Essay about The External Environment and Organizational Culture

849 Words Jul 14th, 2013 4 Pages
The External Environment and Organizational Culture
Chapter 2

I. Systems Theory of the Organization a. Figure

b. Open systems – organizations that are affected by and that affect their environment c. Inputs – goods and services organizations take in and use to create products or services i. Raw materials, services, equipment, capital, information d. Outputs – products and services organizations create ii. Products, services e. External environment – all relevant forces outside a firm’s boundaries such as competitors, customers, the government, and the economy iii. Competitive environment – immediate environment surrounding a firm 1. Suppliers, customers,
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Substitutes and Complements xiii. Substitutes – potential threat, customers use it as an alternative, buying less of one kind of product but more of a another 4. Example: cotton – polyester, coffee – energy drinks, music CD – MP3 player xiv. Complements – potential opportunity because customers buy more of a given product if they also demand more of the complementary product 5. Example: computer printer – ink cartridges, apartment – furniture o. Suppliers xv. Providers of goods and services, not necessarily tangible xvi. Danger of over-depending on supplier xvii. Switching costs – fixed costs buyers face when they change suppliers xviii. Supply chain management – managing of the network of facilities and people that obtain materials from outside the organizations, transform them into products and distribute them to customers p. Customers xix. Final consumer – purchase products in their finished form xx. Intermediate customer – customer who purchases raw materials or wholesale products before selling them to final customers IV. Environmental Analysis q. Needed in making managerial decisions especially if little to no information is available r. Environmental uncertainty – lack of information needed to understand or predict the future s. Environmental scanning – searching for and

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