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32 terms

Chapter 2: The Environment of Business

STUDY
PLAY
open systems
organizations that are affected by, and that affect, their environment
inputs
goods and services organizations take in and use to create products or services
outputs
the products and services organizations create
external environment
all relevant forces outside a firm's boundaries, such as competitors, customers, the government, and the economy
competitive environment
the immediate environment surrounding a firm; includes suppliers, customers, rivals, and the like
macroenvironment
the general environment surrounding a firm; includes governments, economic conditions, and other fundamental factors that generally affect all organizations
demographics
measures of various characteristics of the people who make up groups or other social units
barriers to entry
conditions that prevent new companies from entering an industry
switching costs
fixed costs buyers face when they change suppliers
supply chain management
the managing of the network of facilities and people that obtain materials from outside the organization, transform them into products, and distribute them to customers
final consumer
a customer who purchases products in their finished form
intermediate customer
a customer who purchases raw materials or wholesale products before selling them to final customers
environmental uncertainty
lack of information needed to understand or predict the future
environmental scanning
searching for and sorting through information about the environment
competitive intelligence
information that helps managers determine how to compare better
scenario
a narrative that describes a particular set of future conditions
forecasting
method for predicting how variables will change the future
benchmarking
the process of comparing an organization's practices and technologies with those of other companies
empowerment
the process of sharing power with employees, thereby enhancing their confidence in their ability to perform their jobs and their beliefs that they are influential contributors to the organization
buffering
creating supplies of excess resources in case of unpredictable needs
smoothing
leveling normal fluctuation at the boundaries of the environment
independent strategies
strategies that an organization acting on its own uses to change some aspect of its current environment
cooperative strategies
strategies used by 2 or more organizations working together to manage the external environment
strategic maneuvering
an organization's conscious efforts to change the boundaries of its task environment
domain selection
entering a new market or industry with an existing expertise
diversification
a firm's investment in a different product, business, or geographic area
merger
1 or more companies combining with another
acquisition
one firm buying another
divestiture
a firm selling 1 or more businesses
prospectors
companies that continuously change the boundaries for task environments by seeking new products and markets, diversifying and merging, or acquiring new enterprises
defenders
companies stay within a stable product domain as a strategic maneuver
organizational culture
the set of important assumptions about the organization and its goals and practices that members of the company share