3. global context of business - itb - ayesha aman - Economics
2. understanding the environments of business - itb - ayesha aman - Economics
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BUSINESS 7e Copyright 2004 Prentice Hall, Inc. 1 CHAPTER 2 Understanding the Environments of Business
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Transcript of 2. understanding the environments of business - itb - ayesha aman - Economics
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CHAPTER 2
Understanding the Environments of Business
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Chapter Outline
Organizational Boundaries and Environments
The Economic Environment The Global Economy in the 21st Century The Technological Environment The Political-Legal Environment The Sociocultural Environment The Business Environment
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Organizational Boundaries and Environments
All businesses— regardless of their size, location or mission— operate within a larger external environment.
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What Is the External Environment?
Everything outside an
organization’s boundaries that might
affect it
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What Is an Organizational Boundary?
That which separates the organization
from its environment
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Dimensions of the External Environment
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What Is the Economic Environment?
Conditions of the economic system in which an organization operates
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Key Goals of a Country’s Economic System
Economic Growth Aggregate Output and
Standard of Living Gross Domestic Product
Real Growth Rate GDP per Capita Real GDP Purchasing Power
Parity Productivity Balance of Trade National Debt
Economic Stability Inflation
Measuring Inflation: The CPI
Unemployment Recessions and
Depressions
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Aggregate Output and Standard of Living
Business cycle is a pattern of short-term ups and downs (expansions and contractions) in an economy
Aggregate output is the total quantity of goods and services produced by an economic system during a given period
Standard of living is the total quantity and quality of goods and services that a country’s citizens can purchase with the currency used in their economic system
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Gross Domestic Product GDP, or gross domestic product, is the
total value of all goods and services produced within a given period by a national economy through domestic factors of production
GNP, or gross national product, is the total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located
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What Is Purchasing Power Parity?
Principle that exchange rates are set so that the prices of similar products in different countries are about the same
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What Is Productivity?
Measure of economic growth that compares
how much a system produces with the
resources needed to produce it
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What Is Balance of Trade?
Economic value of all the products that a
country exports minus the economic value of imported
products
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What Is National Debt?
Amount of money that a government owes its creditors
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What Is Stability?
Condition in an economic system in which the
amount of money available and the quantity of goods and services produced are growing at about the same
rate
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What Is Inflation?
Occurrence of widespread price increases throughout an economic system
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When Did the Cost of a Hamburger Go Up?
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Measuring Inflation: The CPI
Measure of the prices of typical products purchased by consumers living in urban areas
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Selected CPI Values
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What Is Unemployment?
Level of joblessness among people actively seeking work in an economic system
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Recessions and Depressions
Recession is a period during which aggregate output, as measured by real GDP, declines
Depression is a particularly severe and long-lasting recession
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Managing the Economy
Fiscal policies determine how the government collects and spends its revenues
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Managing the Economy
Monetary policies determine the size of a nation’s monetary supply
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Managing the Economy
Stabilization policy embraces both fiscal and monetary policies—the goal is to smooth out fluctuations in output and unemployment and to stabilize prices
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The Global Economy in the 21st Century
Major forces driving the economy:
The information revolution will continue to enhance productivity across all economic sectors.
New technological breakthroughs will create entirely new industries.
Increasing globalization will create much larger markets while fostering tougher competition among global businesses.
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Internet Users per 1,000 People
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Information-Technology Spending
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The Export Resurgence
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What Is Technology?
All the ways by which firms create value for their constituents
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Product and Service Technologies
Technologies employed for creating products—both physical goods and services—for customers
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Business Process Technologies
Business process technologies are used not so much to create products as to improve a firm’s performance of internal operations. Enterprise Resource Planning, or ERP,
is a large-scale information system for organizing and managing a firm’s processes across product lines, departments and geographic locations
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ERP Applications
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What Is the Political-Legal Environment?
Conditions reflecting the relationship between business and government
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What Is the Sociocultural Environment?
Conditions including the customs, mores, values
and demographic characteristics of the society in which an
organization functions
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Customer Preferences and Tastes
Customer preferences and tastes vary both across and within national boundaries.
Consumer preferences can vary widely within the same country.
Consumer preferences and tastes change over time.
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The Business Environment
Redrawing Corporate Boundaries Core competencies are the skills and
resources with which an organization competes best and creates the most value for owners Disruption management is a method by
which some organizations are responding to crises in their environments
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Emerging Challenges and Opportunities in the Business Environment
Outsourcing is the strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services
Viral marketing is a strategy of using the Internet and word-of-mouth marketing to spread product information
Business process management is an approach by which firms move away from department-oriented organization and toward process-oriented team structures that cut across old departmental boundaries
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The Aftermath of 9/11
Resilience of U.S. institutions Flexibility and strength—and flaws–
inherent in the U.S. political and economic systems
Government as provider of homeland security
Issues of workplace security
