The Firm and it's environment Flashcards
Systematic monitoring of the major external forces influencing organizations is necessary to improve the management of companies.
Environmental Forces
includes the economic,socio-cultural, politico-legal, demographic, technological, and the world and ecological situations.
general business environment
What are the different environmental factors?
(1) Economic situations
(2) Sociocultural situations
(3) Politico-legal situations
(4) Demographic situations
(5) Technological situations
(6) World and ecological situations
Include factors/elements such as inflation, rates of interest, changing
options in stock markets, and people’s spending habits.
Economic Situations
Include the customers’ changing values and preferences; customs
could also affect management practices in companies.
Sociocultural situations
Refer to national or local laws, international laws, and rules and
regulations that influence organizational management.
Politico-legal situations
Gender, age, education level, income, the number of family members, geographic origin, etc. may also influence some managerial decisions in organizations.
Demographic situations
companies involve the use of varied types of electronic
gadgets and advanced technology such as computers, robotics, microprocessors, and others that have revolutionized business management; e-commerce, teleconferencing, and sophisticated information systems have rapidly changed the ways that business is
conducted in the 21st century.
Technological situations
Related to the increasing number of global competitors and markets, as well as the nature and conditions of the changing natural environment.
World and ecological situations
focuses on stakeholders, customers, pressure groups, and investors or owners and their employees as follows.
Specific business environments
Failure to consider a company’s _________________________may affect the strategies that management will make and use.
general and specific environments
Parties likely to be affected by the activities of the organization.
Stakeholders
They are those who patronize the organization’s products and services.
customers
who ensure the organization’s continuous flow of needed and
reasonably priced inputs or materials required for producing their goods and rendering their services.
Suppliers
The one who decide what, where, and when to buy their supplies and which supplier to favor with their organization’s supply orders.
Managers
They are special-interest groups that try to influence the organization’s decisions or action.
Pressured groups
They provide the company with the financial support it needs.
Investors or owners
The company, of course, cannot exist without them; thus, they greatly influence organizational
management.
investors or owners
Top-level, middle-level, and lower-level managerial decisions are all influenced, in one way or another, by them of organizations.
investors or owners
Branching out, offering new products and services, and applying for needed loans are all affected by the ________ way of thinking.
Investors or owners
Those who work for an employer in exchange for salaries/wages or non-monetary benefits.
Employees
They execute the company’s strategies and are important for the maintenance of the company’s stability.
Employees
It is a widely used tool to identify the external forces that may affect an organization both positively and negatively.
PESTEL analysis
PESTEL analysis is composed of?
Political
Economic
Social
Technological
Environmental
Legal
These factors determine the impact of government and government policy on a particular organization or a specific industry.
Political
It includes trade, fiscal, and taxation policies, among others.
Political
These factors determine the impact of the economy and its performance, to an organization and its profitability.
Economic
These include interest rates, employment or unemployment rates, raw material costs, and foreign exchange rates, among others.
Economic
These factors determine the impact of the social environment and emerging trends to the business profitability of an organization.
Social
These also help marketers to further understand the changing preferences of the customers.
Social
These include changing family demographics, education levels, cultural trends, attitude changes, and changes in lifestyles, among others.
Social
These factors determine the impact of technological innovation and
development on a particular market or industry.
Technological
These include changes in digital or mobile technology, automation, research, and development.
Technological
These include technological influence on methods of distribution, manufacturing, and logistics.
Technological
These factors determine the influence of the surrounding and the impact of ecological aspects to a market or industry.
Environmental
These include climate, recycling
procedures, carbon footprint, waste disposal, and sustainability.
Environmental
These factors determine the importance of understanding legal laws and procedures on a given territory where a business operates.
Legal
These include employment legislation, consumer law, health, and safety, international as well as trade regulation and restrictions.
Legal
Able to understand and predict the various changes, opportunities, and threats that may affect organizations in the future.
Environmental scanning
Also known as business forecasting
Business predictions
Is a method of predicting how variable in the environment will alter the future of business.
Business predictions or business forecasting
It could be used in making decisions regarding off-shoring, branching out locally, and expanding or downsizing the company.
Business predictions / business forecasting
An another component of environmental scanning that involves gauging the performance of the organization concerning those of others.
Benchmarking
It is the process of measuring or comparing one’s products, services, and practices with those of the
recognized industry leaders to identify areas for improvement.
benchmarking
Best practices of said industry leaders are______ so that understanding their competitive advantage would be easier.
observed
is a common tool used to assess and evaluate the competitive strength and position of a business.
Porter’s Five (5) Forces
Porter’s Five (5) Forces is developed by whom?
Michael E. Porter
This force analyzes how suppliers can easily influence price increases.
supplier power
This is
driven by the following factors: number of suppliers of each essential input; uniqueness of their product or service; relative size and strength of the supplier; and cost of switching from one supplier to another.
Supplier power
This force analyzes how buyers can easily influence price decreases.
Buyer power
This is driven by the number of buyers in the market, the importance of each buyer to the organization, and cost to the buyer of switching from one supplier to another. For instance, a few powerful buyers of a business are often able to dictate terms.
Buyer Power
This force examines the intensity of competition in the market place.
