Environmental scanning practices in South African top performing companies

Abstract

The environment in which companies operate is becoming more competitive and complex, and companies are searching for ways to ensure their success while remaining sustainable. Environmental scanning is an important element of strategic planning. Companies today are facing major challenges to be successful and to survive. In order to be successful, companies need to understand the environment in which they operate. In this light, information becomes a strategic asset because companies are able to obtain information through environmental scanning, which is a fundamental aspect of strategic planning. A knowledge gap exists on the environmental scanning practices of top performing South African companies, in terms of how environmental information is being captured and used for strategic planning in these companies. In fact, it is not clear whether top performing South African companies practice environmental scanning at all. The present study investigated the environmental scanning practices of top performing South African companies. The main purpose of this study was to investigate the nature of environmental scanning, the way companies acquire environmental information and the way this information supports strategic planning. Moreover, the study investigated the dimensions of the external environment that are of specific relevance to the companies‟ business environments. The study specifically investigated how these companies use information acquired through environmental scanning to make informed strategic decisions. The study followed a convergent parallel mixed methods research design, which involves the simultaneous collection and analysis of qualitative and quantitative data. In the qualitative phase of the study, semi-structured interviews were used to gather data from 16 participants, including one chairman, four vice-presidents, and 11 senior managers of 11 top performing companies in South Africa. In the quantitative phase, data was collected from 33 senior managers representing 33 companies listed in the Financial Mail‟s 2014 list of the 200 top performing South African companies. The study reveals that 56.3% of the participating companies have formal environmental scanning offices or units, indicating a formal search mode of environmental scanning. This environmental scanning mode entails a deliberate attempt to gather environmental information during which companies scan the external environment in a broad and comprehensive way. Some of these companies are actively searching for information so as to influence events in the external environment, which is known as enacting. Only a few companies use a conditioned viewing mode of environmental scanning in which they tend to follow standard procedures when scanning the external environment. Although their environmental scanning practices differ, the participating companies all use environmental information for strategic planning purposes to make informed strategic decisions. The findings from this study provide an in-depth understanding of the environmental scanning practices of top performing South African companies and the influence of these practices on these companies‟ strategic planning activities. The results of the study are useful in developing the skills needed to perform effective environmental scanning in other companies.