bharti Airtel's urgent request failed.

4. PESTEL analysis

It means political , economical, social and technological analysis. We scan following updates in it.

  • Changes in Taxation Policy
  • Changes in Trade regulations
  • Changes in Governmental rules 
  • Changes in Unemployment Policy etc.
  • Changes in Inflation rate
  • Changes in Growth in spending power
  • Changes in  a pensionable age, suppose in Italy, pensionable age will be 67 years in 2026.
  • Technological changes
  • New or improved distribution channels
  • Improved communication and knowledge transfer etc.
  • moral factor
  • Laws on
  • Waste disposal
  • Energy consumption
  • Pollution monitoring etc.
  • Unemployment law
  • Health and safety
  • Product safety
  • Advertising regulations
  • Product labelling etc.

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Objective of Business Environment

Following are main objectives of business environment:
1. Knowledge of Information 
By studying the business environment, we can know the changes of business. This information is very useful for our business. Every businessman should aware current environment of business. With this, he can think the future of his business in such environment. 
2. Basis of Decisions 
One of main objective of the study of business environment that it can provide all the information which is needed for taking good decisions. Suppose, you completed your internal business environment study. With this study, you can take decision relating to purchase, sale, salary and price because you know your competitor, you know your suppliers and you know your customers. 
3. Helpful in making of Policies 
For making good business policies, we need to know and scan business through business environment. 
4. Technological Planning 
Today, technology is changing very fastly. 3 years ago, I have to search software for downloading …

Limitation of Business Environment Analysis

Following are main limitation of business environment analysis:

1. Unexpected and Unanticipated Events 

We can not tell unexpected and unanticipated events in business environment analysis. Sometime, business has to face unexpected happenings. So, there will no benefit of business environment in these cases.

2. No sufficient Guarantee

Business environment analyst does not give any guarantee whether all events will happen as per estimation in business environment.

3. Uncritical Faith 

Sometime data may be incorrect. So, decisions on basis of these analysis may be risky for business.

4. To much information

Sometime too much information relating to business environment analysis will create the doubt in businessmen.

Technological Environment

Definition of Technological Environment :-


“Technological Environment means the development in the field of technology which affects business by new inventions of productions and other improvements in techniques to perform the business
 work. "

Introduction to Business Environment

Business environment may be defined as the set of external and internal factors which affects the decisions of business. We can divide business environment into two parts

A. The Micro Environment of Business

These are powers which are deeply related with company and company can control these type of environment by improving its capacity and efficiency.

1. Suppliers

Suppliers are the persons who supply raw material to company.

2. Customers

Customers are the persons who buy goods from company.

3. Market Intermediaries

Market intermediaries are those person who helps company to sell its products.

4. Financial Intermediaries

Financial intermediaries are those institutions who provide loan, credit and advance to company.

5. Competitors

Competitors are those who also sell same product of company.

6. Public

Public is those group of people who can buy or who can show their interest to buy the products of company.

B. The Macro Environment of Business

Macro environment of business means all exte…