The ideal position of an entity will come after the analysis of the environment within which the said entity will play. Growth of the company will also be determined by the eminent exercise of scanning the environment where the company operates. To have an entry or growth strategy, the entity will have to deep dive into its immediate environment while noting the impact of the broader environment on its operations.
The exercise of environmental scanning will take into consideration the country within which the entity would like to operate or where the entity is already operating. The first step would be to define the country in terms of its general environment including total population with a deep dive on the different dynamics of the population, top 5 industrial sectors within the country and their performance, GDP, political and economic solidity as well as rate of unemployment. Once this exercise is complete and the country data is defined then a step into the macro environment ensues.
A look at the macro environment is quite imperative in analyzing the external factors that will impact the performance of your entity. The most suitable method of analysis will detail PESTLE factors while identifying key events and trends within each of the categories. The next step would be to detail how each of these trends relate to each other. Further, there will then be an analysis of the potential impact to the organization within 3 to 5 years giving a forecast of the direction these trends are likely to take. Finally, an implication of the trends detailed will be summarized while focusing on forces within the industry which may have an effect on future strategic direction of the entity. Following a scanning of the macro environment, a micro environment outlook is important. This involves a look at the factors and elements in an organization’s immediate environment. These are specific elements with a direct influence on the running of an entity.
Within the African context, a PESTLE analysis is required periodically to be able to design a strategy that is a fit for an entity. This is because an element of dynamism within the continent is evident. Prior to entry and again within 3 years and following that, within 5 years is the best timing to implement a macro environment scanning. A micro environmental scanning for entities operating within the African continent will need to be done prior to set up and within 5 years. This allows for check and mitigation of immediate factors affecting the operations of the said entity. In the event of availability of resources or an eminent need, a 3-year check on the micro environment will also be needed.
When deploying an environmental scanning exercise, it is key to take into consideration the resources it will take for the exercise to be accomplished. Environmental scanning will require some desk work; however, it will also require a deeper external ground work which would determine the need of resources. When making the decision to undertake an environmental scanning exercise, the definition of the overarching and immediate environment should therefore be made. This will support the determination of resources required for the full exercise.
The importance of an environmental scanning exercise is that it provides entities with clear indications on external and immediate environments that will impact the business. It allows clear strategic direction with these indications in mind allowing the decisions to be made in clarity of the expected performance of businesses taking all matters into consideration. The importance of this exercise is therefore quite critical for a business.
Nyangi Consultants LLP 