In the context of the external environment of a firm, which of the following statements is true of environmental scanning?
A) Managers scan their firm's environment to reduce uncertainty.
B) It remains unaffected by organizational strategies.
C) CEOs in poorer-performing firms scan their firms' environments more frequently than CEOs in better-performing firms.
D) It is reactive in nature and leads to the detection of environmental problems after they become organizational crises.

Question

Quizplus · Accepted Answer

Environmental scanning involves gathering information about the external environment of the firm to identify and interpret potential trends and events that could impact the organization. This helps managers to reduce uncertainty and make informed decisions. Option B is incorrect because organizational strategies are typically informed by the results of environmental scanning. Option C is incorrect as there is no evidence to suggest that poorer-performing firms scan their environments more frequently than better-performing firms. Finally, option D is incorrect because environmental scanning is proactive in nature and helps organizations anticipate and prepare for potential environmental problems before they become crises.

In the Context of the External Environment of a Firm