What You Need to Know About Environmental Scan for the PHR/SPHR Exams
An environmental scan reviews the internal and external factors that influence an organization’s ability to compete in its space. Internal strengths and weaknesses and external threats and opportunities are identified, and plans then are generated to respond to these conditions on a short-term and long-term basis. This process explores the technological, economic, social, and political factors that influence success.
Both exams require an understanding of the different types of environmental scanning formulas, including the following:
PEST: Political, economic, social, and technological analysis to collect data for the strategic planning process.
PESTLE: Political, economic, social, technological, legal, and environmental assessment of the business climate.
Porter’s five forces: Michael E. Porter’s description of the competitive influences of business success and failure listed as rivalry, supplier power, the threat of substitutes, buyer power, and the threat of new entrants into the market. A good business strategy collects this data and analyzes it for a better understanding of competitive position in their relevant market.
SWOT: A SWOT audit is a scan of the environment to identify internal strengths and weaknesses and external opportunities and threats. A strong strategic plan maximizes strengths and mitigates weaknesses, while capitalizing on opportunities and taking steps to reduce or eliminate threats.