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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 Environment

An environment in which the rate of change is slow

Dynamic Environment

An environment in which the rate of change is slow

Punctuated Equilibrium Theory

The theory that companies go through long periods of stability, followed by short periods of dynamic, fundamental change, and finishing with a return to stability

Environmental Complexity

The number and the intensity of external factors in the environment that affects organizations

Simple Environment

An environment with few environmental factors

Complex Environment

An environment with many environmental factors

Resource scarcity

The abundance or shortage of critical organizational resources in an organization's external environment


Extent to which managers can understand or predict which environmental changes and trends will affect their businesses

General Environment

The economic, technological, sociocultural, and political trends that indirectly affect all organizations

Specific Environment

The customers, competitors, suppliers, industry regulations, and advocacy groups that are unique to an industry and directly affect how a company does business

Business Confidence Indices

Indices that show managers' level of confidence about future business growth


The knowledge, tools, and techniques used to transform input into output


Companies in the same industry that sell similar products or services to customers

Competitive Analysis

A process for monitoring the competition that involves identifying competition, anticipating their moves, and determining their strengths and weaknesses


Companies that provide material, human, financial, and informational resources to other companies

Supplier Dependence

The degree to which a company relies on a supplier because of the importance of the supplier;s product to the company and the difficulty of finding other sources of that product

Buyer Dependence

The degree to which a supplier relies on a buyer because of the importance of that buyer to the supplier and the difficulty of finding other buyers for it's products

Opportunistic Behavior

A transaction in which one party in the relationship benefits at the expense of the other

Relationship Behavior

The establishment of mutually beneficial, long-term exchanges between buyers and suppliers

Industry Regulation

Regulations and rules that govern the business practices and procedures of specific industries, businesses, and professions

Advocacy Groups

Concerned citizens who band together to try to influence the business practices of specific industries, businesses and professions

Public Communications

An advocacy group tactic that relies on voluntary participation by the news media and the advertising industry to get the advocacy group's message out

Media Advocacy

An advocacy group tactic that involves framing issues as public issues

Product Boycott

An advocacy group tactic that involves protesting a company's actions by persuading consumers not to purchase it's product or service

Environmental Scanning

Searching the environment for important events or issues that might affect an organization

Internal Environment

The events and trends inside an organization that affect management, employees, and organizational culture

Organizational Culture

The values, beliefs, and attitudes shared by organizational members

Organizational Stories

Stories told by organizational members to make sense of organizational events and changes and to emphasize culturally consistent assumptions, decisions, and actions

Organizational Heroes

People celebrated for their qualities and achievements within an organization

Company Vision

A company's purpose or reason for existing

Consistent Organizational Culture

A company culture in which the company actively defines and teaches organizational values, beliefs, and attitudes

Behavioral Addition

The process of having managers and employees perform new behaviors that are central to and symbolic of the new organizational culture that a company wants to create

Behavioral Substitution

The process of having managers and employees perform new behaviors central to the "new" organizational culture in place of behaviors that were central to the "old" organizational culture

Visible Artifacts

Visible signs of an organization's culture, such as the office design and layout, company dress code, and company benefits and perks, like stock options, personal parking spaces, or the private company dinning room


The set of moral principles or values that defines right and wrong for a person or group

Ethical Behavior

Behavior that conforms to a society's accepted principles of right and wrong

Ethical Intensity

The degree of concern people have about an ethical issue

Magnitude of Consequences

The total harm or benefit derived from an ethical decision

Social Consensus

Agreement on whether behavior is bad or good

Probability of Effect

The chance that something will happen and then harm others

Temporal Immediacy

The time between an act and the consequences the act produces

Proximity of Effect

The social, psychological, cultural, or physical distance between a decision maker and those affected by his or her decisions

Concentration of Effect

The total harm or benefit that an act produces on the average person

Preconventional Level of Moral Development

The first level of moral development, in which people make decisions based on selfish reasons

Conventional Level of Moral development

The second level of moral development, in which people make decisions that societal to societal expectations

Postconventional Level of Moral Development

The third level of moral development, in which people make decisions based on internalized principles

Overt Integrity Test

A written test that estimates job applicant's honesty by directly asking them what they think or feel about theft or about punishment of unethical behaviors

Personality-Based Integrity Test

A written test that indirectly estimates job applicants' honesty by measuring psychological traits, such as dependability and conscientiousness


Reporting others' ethics violations to management or legal authorities

Social Responsibility

A business's obligation to pursue policies, make decisions, and take actions that benefit society

Shareholder Model

A view of social responsibility that holds that an organization's overriding goal should be profit maximization for the benefit of shareholders

