Chapter 2 Flashcards
what are organizational boundaries
- separate an organization from its external environment
- define what is included within the organization and what lies outside impacting how the organization interacts with external factors
what are multiple organizational environments
- operate within various external environments which significantly influence their success or failure
- include economic conditions, technological advancements, political and legal frameworks, social issues and global trends
- businesses must be aware of these to adapt and thrive
what is the importance of the economic environment to business
- influences consumer behavior, business operations and overall market dynamics
what are the key factors used to evaluate the performance of an economic system
- economic growth: reflects increase in production and total output within an economy
- aggregate output: measures the total quantity of goods and services produced, indicating the health of the economy.
- Business Cycle: Involves phases of expansion and contraction in economic activity, which impact consumer spending and business investment.
- Gross Domestic Product (GDP): Total value of all goods and services produced, crucial for assessing economic growth.
- Balance of Trade: The difference between a country’s exports and imports, affecting economic stability.
- National Debt: The total amount of money owed by a government, influencing fiscal policies and economic health.
what is the technological environment
- encompasses all the methods and tools that firms use to create value
- includes human knowledge, work methods, physical equipment and processing systems
what is the role of the technological environment
- innovation: firms have to continuously adapt to technological changes to remain competitive
- efficiency: improved technology can lead to higher productivity and reduced costs
- product development: R&D is essential for creating new products and improving existing ones, which allow companies to meet market demands
what is the political-legal environment
- reflects the relationship between business and government, particularly regarding regulation
what is the role of the political-legal environment
- regulation: governments impose rules that can affect industry practices and competition
- political stability: a stable political environment is crucial for long-term business planning and investment
- compliance: businesses must adhere to laws and regulations to operate legally influencing their strategies and operational practices
what is the sociocultural environment
- includes the customs, values, attitudes, and demographic characteristics of society
what is the role of the sociocultural environment
- consumer preferences: understanding sociocultural factors helps businesses tailor their products and marketing strategies to meet consumer needs
- ethical standards: companies are increasingly held accountable for their ethical conduct and social responsibility
- market trends: sociocultural shifts can create new opportunities or challenges for businesses affecting demand for goods and services
what are the emerging challenges and opportunities in the business environment
- technological advancements: rapid technological changes can disrupt existing markets but also provide avenues for innovation and growth
- globalization: expanding into international market offers opportunities but requires understanding diverse regulatory and cultural landscapes
- consumer expectations: there is an increasing demand for high-quality, customized products delivered quickly and at competitive prices
- sustainability: businesses are challenged to adopt sustainable practices while also addressing consumer demand for ethical behavior
what are the recent trends in the redrawing of corporate boundaries
- mergers and acquisitions: companies are merging to enhance competitiveness or expand market share
- strategic alliances: firms are forming partnerships to share resources, reduce risk, and enhance capabilities
- outsourcing: companies are increasingly outsourcing non-core activities to focus on their competencies often leading to greater efficiency
- employee ownership: there’s a growing trend toward employee stock ownership plans (ESOPs) encouraging employee investment in company success
External environment
consists of everything outside an organization’s boundaries that might affect it
Economic environment
conditions of the economic system in which the organization operates
Aggregate output
total quantity of goods and services produced by an economic system during a given period
Business cycle
pattern of short term ups and downs (expansions and contractions) in an economy
