A study of the extent of environmental scanning undertaken by manufacturing industries in Pietermaritzburg prior to the adoption of significant corporate strategies to gain a competitive advantage.
Jooma, Sahin Aboobaker.
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In this rapidly growing and competitive business environment, each firm attempts to gain and retain competitive advantage. The marketplace is a dynamic and changing environment. Globalisation has had a profound influence on the business environment. Strategy formulation involves matching a company's internal strengths and weaknesses against the opportunities and threats offered by the industry and external macro environment. Strategy formulation involves more than the environmental scan of local markets. This scan has to be broadened to include the broader global arena. Companies do not work in isolation. Hence it is essential for companies to examine the role that competition plays, and how such companies position themselves relative to the competition. This study investigates the extent to which manufacturing industries in Pietermaritzburg undertake environmental scanning before adopting a strategy, or making strategic changes. It further attempts to determine the extent and ratio that business strategists seek competitive advantage from environmental scanning of their particular industry, and from the broader macro environment, and evaluate whether increased or superior use of external macro environmental scanning is perceived to lead to increased competitive advantage, due to the rapid and extensive impact of global events. The findings suggest that many companies focus their attention purely on industry-based factors as a source of strategic competitive advantage. Further, most firms do not make use of services of essential consulting firms in the strategy formulation process. This study found that many companies undertook strategy formulation once a year, and no external environmental scanning was undertaken by their strategists. Firms appear to prefer internal analysis. For companies wanting to maximize their competitive strategy, it is essential for strategists to explore both the industry and macro environment for any advantages that can be 'identified. Globalisation is enforcing the expansion of the scope of macro environmental factors. Larger firms may have the resources to cope, but smaller firms would need to look at alternative ways of acquiring the proposed information, e.g. using the database of external consulting firms, Companies have to move away from the old mindset, and embrace the changes in the dynamic business environment, if they wish to remain competitive.