Stakeholder Model

A theory of corporate responsibility that holds that management's most important responsibility, long-term survival, is achieved by satisfying the interests of multiple corporate stakeholders


Persons or groups with a "stake" or legitimate interest in a company's actions

Primary Stakeholder

Any group on which an organization relies for its long-term survival

Secondary Stakeholder

Ant group that can influence or be influenced by a company and can affect public perceptions about company's socially responsible behavior

Economic Responsibility

A company's social responsibility to make a profit by producing a valued product or service

Legal Responsibility

A company's social responsibility to obey society's laws and regulations

Ethical Responsibility

A company's social responsibility not violate accepted principles of right and wrong when conducting its business

Discretionary Responsibilities

The social roles that a company fulfills beyond its economic, legal, and ethical responsibilities

Social Responsiveness

Refers to a company's strategy to respond to stakeholders' economic, legal, ethical, or discretionary expectations concerning social responsibility

Reactive Strategy

A social responsiveness strategy in which a compay does less than society expects

Defensive Strategy

A social responsiveness strategy in which a company admits responsibility for a problem but does the least required to meet societal expectations

Accommodative Strategy

A social responsiveness strategy in which a company accepts responsibility for a problem and does all that society expects to solve that problem

Proactive Strategy

A social responsiveness strategy in which a company anticipates responsibility for a problem before it occurs and does more than society expects to address the problem


Choosing a goal and developing a strategy to achieve that goal

S.M.A.R.T. Goals

Goals that are specific, measurable, attainable, realistic, and timely.

Goal Commitment

The determination to achieve a goal.

Action Plan

The specific steps, people, and resources needed to accomplish a goal

Proximal Goals

Short-term goals or subgoals

Distal Goals

Long-term or primary goals

Option-Based Planning

Maintaining planning flexibility by making small, simultaneous investments in many alternatives in many alternative plans

Slack Resources

A cushion of extra resources that can be used with options-based planning to adapt to unanticipated change, problems, or opportunities

Learning-Based Planning

Learning better ways of achieving goals by continually testing, changing, and improving plans and strategies

Strategic Plans

Overall company plans that clarify how the company will serve customers and position itself against competitors over the next two to five years


An inspirational statement of an organization's enduring purpose


A statement of a company's overall goal that unifies company-wide efforts toward it's vision, stretches and challenges the organization, and possesses a finish line and a time line

Tactical Plans

Plans created and implemented by middle managers that specify how the company will use resources, budgets, and people over the next six months to two years to accomplish specific goals with it's mission

Management by Objectives

A four-step process in which managers and employees discuss and select goals, develop tactical plans, and meet regularly to review progress toward goal accomplishment

Operational Plans

Day-to day plans, developed and implemented by lower-level managers, for producing or delivering the organization's products and services over 30-day to six-month period

Single-Use Plans

Plans that cover unique, one-time-only events

Standing Plans

Plans used repeatedly to handle frequently recurring events


A standing plan that indicated the general course of action that should be taken in response to a particular event or situation


A standing plan that indicates the specific steps that should be taken in response to a particular event

Rules and Regulations

Standing plans that describe how a particular action should be performed, or what must happen or not happen in response to a particular event


Quantitative planning through which managers decide how to allocate available money to best accomplish company goals

Decision Making

The process of choosing a solution from available alternatives

Rational Decision Making

A systematic process of defining problems, evaluating alternatives, and choosing optimal solutions


A gap between a desired state and an existing state

Decision Criteria

The standards used to guide judgements and decisions

Absolute Comparisons

A process in which each decision criterion is compared to a standard or ranked on its own merits

Relative Comparisons

A process in which each decision criterion is compared directly with every other criterion

Bounded Rationality

A decision-making process restricted in the real world by limited resources, incomplete and imperfect information, and managers' limited decision-making capabilities


Choosing the best alternative


Choosing a "good enough" alternative


A barrier to good decision making caused by pressure within the group for members to agree with each other

C-Type Conflict

Disagreement that focuses on problem and issue-related differences of opinion

A-Type Conflict

Disagreement that focuses on individuals or personal issues

Devil's Advocacy

A decision-making method in which an individual or a subgroup is assigned the role of a critic

Dialectical Inquiry

A decision-making method in which decision makers state the assumptions of a proposed solution that is the opposite of that solution

Nominal Group Technique

A decision-making method that begins and ends by having group members quietly write down and evaluate ideas to be shared with the group

Delphi Technique

A decision-making method in which members of a panel of experts respond to questions and to each other until reaching agreement on an issue

Stepladder Technique

A decision-making method in which group members are added to a group discussion one at a time.


