Understanding Business Environments and Factors
External Environment
External Environment: All events outside a company that have the potential to influence or affect it.
Environmental Change
Environmental Change: The rate at which a company’s general and specific environments change.
- Stable Environments: An environment in which the rate of change is slow.
- Dynamic Environment: An environment in which the rate of change is fast.
Punctuated Equilibrium Theory
Punctuated Equilibrium Theory: A theory in which companies go through long, simple periods of stability, followed by short periods of dynamic, fundamental change (revolution), and return to stability.
Environmental Complexity
Environmental Complexity: The number of external factors in the environment that affect organizations.
- Simple Environment: An environment with few environmental factors.
- Complex Environment: An environment with many environmental factors.
Resource Scarcity
Resource Scarcity: The abundance or shortage of critical organizational resources in an organization’s external environment.
Uncertainty
Uncertainty: The extent to which managers can understand or predict which environmental changes and trends will affect their businesses.
General and Specific Environments
General Environment
General Environment: The economic, technological, sociocultural, and political trends that indirectly affect all organizations.
Specific Environment
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
Business Confidence Indices: Indices that show managers’ level of confidence about future business growth.
Key Concepts and Definitions
Technology
Technology: The knowledge, tools, and techniques used to transform input into output.
Supplier and Buyer Dependence
- Supplier Dependence: The degree to which a company relies on a supplier.
- 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.
Opportunistic Behavior
Opportunistic Behavior: Not defined as mutually beneficial in the original text. It generally refers to one party benefiting at the expense of another. A correct definition would be: A transaction in which one party in the relationship benefits at the expense of the other.
The original document seems to confuse this with Relationship Behavior:
Relationship Behavior: The establishment of mutually beneficial, long-term exchanges between buyers and suppliers.
Industry Regulations
Industry Regulations: Regulations and rules that govern the business practices and procedures of specific industries, businesses, and professions.
Advocacy Groups
Advocacy Groups: Groups of concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions.
Advocacy Group Tactics
- 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 convincing consumers not to purchase its products.
Cognitive Maps
Cognitive Maps: Graphic descriptions of how managers believe environmental factors relate to possible organizational actions.
Internal Environment
Internal Environment: The events and trends inside an organization that affect management, employees, and culture.
Organizational Culture
Organizational Culture: The values, beliefs, and attitudes shared by the members of an organization.
Organizational Stories
Organizational Stories: Stories told by members to make sense of events and changes in an organization, to emphasize culturally consistent decisions.
Company Vision
Company Vision: The purpose of a company’s existence.
Cultural Change Techniques
- Behavioral Addition: The process of having managers and employees perform new behaviors that are central to and symbolic of the new organizational culture.
- Behavioral Substitution: The process of having managers and employees perform new behaviors in place of another.
- Visible Artifacts: Visible signs of an organization’s culture, such as office layout, dress code, and company benefits and perks.