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ADMS MIDTERM REVIEW chapter 1 and 9

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York University
Administrative Studies
ADMS 1000
Eytan Lasry

Chapter 1 : external context of business What are the different external (7) forces and how do they influence organizations? 1. Competitive forces -operate at two levels for any organization -globalization opens gates for competitors -number of competitors and nature of competition will dictate changes in the organizations strategies -domestic and foreign competitors has demanded an acceleration in innovation among firms in many industries -organizations must create new and better methods of serving customers 2. Technological forces -central role in how an organization functions -how it obtains resources and ultimately how effectively it competes -technology environment exerts influence across industries -change in technology is a constant and is a force that permits and demands organizational change -benefit; technology has increased flexibility in work arrangements 3. Labour forces -Canadian business operates within a diverse society -Canadian population reflects many cultures and demographics backgrounds -immigrants took up much of the work force/ women as well -these factors demand that organizations understand the demographics context within which they operate -unions/industrial relations 4.Global forces -forces that could be embedded in general economic , political, technological or societal forces - but are international in nature -important impact on local organizations -globalization ; a process ; that is a process involving the integration of world economies -international trade agreements, and global agreements among governments that are changing within the domestic borders, but may have a significant consumer market overseas ; this demands knowledge of global societies , global competitors, and other forces that exist on an international level. 5. political Forces - can exert influence at both the specific and general levels -reduction trade barriers worldwide has opened the doors for increasing presence of foreign competition in many industries -political environment of business can dictate changes in how businesses compete, on what services it offers and how they can be offered. 6. Societal forces -Nature of a society certainly is an entrenched part of any organization general environment -workplace increasingly emphasizes organizational justice -businesses must respond to society -organizations that serve societal demands can change 7.Economic Forces -strong influence on the present and future prospects of any organization -many questions organizations must answer regarding economy in order to obtain resources The Canadian Context Economic forces in canada Indicators of current state -GDP : gross domestic product -total value of a country’s output of goods and services in one year -money goes to employees Canada’s economy is unpredictable -short term changes in the domestic economy and on going trends in the nature of the business enterprise system -Unemployment rate goes up Competitive forces in Canada -developed a large open economy -international trade -> natural resources Perfect Competition/pure competition - when there are small firms producing an identic al product, no producer has the power to affect the price of the product -example ; agriculture Monopolistic Competition -large number of firms whose product or service is perceived as slightly different -each firm influence prices Oligopoly -where there are a small number of producers with a different product -example; car manufacturers Monopoly -only one seller or producer Technological forces in Canada -Economy is resource based -agriculture , mining, forestry, fisheries, minerals, energy -main exports -Canada needs more tech.sector -economy is transforming Canada’s employment shifting from agriculture sector -reduced need for human capital -tech.advancement ->humans no jobs -tech. gives similar output Employment shift in the manufacturing / service sector - following ww2 -because of tech. -these shifts occur -need more employment in service to maintain relative levels of output Knowledge worker -underscores the increasing importance of higher education and the value of transferable skills Demographics -comprises the characteristics of a population -age,sex,income, employment -baby boomers -growth in population causes industries to rise -women in the workforce Global forces in Canada US -trade agreements have a heavy influence on the business secotor International trade - canada exports over 40 percent of its total (GDP) -major trading nation -exports more than we import -NAFTA Political forces in canada -mixed system -capitalist economy -government plays an important role -involvement in business Societial forces in canada - best country to do business in - best place to invest Chapter 9: Strategic management The five-forces model- allows us to systematically assess the industry environment. -relationships between the five forces and incumbent firms determine the attractiveness of the industry environment -helps make strategic decisions in terms of how to achieve organizational goals or to find a position in the industry where we can best defend ourselves against competition - FIve forces include ; (Threats of new entrants, \bargaining power of suppliers, Bargaining power of customers, threats of substitute products or services, and rivalry among existing firms) 1. THREATS OF NEW ENTRANTS - either new startups and diversification of existing firms in other industries. -they bring new desire to gain market share and resources and capabilities. (5 major sources of entry barriers from the potential new entrants’ point of view. Economies of scale - refer to spreading the costs of production over the number of units produced. -the cost of a product per unit declines as the number of units per period increases. -They can provide the incumbents cost advantages to compete with the new entrants on the price, if necessary Capital Requirements - some industries such as airlines, required capital to establish a new firm is significantly high. -the threat of new entrants is reduced as the level of required capital increases. Switching Costs - refers to the costs (monetary or psychological) associated with changing from one supplier to another from the buyer perspective. -when switching costs are minimal, customers can easily switch buying products from one firm to another. -creates an opportunity for potential new entrants, new entrants can easily acquire customers from incumbents. -threat increases (decreases) as the switching costs decreases. Access to distribution channels - Can be an entry barrier for potential new entrants. -situation where new entrants control most of the distribution channels, potential entrants wo
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