Factors affecting environmental appraisal: given, the same environmental conditions, no two strategies or two organizations would appraise the environment in a similar function. This is due to the many factors that affect the process of the environment appraisal. Aspects of the environment relevant to any industrial or trading concern may involve varying dimensions depending on the size of the enterprise and its mission and objectives. Environmental factors have been differently categorized by the different analysis. Some of these factors are as follows:
1. Strategist related factors: there are many factors related to strategist, which affect the process of environment appraisal. Since strategist plays central role in the formulation of strategies, their characteristics such as age, education, experience, motivation level, cognitive styles, ability to withstand the time pressure and strain, etc. have an impact on the extent to which are able to withstand are able to appraise their organizations environment and how well they are able to do it. Apart from these factors, related to strategies as individuals, group characteristics too have an impact on how environmental appraisal is done. Such groups charactistics could be the inter personal relations between the different strategies involved in appraisal, term spirit, and the power educations operating between them.
2. Age of the organization: the age of the organization may also determine the types of the information that can be sought by it. The organizational growth over the period of time requires different type of interaction with its environment. Generally older is the age of the organization with the more experienced managers, the narrower will be the focus on the environment information because with the experience, managers may be able to distinguish what is relevant or irrelevant for the organizational. The necessary information may be sought and unnecessary will be screened out. Since the information may be sought can be tested to determine the organizational effectiveness by the managers, they can easily know the relevance of a particular piece of information.
3. Size and power of the organizational: large organizational have to interact regularly with the various environmental forces and its environmental search will have to be more intensive. Because of great risk exposure and frequency of taking on new ventures, or diversifying its activities, these organizations have to provide high weight age to trends in economic and competitive environments. They also have to respond to various laws, which apply particularly to large organizations. In our country various laws as industries (Development and Regulation) act and MTRP act are applicable to large organizational. The management of small enterprises need not be affected by these laws.
4. Geographic dimension of the organization: the geographic dimension of the organization affects the type of the interaction, which the organization has with its environment. Generally greater is the area of organization operation, more will be its informational requirements because the environmental factors may differ from place to place. If an organizational is localized, it may require information for those areas also. For example, the information requirements or multinationals, or an organization involved in the international business is much more than that of local organizational.
5. Type of business: the type of business the organization is in or intends to be in determines the nature of information sought. Moreover, how an organizational defines its business also becomes an important factor determining the information requirements. If the organization has defined its business narrowly, it will focus on the narrow aspect on the environment, thus a highly diversified company may require diverse types of the information. Similarly if an organization is its area of information search may be much broader.
6. Influence of business organization: the more power on organization has in relation to the environmental forces; the lower will be its need for appraisal of such forces. For example, a mono politic organization such as BHEL or ONGC, need not analyze the competitive environment. Similarly, organizations not dependent on fiscal and financial facilities of government and the financial institutions will lay less emphasis on political environment than those who depend heavily on them. In the same way, the management of the organization which have alternative sources of the supply of factors of production considers the supplier aspect of external environment less important. The less dependent the enterprise is on one or a few customers, the less it will focus on the customer sector of the environment.
7. Volatility of the environment: emphasis on environmental study and type of information needed an organizational are also dependent upon the nature of the environment. If the business environment is highly voltaic and turbulent, the management must be greatly concerned with the external environment and they would attempt to gather as much information as possible. This will be further reinforced id the environmental shows less functional, central managers show less concern towards the economic and the technological components of the environment and focus their environmental analysis on competitions. This is more so when environmental analysis on competitions. This is more so when environmental forces are relatively more homogenous and clustered.
8. Managerial calibre: organizations employing highly qualified executives show greater concern for environmental scanning than those devoid of such expertise. One of the factors contributing to the comprehensive and systematic environmental study by large and multinational organizational is that they are rich in the managerial skills and technical knowledge.