Is environmental scanning necessary for entrepreneurial activity?

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belarafon eNotes educator| Certified Educator

Environmental scanning, the study of influence and trends on a business market, is a vital part of entrepreneurial activity. Most analyses use a variation on the PESTEL system, focusing on Political, Economic, Socio-cultural, Technological, Environmental, and Legal data (Wikipedia, eNotes). Without analyzing the way in which society influences the market, a product or business can be started that is unsuited for its local environment; losing business because the business environment is not fully understood is a common error for new business owners. Using techniques of accumulating and interpreting data about the larger environment -- for example, the current political trends, or the effects of a peer group (i.e. church, union) on one area versus another -- an entrepreneur can focus on building a strong business that caters to the actual needs and desires of the surrounding environment. Similarly, if the activity in question requires an available labor force, an area with higher unemployment might be better suited than one with high employment.