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adms 1000

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York University
Administrative Studies
ADMS 1000
Len Karakowsky

Session 1: Exploring the Canadian Business Environment:AFramework Chapter One: The Context of Business: AFramework for Study Notes What is an Organization? • We can identify three broad categories of organizations: 1. Public/governmental organizations that provide goods and services without necessarily generating a profit 2. Private/non-governmental organizations, including voluntary organizations, that offer goods or services without necessarily generating a profit 3. Private organizations that produce goods and services with the intent of making a profit for the benefit of their owners or shareholders • Therefore, organizations are : 1. Social entities  They are made up of people  They are entities that have been generated and are maintained by people  They involve some level of human interaction 2. Created to achieve goals  They are goal directed. Whether it is a profit-making organization or a non-profit organization, all organizations have some kind of goal or objective they were designed to achieve. 3. Interact with the environment  An organization obtains inputs from its environment, whether in the form of people, raw materials, technology or financial capital.All these inputs are transformed by the organization and become outputs: the goods, services or knowledge that the organization generates. Organizations as Open Systems • An open system asserts that organizations are entities that are embedded in, and dependent on exchanges with the environment they operate within • An organizations environment represents all elements that exist outside the organization and that, potentially, influence or affect the organization in some way • The open-systems perspective of organizations emphasizes the importance of the environment and interaction with the environment. Clearly, organizations are dependent on the environment for their survival and success. Without obtaining the necessary environmental inputs, whether they are suitable employees or the raw materials for production, organizations cannot function effectively. Similarly, if organizations fail to generate the types of products or services sought by the environment, then, too, these organizations will cease to exist. • Organizations are created in response to societal or environmental needs and ultimately, it is the environment that will determine the organization’s fate The External Context of Business • We can refer to the external context of organizations as their environment • Management scholars have typically defined the environment of an organization along two dimensions: the organization’s specific or task environment, and the organization’s general environment Specific or Task Environment • Any organization is surrounded by external stakeholders. These are parties or groups that have direct influence on the organization’s ability to obtain resources and generate outputs. Stakeholders have some kind of stake or interest in the organization, and could include such parties as the organization’s customers, unions, distributors, creditors, the local public and the government. General Environment • The sphere surrounding the organization’s specific environment is typically referred to as the general environment • The forces that make up the general environment ultimately shape the specific environment of the organization • General environment factors typically include: 1. Economic Forces 2. Competitive Forces 3. Technological Forces 4. Labour Forces 5. Global Forces 6. Political forces 7. Societal Forces NOTE: PETS THAT DON’T GO WELLTOGETHERARE CATSAND GOLDFISH. Economic Forces • An economic slump can mean downsizing, cuts in training and staff development, and of traditional work practices etc • An economic boom can mean expansion, extra training, R & D etc Competitive Forces • The number of competitors and the nature of the competition will dictate changes in the organization’s strategy • Competition has demanded an acceleration in innovation among firms in many industries • Organizations, to compete effectively, must continually create new and better methods of serving customers • Businesses must think about who their competitors will be • Competition may be at a local, national or global level, it may be open or restricted Technological Forces • Technology plays a central role in how an organization functions, how it obtains resources, and how effectively it competes • One benefit of technology is increased flexibility in work arrangements. For example, more employees are able to work from home today. • Technology has allowed businesses to re-design or “re-engineer” • Technology has an important influence on organizations – accessibility influences market entry and operating costs • Consider how technology has influenced the role of work and how work is done. For example, teleworkers, flexible work practices. Labour Forces • Across many industries, unions are the organizations responsible for representing the interests of Canada’s working population • Given the range of activities within which unions can operate, they can have an equally broad range of effects on their member’s wages and working conditions, as well as on the productivity and overall performance of the firms within which their members work • The changing nature of the workforce • The increasingly diverse nature of the workforce • As a “voice” for the labour force, consider how unions have impacted work and society Global Forces • Are forces that could be embedded in general economic, political, technological or societal forces – but are international in nature • The presence of trade blocs reflects the accelerating pace with which nations are integrating their economies • Globalization also includes the globalization of markets – the notion that consumer preferences are converging around the world. Production is increasingly becoming a global affair. Businesses will set up operations wherever it is least costly to do so. • International trade agreements are global agreements among governments that are changing the nature and functions of many businesses. ACanadian organization may not simply consider consumers within the domestic borders, but may have a significant consumer market overseas; this demands knowledge of global societies, global
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