What is external monitoring and what role does it play in business organizations?

Student answers may vary. External monitoring is needed to detect threats and opportunities for the organization. Top executives need to be sensitive to a wide range of events and trends that are likely to affect their organization. It is essential to learn about the concerns of customers and clients, the availability of suppliers and vendors, the actions of competitors, market trends, economic conditions, government policies, and technological developments. The information may be gathered in a variety of ways (e.g., reading government reports and industry publications, attending professional and trade meetings, talking to customers and suppliers, examining the products and reports of competitors, conducting market research). External monitoring (also called "environmental scanning") provides the information needed for strategic planning and crisis management. The amount of change and turbulence in the environment will determine how much external monitoring is necessary. More external monitoring is needed when the organization is highly dependent on outsiders (e.g., clients, customers, suppliers, subcontractors, joint venture partners), when the environment is rapidly changing, and when the organization faces severe competition or serious threats from outside enemies. Monitoring of the external environment is usually considered more important for upper-level managers than for lower-level managers. However, the difficulties involved in scanning and interpreting information about environmental changes make this responsibility one that should be shared by managers in an organization.