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How Can Managers Use Environmental Scanning? CHAPTER 5 • Foundations of Planning 173
environmental scanning
A manager’s analysis of the external environment may be improved by environmental An analysis of the external environment, which
scanning, which involves screening large amounts of information to detect emerging trends. involves screening large amounts of information to
detect emerging trends
One of the fastest-growing forms of environmental scanning is competitive intelligence,
which is accurate information about competitors that allows managers to anticipate competi- competitive intelligence
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tors’ actions rather than merely react to them. It seeks basic information about competitors: A type of environmental scanning that gives manag-
ers accurate information about competitors
Who are they? What are they doing? How will what they’re doing affect us?
Many who study competitive intelligence suggest that much of the competitor-related
information managers need to make crucial strategic decisions is available and acces-
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sible to the public. In other words, competitive intelligence isn’t organizational espionage.
Advertisements, promotional materials, press releases, reports filed with government agen-
cies, annual reports, want ads, newspaper reports, information on the Internet, and industry
studies are readily accessible sources of information. Specific information on an industry and
associated organizations is increasingly available through electronic databases. Managers can
literally tap into this wealth of competitive information by purchasing access to databases.
Attending trade shows and debriefing your own sales staff also can be good sources of
information on competitors. In addition, many organizations even regularly buy competi-
tors’ products and ask their own employees to evaluate them to learn about new technical
innovations. 46
In a changing global business environment, environmental scanning and obtaining
competitive intelligence can be quite complex, especially when information must be gath-
ered from around the world. However, managers could subscribe to news services that
review newspapers and magazines from around the globe and provide summaries to client
companies.
Managers do need to be careful about the way information, especially competitive intel-
ligence, is gathered to prevent any concerns about whether it’s legal or ethical. For instance,
Starwood Hotels sued Hilton Hotels alleging that two former employees stole trade secrets
and helped Hilton develop a new line of luxury, trendy hotels designed to appeal to a young
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demographic. The court filing said, “This is the clearest imaginable case of corporate espio-
nage, theft of trade secrets, unfair competition, and computer fraud.” Competitive intelligence
becomes illegal corporate spying when it involves the theft of proprietary materials or trade
secrets by any means. The Economic Espionage Act makes it a crime in the United States to
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engage in economic espionage or to steal a trade secret. Difficult decisions about competi-
tive intelligence arise because often there’s a fine line between what’s considered legal and
ethical and what’s considered legal but unethical. Although the top manager at one competi-
tive intelligence firm contends that 99.9 percent of intelligence gathering is legal, there’s no
question that some people or companies will go to any lengths—some unethical—to get
information about competitors. 49

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