The external business environment is all factors that affect an organization’s
boundaries. External is the macro environment (politics, technology, international) or
task environment (competitors, suppliers, customers).
PEST: political, economical, social, and technological events that impact an
organization. Involved in looking into the future.
The political environment consists of democracies, communists, and theocratic.
Democracy- accessible legal systems and laws. Communist- single party political
systems; centrally controlled; emphasize worker’s right, equality, and ideology.
Theocratic- governed by religion; political leaders are also religious leaders.
The economic environment consists of interconnections between the economies of
different countries. Economic markets consist of open markets, centrally planned, and
combinations. Open markets- free markets consisting of competing forces (USA).
Centrally planned- resources are allocated by the government (Soviet Union).
Combinations- mix between the two (current China).
Culture is the learned values, assumptions, perceptions, and behaviors of a society. It
contains three levels- perceived culture; common values, attitudes, and norms; and
underlying assumptions. Culture is learned, shared, organized, and systematic.
Iceberg of culture: top- artifacts, middle- exposed values, bottom- underlying
assumptions. Artifacts are what we see that represents the culture. Exposed values are
what we say and promote but not what we do. Underlying assumptions are what we
believe and are felt but not spoken.
Comparison of organizational culture and national culture: organizational cultures are
shared values, socialized into, and partly involved in. National cultures are shared
meanings, born into, and completely immersed into.
Convergence/divergence: the extent to which cultures are becoming more similar or
more different. Acculturation: the changes in people who relocate from one culture to
Prejudice is when we hold negative preconceptions of others. Ethnocentrism is when
our view of the world places us at the center; we are better than others.