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Chapter 2

CHAPTER 2 NOTES.docx

by OneClass54342 , Fall 2012
7 Pages
110 Views

Department
Business Administration
Course Code
BUS 201
Professor
Peter Tingling
Chapter
2

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CHAPTER 2 NOTE
External environment
- consists of everything outside an organization that might effect it
- managers might understand the key features of the external environment
and then strive to operate and compete within it
organization boundaries
- separates the organization from its environment
- some disturbers (walking inside a door) are normally considered a part of
the environment rather than the organization
- but when inside the store, it is essentially a part of the business
multiple organization environment
- prevailing economic conditions affect the performance of almost every
business
- other dimensions of the environment are much more specific
Economic environment
- refers to the conditions of the economic system in which an organization
operates
economic growth
- agricultural production has grown because the total output of the
agricultural sector has increased
aggregate output and the standard of living
- main measure of growth is aggregate output: the total quantity of goods and
services produced by an economic system during a given period
- when output grows more quickly than population:
1. output per capita (quantity of goods and services per person) goes up
2. the system provides relatively more of the goods and services that people
want
business cycle
- growth and contraction pattern of short term ups and downs in an economy
- 4 phases: peak, recession, trough and recovery
- recession: defined as two consecutive quarters when the economy shrinks
- recession starts just after the peak of the business cycle is reached and ends
when the trough is reached
- depression: when trough extends two or more years
Gross domestic product (GPD):
- total value of goods and services within a given period of time by a national
economy through domestic factors of production
- if GDP is going up, nation is experiencing economic growth
- gross national product (GNP): total value of all goods and serves produced by
a national economy within a given period regardless of where the factors of
production are location
- GDP is the key measure of economic growth, it tracks the economy’s
performance over time
Real growth rates
- adjusted for inflation and changes n the value of the country’s currency
- growth depends on output increasing at a faster rate than population

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Description
CHAPTER 2 NOTEExternal environment consists of everything outside an organization that might effect itmanagers might understand the key features of the external environment and then strive to operate and compete within itorganization boundariesseparates the organization from its environmentsome disturbers walking inside a door are normally considered a part of the environment rather than the organizationbut when inside the store it is essentially a part of the businessmultiple organization environmentprevailing economic conditions affect the performance of almost every businessother dimensions of the environment are much more specific Economic environment refers to the conditions of the economic system in which an organization operates economic growthagricultural production has grown because the total output of the agricultural sector has increasedaggregate output and the standard of livingmain measure of growth is aggregate output the total quantity of goods and services produced by an economic system during a given periodwhen output grows more quickly than population1 output per capita quantity of goods and services per person goes up 2the system provides relatively more of the goods and services that people want
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