COMMERCE 1BA3 Chapter Notes - Chapter 15: Vertical Integration, Joint Venture, Human Capital
11 Dec 2013
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External environment: events and conditions surrounding an organization that influence its activities. Ex. impact of sars outbreak of 2003: bus, hotel, restaurant, theatre and travel companies impacted with cancellations, decline in business. Open systems: systems that take inputs from external environment, transform some of them, and send back to environment as outputs. Transformation process can be: physical (ex. manufacturing/surgery, intellectual (ex. teaching/programming, emotional (ex. psychotherapy) Organizations need to be ale to cope with the demands of the external environment on both the input side and the output side. The general economy: organizations that survive by selling products/services suffer from economic downturn and profit from upturn, downturn: competition for customers increases, downsizing to cut costs, reduced inputs. Customers: organizations must be sensitive to changes in customer demands, successful firms are highly sensitive to customer reactions, ex. removing trans fats from food products, making energy-efficient vehicles, not using animals to test products.
