Textbook Notes - Chapter 15

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Management (MGH)
Joanna Heathcote

MGTB27 01 Week 13 Chapter 15 Environment, Strategy, and Technology (pg. 495 522) - The merger between Suncor and Petro-Canada was a result of soaring gasoline prices - Appropriate organizational structure is contingent on environmental, strategic, and technological factors The External Environment of Organizations - The external environment are events and conditions surrounding an organization that influence its activities - E.g. the influence of the external environment is the SARS outbreak in 2003 for Toronto. Bus, hotel, restaurant, theatre, and travel companies experienced a sharp decline in business - The external environment profoundly shapes organizational behaviour Organizations as Open Systems - Open systems are systems that take inputs (e.g. capital, labour, materials, information) from the external environment, transform some of them (e.g. raw materials, skilled craftspeople), and send them back into the environment as outputs (e.g. products and services) - Transformation process may be physical (e.g. manufacturing or surgery), intellectual (e.g. teaching or programming), or even emotional (e.g. psychotherapy) - E.g. Universities import seasoned scholars and aspiring students from the environment, through the teaching process, they return educated individuals to the community as outputs - Open systems sensitize us to the need for organizations to cope with the demands of the environment and coping may be oriented toward changing the environment Components of the External Environment - External environment involves any person, group, event, or condition outside the firm - The external environment can be divided into these components: - The General Economy o Organizations that survive through selling products or services often suffer from an economic downturn and profit from an upturn o Welfare offices or law firms specializing in bankruptcies gain profit from downturn o If a poor economy is accompanied by high unemployment, organizations might find the opportunity to upgrade the quality of their staffs since they have ample selection of candidates (RIM recruited the best staffs during the recent recession) - Customers o All organizations have potential customers for their products and services (e.g. Piano makers have musicians, Universities have students and employers) o Successful firms are generally highly sensitive to customer reactions (e.g. automobile manufacturers are making more smaller and energy efficient vehicles) - Suppliers o Organizations are dependent on the environment for supplies which may include labour, raw materials, equipment, and component parts o When there are shortages, this shock will affect & be troublesome to the organization o Recent practices is to reduce the number of suppliers in order to establish a strong relationship based on quality and reliable delivery - Competitors o Environmental competitors compete for resources that include customers & suppliers o Successful organizations devote considerable energy to monitoring the activities of competitors www.notesolution.com
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