Textbook notes-Chapter 15-Environment, Strategy and Technology

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University of Toronto Scarborough
Management (MGH)
Andrew Davidson

1 CHAPTER 15- ENVIRONMENT, STRATEGY, AND TECHNOLOGY THE EXTERNAL ENVIRONMENT OF ORGANIZAITONS external environment: events and conditions surrounding an organization that influence its activities shapes profoundly shapes organizational behaviour Organization as open systems open system: systems that take inputs from the external environment, transform some of them, and send them back into the environment as outputs - inputs: capital, energy, materials, info, tech, and ppl - outputs: various products and services -- some inputs are transformed while others assist in the transformation process - transformation process could be physical, intellectual, or emotion - through application of financial knowledge, it transforms the capital into insurance coverage and investment in areas like real estate -the value of the open system concept is that it sensitizes us to the need for organizations to cope with the demands of the environment on both the input side and the output side Components of the external environment - involves any person, group, event or condition outside the direct domain of the organization 1) the general economy - organizations that survive through selling products or services often suffer from an economic downturn and profit by an upturns - if a poor economy is accompanied by high unemployment, some organizations might find it opportune 2) customers - successful firms are generally highly sensitive to customer reactions 3) suppliers - organizations are dependent on the environment for supplies that include labour, raw materials, equipment, and component parts - shortages can cause severe difficulties - more exclusive relationships with suppliers, on the basis of quality and reliable dliverty,are becoming more common 4) competitors - environmental competitors vie for resources that include both customers and suppliers - organizations in hypercompetitive environments must become extremely flexible to respond quickly to change and cope with hypercompeititon - flexible manufacturing is necessary 5) socialpolitical factors - changes in public attitudes toward ethnic diversity, the proper age for retirement, or the www.notesolution.com
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