Competitive Rivalry
This is driven by the number and capability of competitors in the market.
Competitive Rivalry
When_________ is high, advertising and price wars can ensue, which can pose a negative impact on the business in the long run
competitive rivalry
___________ is high when there are few businesses equally selling a product or service, when the industry is growing, and when consumers can easily switch to a competitor’s product for a cheaper cost.
Competitive Rivalry
This force is threatening when buyers can easily find substitute products with attractive prices or better quality, and when buyers can switch from one product or service to another with little cost.
Threat of substitution
This force determines how easy or difficult it is to enter a particular
industry.
Threat of new entrants
It is a framework used to evaluate a company’s competitive position must be executed to examine important stakeholders like suppliers and customers within the firm’s environment.
SWOT Matrix
What are the following components of the SWOT Matrix?
Strengths
Weaknesses
Opportunities
Threats
These are the internal areas where an organization excels and the factors which separate an organization from its competitors.
Strengths
These are the internal areas that hinder an organization from performing at its optimum level.
weaknesses
These are areas where the business needs to make some improvements to remain competitive.
weaknesses
These are favorable external factors that could give an organization a
competitive advantage.
Opportunities
These are the factors that may pose potential harm to an organization.
Threats
He took a historical approach in suggesting that developed countries have
tended to pass through five (5) stages to reach their current degree of economic development.
Walt Whitman Rostow
What are the degree of economic development?
Traditional Society
Pre-conditions for take-off
Take-off
Drive to maturity
Age of mass consumption
This is an agricultural economy of mainly subsistence farming, little of
which is traded.
Traditional society
The size of the capital stock is limited and of low quality resulting in very
low labor productivity and little surplus output left to sell in domestic and overseas markets.
Traditional society
Agriculture becomes more mechanized and more output is
traded.
Pre-conditions for take-off
Savings and investment grow although they are still a small percentage of national income or Gross Domestic Product (GDP).
Pre-conditions for take-off
The manufacturing industry assumes greater importance, although the number of industries remains small.
Take-off
Political and social institutions start to develop - external finance
may still be required. Savings and investment grow, perhaps to 15% of GDP.
Take-off
Agriculture assumes lesser importance in relative terms although the majority of people may remain employed in the farming sector.
Take-off
There is often a dual economy apparent with rising productivity and wealth in manufacturing and other industries contrasted with stubbornly low productivity and real incomes in rural agriculture.
Take-off
Industry becomes more diverse.
Drive to maturity
Growth should spread to different parts of the country as the state of technology improves - the nation shifts toward a diverse economy, with massive growth in many sectors as influenced by the use of innovation that uplifts the individual income of the citizens.
Drive to maturity
Output levels grow, enabling increased consumer expenditure.
Age of mass consumption
There is a shift towards tertiary sector activity and the growth is sustained by the expansion of a middle class of consumers.
Age of mass consumption
What are the Traditional form of business organizations?
Simple Business Organization
Functional business structure
Divisional business organizations
Profit Business Organization
This have few departments, centralized authority with a wide span of control, and with few formal rules and regulations.
Simple business organizations
those that group together those with similar or related specialized duties that introduce the concept of delegation of authority to functional
managers like the personnel manager, sales manager, or financial manager but allow CEOs to retain authority for strategic decisions.
Functional business organizations
Made up of separate business units that are semiautonomous or semi-independent, with a division head responsible for his/her unit’s
performance.
Divisional business organizations
In other words, each division has its functional organization and its general manager.
Divisional business organizations
Maintains responsibility for the
delineation of organizational goals of the individual division.
Central Headquarters management
It is designed to achieve their organization’s mission, vision, goals,
and objectives and maintaining their organizational stability through income generation and
profit-making activities.
Profit business organization
It is designed to achieve their organizations’ mission, vision, goals, and objectives, providing service to clients without expecting monetary gains or financial benefits for their
endeavor.
Non-profit organization
It is formed to meet today’s changing work environment.
Open business organization or Flexible business organization
what are the diff types of business organization have evolved into other forms?
(1) Team structures
(2) Matrix business organizations
(3) Project business structure
(4) Boundaryless business organization
(5) Virtual business organization
Where the organization as a whole is made up of small teams that work
together to achieve the organization’s purpose; popular in a collective culture.
Team Structure
Refers to an organization that emphasizes the needs and goals of the group as a whole over the needs and desires of each individual.
Collective culture
Those which assign experts or specialists belonging to different functional departments to work together on one (1) or more projects; exhibit dual reporting relationships in which managers’ report to two (2) superiors – the functional manager and the divisional manager.
Matrix Business organization
A business organizational form with a flexible design, where the employees work on a project assigned to them within a definite time frame; projects may be short-term or long-term and members disband when the project is completed.
Project business structure
a business organization whose design eliminates vertical, horizontal, or external boundaries, and is described to be flexible and unstructured; there are non-barriers to information flow and therefore, completion of work is fast.
Boundaryless business organization
Made up of a small group of full-time workers and outside experts who are hired temporarily to work on assigned projects; members are physically dispersed and usually communicate electronically.
Virtual business organization
This person must be creative in finding ways to structure or design and organize work in their respective firms.
Manager
