Environmental scanning is the process of examining the external environment to determine trends and projections of factors that will affect the organization. It involves studying and interpreting the effects of social, political, economic, ecological, and technological events in an effort to spot budding trends and conditions that could become driving forces. It is a process that systematically surveys and interprets relevant data to identify external opportunities and threats.
The main purpose of environmental scanning is to raise the consciousness of managers about potential developments that could have an important impact on industry conditions and create new opportunities or threats. The basic purpose of environmental scanning is to help management determine the future direction of the organization. It helps the managers to decide the future path of the organization. Scanning must identify the threats and opportunities existing in the environment. While strategy formulation, an organization must take advantage of the opportunities and minimize the threats.