Final answer:
An Environmental Scan is the analysis conducted by a firm to evaluate its strengths, weaknesses, and the opportunities and threats in its environment, playing a crucial role in strategic planning.
Step-by-step explanation:
In step 2 of the strategic planning process, when a firm analyzes its strengths, weaknesses, opportunities, and threats in both internal and external environments, this analysis is commonly referred to as an Environmental Scan. This comprehensive review assists the company in understanding the various factors that can impact their business operations and strategic decisions. During an Environmental Scan, internal factors such as employee skills, brand reputation, and financial resources are scrutinized as strengths and weaknesses. Concurrently, external factors like market trends, competition, and regulatory changes are evaluated as opportunities and threats.
An Environmental Scan is integral to the strategic planning process because it provides a holistic view of the business landscape. It allows firms to pivot or adapt their strategies by highlighting the areas where they can leverage their strengths or where they need to improve weaknesses. Additionally, by identifying opportunities for growth and awareness of potential threats, businesses can proactively plan for future challenges and trends in the marketplace.