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Management (MGH)

Chapter 15- Environment, Strategy and Technology I. The External Environment of Organizations The external environment consists of events and conditions surrounding an organization that influence its activities has a tremendous influence on organizations and profoundly shapes organizational behaviour A. Organizations as Open Systems Organizations can be described as open systems Open systems - systems that take inputs from the external environment, transform some of these inputs, and send them back into the external environment as outputs important because it sensitizes us to the need for organizations to cope with demands of the environment on both the input and the output side inputs include capital, energy, materials, info, technology and ppl outputs include various products and services some inputs are transformed while other inputs assist in the transformation process transformation process may be physical. Intellectual or emotion inputs transformation outputs B. Components of the External Environment It is useful to divide the external environment into a manageable number of components. The General Economy The general economy affects organizations as they profit from an upturn or suffer from a downturn When a downturn occurs, competition for remaining customers increase Some org thrive under a poor economy, including welfare offices and law firms that deal heavily in bankruptcies With high unemployment (poor economy), some org might upgrade the quality fo their staff since they will have more selection Customers All organizations have potential customers for their products and services Successful firms are highly sensitive to customer relations Organizations must be sensitive to changes in customer demands and reactions Suppliers Organizations are dependent on the environment for supplies that include labour, raw materials, equipment, and component parts. Shortages can cause severe difficulties Shortages can cause severe difficulties, ie no workers Firms have changed their strategy for dealing with suppliers keep many of them and try to keep them in stiff competition so price would be lowered at the end Competitors Environmental competitors vie for resources that include both customers and suppliers successful organizations devote considerable energy to monitoring the activities of competitors hypercompetitivewhen competition has become SOOO aggressive, in constant change SocialPolitical Factors 1 www.notesolution.com
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