chapter 2 Flashcards
General environment:
The set of broad dimensions
and forces in an organization’s surroundings that
determine its overall context
Task environment:
Specific organizations or groups
that affect the organization
Internal environment
The conditions and forces within an organization
General Environment dimension
- Economic dimension: Overall health and vitality of the
economic system in which the organization operates.
− Includes growth, inflation, interest rates, and unemployment - Technological dimension: Methods available for converting
resources into products or services
− CAD/CAM technologies, Web-based technologies in all areas of
business - Political-legal dimension: Government regulation of
business, relationship between business and government
Political-legal dimension:
Government regulation of
business, relationship between business and government
− Free market economy
− Political stability of international and local governments
− Pro- or anti-business sentiment in government influences
business activity. Includes antitrust issues, taxes, regulation
- Affects ability to compete
task: Competitor
− An organization that competes with other
organizations for resources
task: Customer
− Whoever pays money to acquire an organization’s
products or services
task: Supplier
− An organization that provides resources for other
organizations
task: Regulator
A body that has the potential to control, legislate,
or otherwise influence the organization’s policies and
practices
task: Regulatory agencies:
An agency created by the
government to regulate business activities
task: Interest groups
A group organized by its members to
attempt to influence organizations
task: Strategic partner
Also called strategic ally. An organization
working together with one or more other organizations in a
joint venture or similar arrangement
Internal: Owner
− Whoever can claim property rights to an organization
Internal: Board of directors
− Governing body that is elected by a corporation’s
stockholders and charged with overseeing the general
management of the firm to ensure that it is being run in a
way that best serves the stockholders’ interests
internal: Physical work environment
− Includes the actual physical environment and the work that
people do
Ethics
- An individual’s personal beliefs about whether a behavior,
action, or decision is right or wrong
Ethical behavior:
- Behavior that conforms to generally accepted social norms
Unethical behavior:
- Behavior that does not conform to generally accepted social
norms
Exporting
− Making a product in the firm’s domestic marketplace
and selling it in another country
Importing
− Bringing a good, service, or capital into the home
country from abroad
Licensing
− An arrangement whereby one company allows another
company to use its brand name, trademark, technology,
patent, copyright, or other assets in exchange for a
royalty based on sales
Strategic alliance
− A cooperative arrangement between two or more firms for
mutual gain
Joint venture
− A special type of strategic alliance in which the partners
share in the ownership of an operation on an equity basis
Direct investment:
− When a firm builds or purchases operating facilities or
subsidiaries in a different country
Maquiladoras:
− Light assembly plants built close to the U.S. border and are
given special tax breaks by the Mexican government
importing or exporting advanteges
- Small cash outlay
- Little risk
- No adaptation necessary
importing or exporting Disadvantages
- Tariffs and taxes
- High transportation costs
- Government restrictions
Licensing Advantages
- Increased profitability
- Extended profitability
Licensing disadvantages
- Inflexibility
- Competition
Strategic alliances or joint ventures Advantages
- Quick market entry
- Access to materials and technology
Strategic alliances or joint ventures Disadvantages
- Shared ownership (limits control and profits)
Direct investment advantages
- Enhanced control
- Existing infrastructure
Direct investment disadvantages
- Complexity
- Greater economic and political risk
- Greater uncertainty
