BUSA (Chapter 2).docx - CHAPTER 2 ORGANIZATIONAL ENVIRONEMENTS AND CULTURES CHANGING ENVIRONMENTS External Environment forces and events outside a


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CHAPTER 2: ORGANIZATIONAL ENVIRONEMENTS AND CULTURES CHANGING ENVIRONMENTS External Environment : forces and events outside a company that have potential to influence or affect it. (A) Environmental Change: refers to the rate of which a company’s general and specific environments change. o Stable Environment : the rate of environmental change is slow. e.g. food distribution companies: makes little changes from year to year. o Dynamic Environment: the rate of environmental change if fast. e.g. the smartphone industry: it is heavily influenced by the actions of ferocious competitors, technological innovations and changes in consumer demand. o Punctuated Equilibrium Theory: companies go through long periods of stability (equilibrium) during which incremental changes occur, followed by short periods of dynamic, fundamental change (revolutionary periods), which end with the return to stability (new equilibrium). e.g. Airline Industry (B) Environmental Complexity: refers to the number and intensity of external factors in the environment that affect organization. o Simple Environment : has a few environmental factors. e.g. Dairy companies o Complex Environment: has many environmental factors. e.g. Newspaper industry due to the rising technological advancements. (C) Resource Scarcity : refers to the abundance or shortage of critical resources in the organization’s external environment. (D) Uncertainty : refers to how well managers can understand or predict the external changes and trends affecting their business. TWO TYPES OF EXTERNAL ENVIRONMENT General Environment: Consists of the political/legal, economic, sociocultural, and technological trends that indirectly affect all organizations. Specific Environment: factors that is unique to its industry and that directly affects how it conducts day- to-day business. Includes customers, competitors, suppliers, industry regulation and advocacy groups. GENERAL ENVIRONEMENT (A) Economy: the current state of a country’s economy affects all organizations doing business there. o Growing economy: more people are working and higher wages are increasing, consumers have more money to spend. o Shrinking economy: wages are decreasing, making the growth of business tougher. People have less money to spare, therefore, business generating revenue becomes tougher. o Business confidence indices: shows how confident actual managers are about future business growth.
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(B) Technological Component: o Technology: is the knowledge, tools and techniques used to transform inputs in outputs.
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  • Spring '08
  • RobertDelorme
  • Natural environment

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