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MGHB02H3 Study Guide - Final Guide: Mass Production, Vertical Integration, Expert System

Management (MGH)
Course Code
Anna Nagy
Study Guide

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Environment, Strategy & Technology
The External Environment of Organizations
External Environment Events and
conditions surrounding an organization that
influence its activities
Open Systems Systems that take
inputs from the external environment,
transform some of them and send them back
into the environment as outputs
o Inputs include capital, energy,
materials, information, technology, and
o Outputs include various
products and services
o Some other inputs are transformed while others assist in the transformation
o Transformation process may be physical, intellectual or even emotional
External Environment Components
The General Economy organizations that survive through selling products or services
often suffer from an economic downturn and profit from an upturn. When a downturn
occurs, competition for remaining customers increases and organizations might postpone
needed capital improvements
Customers all organizations have potential customers for their products and services.
Successful firms are highly sensitive to customer reactions
Suppliers organizations are dependent on the environment for supplies, which include
labour, raw materials, equipment and component parts. Shortage can cause severe
Competitors environmental competitors vie for resources that include both customers
and suppliers
Social/Political Factors organizations cannot ignore the social and political events that
occur around them
Technology environment contains a variety of technologies that are useful for achieving
organizational goals; Interest groups parties or organizations other than direct
competitors that have some vested interest in how an organization is managed
Environmental Uncertainty
Environmental Uncertainty a condition that exists when the external environment is vague,
difficult to diagnose and unpredictable
Uncertainty depends on the environment’s complexity (simple vs complex) and rate of change
(static vs dynamic)
Simple Environment involves relatively few factors and these are fairly similar to each
Complex Environment contains a large number of dissimilar factors that affect the
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