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BUS 201 (122)
Chapter 2

Bus201 Chapter 2.doc

6 Pages

Business Administration
Course Code
BUS 201
Maureen Fizzell

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Chapter 2The Environment of BusinessOrganizational Boundaries and EnvironmentsExternal Environment everything outside an organizations boundaries that might affect itOrganizational BoundariesoOrganizational Boundary separates the organization from its environment Multiple Organizational EnvironmentsoOrganizations have multiple environmentsoSome like prevailing economic conditions affect the performance of almost every businessoElements of the External EnvironmentEconomic conditionstechnologypoliticallegal considerationssocial issuesthe global environmentissues of ethical and social responsibilitythe business environment itselfemerging challenges and opportunitiesThe Economic EnvironmentEconomic Environment conditions of the economic system in which an organization operatesEconomic GrowthoAgricultural 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 period an increase in aggregate output is economic growthWhen output grows more quickly than the population1 Output per Capita quantity of goods and services per person goes up2 The system provides relatively more of the goods and services that people wantWhen those two things occur higher Standard of Livingthe total quantity and quality of goods and services that they can purchase with the currency used in their economic systemThe Business CycleoBusiness Cycle Pattern of shortterm ups and downs expansions and contractions in an economyPeakRecession two consecutive quarters when the economy shrinks but it is probably more helpful to say that a recession starts just after the peak of the business cycle is reached and ends when the trough is reached
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