SOM Chapter 3

STUDYING FOR MY TEST IN SOM. We have a midterm on friday

36 cards   |   Total Attempts: 182
  

Cards In This Set

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External Environments
All events outside a company that have the potential to influence or affect it.
Environmental change
The rate at which a company’s general and specific environments change.
Stable environments
The rate of environmental change is slow.
Dynamic environments
The rate of environmental change is fast.
Punctuated equilibrium theory
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).
. Environmental Complexity
The number and intensity of factors in the external environment that affect organizations.
Simple environments
Have few environmental factors that affect organizations
Complex environments
Have many environmental factors that affect organizations
Resource Scarcity
The abundance or shortage of critical resources to an organization’s external environment.
Uncertainty
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.
General environment
Consists of the economy and the technological, sociocultural, and political/legal trends that indirectly affect all organizations.
Specific environment
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)
Economy
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.
Technological Component
- 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.
Sociocultural Component
- 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.