A decision-making method in which group members build on each others' ideas to generate as many alternative solutions as possible

Electronic Brainstorming

A decision-making method in which group members use computers to build on each others' ideas and generate many alternative solutions.

Production Blocking

A disadvantage of face-to-face brainstorming in which a group member must wait to share an idea because another member is presenting an idea

Evaluation Apprehension

Fear of what others will think of your ideas


The assets, capabilities, processes, information and knowledge that an organization uses to improve its effectiveness and efficiency, create and sustain competitive advantage and fulfill a need or solve a problem

Competitive Advantage

Providing greater value for customers than competitors can

Sustainable Competitive Advantage

A competitive advantage that other companies have tried unsuccessfully to duplicate and have, for the moment, stopped trying to duplicate

Valuable Resources

A resource that allows companies to improve efficiency and effectiveness

Rare Resource

A resource that is not controlled or possessed by many competing firms

Imperfectly Imitable Resource

A resource that is impossible or extremely costly or difficult for other firms to duplicate

Nonsubstitutable Resource

A resource that produces value or competitive advantage and has no equivalent substitutes or replacements

Competitive Inertia

A reluctance to change strategies or competitive practices that have been successful in the pasr

Strategic Dissonance

A discrepancy between a company's intended strategy and the strategic actions managers take when implementing that strategy

Situational Analysis

An Assessment of the strengths and weaknesses in an organization's internal environment and the opportunities and threats in its external environment

Distinctive Competence

What a company can make, do, or perform better than it's competitors

Core Capabilities

The internal decision-making routines, problem-solving processes, and organizational cultures that determine how efficiently inputs can be turned into outputs

Strategic Group

A group of companies within an industry that top managers choose to compare, evaluate, and benchmark strategic threats and opportunities

Secondary Firms

The firms in a strategic group that follows strategies related to but somewhat different form those of the core firms

Strategic Reference Points

The strategic targets managers use to measure whether a firm has developed the core competencies if needs to achieve a sustainable competitive advantage

Corporate-Level Strategy

The overall organizational strategy that addresses the question "What business or businesses are we in or should we be in?"


A strategy for reducing risk by buying a variety of items so that the failure of one stock or one business does bot doom the entire portfolio

Portfolio Strategy

A corporate-level strategy that minimize risk by diversifying investment among various businesses or product lines.


The purchase of a company by another company

Unrelated diversification

Creating or acquiring companies in completely unrelated businesses

BCG Matrix

A portfolio strategy, developed by the Boston Consulting Group, that categorizes a corporation's businesses by growth rate and relative market share, and helps managers decide how to invest corporate funds


A company with a large share of a fast-growing market

Question Mark

A company with a small share of a fast-growing market

Cash Cow

A company with a large share of slow-growing market


A company with a small share of a slow-growing market

Related Diversification

Creating or acquiring companies that share similar products, manufacturing, marketing, technology or culture

Grand Strategy

A broad corporate-level strategic plan used to achieve strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use

Growth Strategy

A strategy that focuses on increasing profits, revenues, market share, or the number of places in which the company does business

Stability Strategy

A strategy that focuses on improving the way in which the company sells the same products or services to the same customers

Retrenchment Strategy

A strategy that focuses on turning around very poor company performance by shrink the size or scope of the business


The strategic actions taken after retrenchment to return to a growth strategy

Industry-Level Strategy

A corporate strategy that addresses the question "How should we compete in this industry?"

Character of the Rivalry

S measure of the intensity of competitive behavior between companies in an industry

Threat of New Entrants

A measure of the degree to which barriers to entry make it easy or difficult for new companies to get started in an industry

Threat of Substitute Products or Services

A measure of the ease with which customer can find substitute foe an industry's products or services

Bargaining Power of Suppliers

A measure of the influence that suppliers of parts, materials, and services to firms in an industry have on the prices of these inputs

Bargaining Power of Buyers

A measure of the influence that customers have on a firm's prices

Cost Leadership

The positioning strategy of producing a product or service of acceptable quality at consistently lower production costs than competitors can, so that the firm can offer the product or service at the lowest price in the industry


The positioning strategy of providing a product or service that is sufficiently different from competitors' offerings that customers are willing to pay a premium price for it

Focus Strategy

The positioning strategy of using cost leadership or differentiation to produce a specialized product or service for a limited, specially targeted group of customers in a particular geographic region or market segment


Companies using an adaptive strategy aimed at defending strategic positions by seeking moderate, steady growth and by offering a limited range of high-quality products and services to a well-defined set of customers

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