That is not so much a contradiction of the research but a limitation of it in terms of applicability to practitioners running small manufacturing companies.
Critique of Environmental Scanning: Frequency and Scope
Beal (2000) bases his methodology for assessing environmental scanning on twenty eight specific items that CEOs of 101 small manufacturing companies responded to as part of the research effort, and later analyzed them using factor analysis. Using Varimax rotation in factor analysis to explain variances across the results, company's management capabilities and resources (.824) and company's financial capabilities and resources (.811) were found to be the greatest two factors across all twenty-eight measured in terms of explaining variations in environmental scanning resulting impact on related environment/competitive strategy alignment. Scanning multiple situations or events occurring in an environmental sector will be positively related to environment-competitive strategy alignment, which is the second hypothesis of the research project (H2) looks at the effect of scope of scanning on external alignments by stage of the industry lifecycle. What emerges from this analysis, shown in Table 4 of the Beal (2000) article is that alignment of low cost ownership and the maturity stage have the highest mean square error (.56* followed by alignment of innovation differentiation during the growth phase (.502). It is feasible to argue that these are tow two most visible aspects of an industry's lifecycle as well, and that even cursory external environmental scanning of an industry can delineate its relative growth through innovation, or its relative stagnant level of sales and the inevitable price competition markets that have matured begin to exhibit. What is most surprising of all in this study however published by Beal (2000) is the statement "Third, the frequency at which CEOs of small manufacturing companies scan their environments may not be critical to aligning their firms' competitive strategies with the stage...
44) contradicts other findings, assumptions and research from the literature review of the entire published article. Isn't this the basis for the article in the first place? That externally scanning the environment can pay major dividends even to small manufacturers? Incredulously this statement sticks out after the argument and factor analysis including Varimax rotation to ascertain the level of variation defined by twenty three differentiation factors and twenty eight environmental scanning factors. Apparently the results were not as conclusive from a theoretical as they were from an empirical standpoint for Beal to make this assessment.
While Beal (2000) posits a unique and potentially insightful methodology of isolating both the sources of differentiation, their effects on small manufacturers, and the outcomes of external environmental scanning, the author fails to deliver prescriptive and concrete findings for the small business and small manufacturing practitioner.
Instead of having a set of processes to evaluate and consider for improvement first through external scanning and then through internal implementation, benchmarking, and continual improvement, the author stays at such a strategic level on the analysis as to make all findings generic in nature. The author, Beal, needs to go back and delve deeper into which manufacturing processes need improvement, by specific manufacturing verticals, to make this analysis useful for the small manufacturers it is presumably completed to assist. Lastly, contradictions that create confusion such as the statement on page 44 defined earlier need to be intermediated against so the entire article has a single, cohesive direction.
Beal, R (2000).Competing effectively: Environmental scanning,…
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