Environmental scanning refers to the unique resources and strengths that an organization’s management considers when formulating a strategy.
The correct answer and explanation is :
The correct answer is “Internal environment”.
Environmental scanning is the process by which an organization analyzes its internal and external environments to identify opportunities, threats, strengths, and weaknesses. The “internal environment” refers to the factors that exist within an organization, such as its resources, capabilities, culture, and overall management. This includes assessing the unique resources, skills, knowledge, and strengths that an organization has at its disposal. These internal factors are essential when formulating a strategy, as they define the organization’s potential to achieve its goals and maintain a competitive advantage.
Explanation:
Environmental scanning can be broken down into two broad categories: internal and external environments.
- Internal Environment: This includes factors that are within the organization’s control, such as human resources, finances, technology, physical assets, organizational structure, and company culture. When formulating a strategy, managers will evaluate the internal environment to understand what the organization does well (its strengths) and what it needs to improve (its weaknesses). For example, a company might have a strong research and development (R&D) department, which could be a key strength when launching new products or innovations. Understanding these resources helps in capitalizing on existing strengths and addressing areas for improvement.
- External Environment: This consists of factors outside the organization, such as market trends, competitor activities, regulatory changes, and economic conditions. While not directly under the organization’s control, these external factors significantly influence strategic decision-making. Identifying opportunities (e.g., emerging markets or technological advancements) and threats (e.g., competition or regulatory challenges) from the external environment is equally important.
The key to effective environmental scanning is understanding the interplay between internal and external factors. An organization must align its internal strengths with external opportunities while addressing its weaknesses and potential threats. By doing so, it can develop a strategy that positions it for success and sustainable growth.