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Related Flashcards
Related Topics
Cards In This Set
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External Environments
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All events outside a company that have the potential to influence or affect it.
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Environmental change
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The rate at which a company’s general and specific environments change.
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Stable environments
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The rate of environmental change is slow.
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Dynamic environments
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The rate of environmental change is fast.
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Punctuated equilibrium theory
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Companies go through long, simple periods of stability (equilibrium), followed by short periods of dynamic (revolutionary period) and ending with a return to stability (new equilibrium).
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. Environmental Complexity
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The number and intensity of factors in the external environment that affect organizations.
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Simple environments
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Have few environmental factors that affect organizations
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Complex environments
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Have many environmental factors that affect organizations
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Resource Scarcity
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The abundance or shortage of critical resources to an organization’s external environment.
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Uncertainty
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The extent to which managers can understand or predict the external changes and trends affecting their business.
- Uncertainty is highest when environmental change and complexity are extensive and resource scarcity is a problem. |
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General environment
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Consists of the economy and the technological, sociocultural, and political/legal trends that indirectly affect all organizations.
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Specific environment
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Unique to that firm’s industry and directly affects the way it conducts day-to-day business. (Customer, competitor, supplier, advocacy groups and industry regulation)
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Economy
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The current state of a country’s economy affects virtually every organization doing business there.
- A growing economy is a favorable environment for business growth. - A shrinking economy makes growth for business more difficult. - Business confidence indices – Indices that show managers’ level of confidence about the future business growth. |
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Technological Component
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- Technology – The knowledge, tools and techniques used to transform input into output.
- Changes in technology can help companies provide better products or produce their products more efficiently. -Companies must embrace new technology and find effective ways to use it to improve their products and services and decrease costs. |
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Sociocultural Component
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- Refers to the demographic characteristics, general behavior, attitudes and beliefs of people in a particular society.
- Affect how firms staff their businesses. - Ex: number of people with particular skills, growth/decline in particular population segments and gender roles - Affect the demand for businesses’ products and services. |
