Chapter 2 understanding the environments of business. All businesses operate within a larger external environment. This external environment, which consists of everything outside an organization"s boundaries that might affect it, plays a major role in determining the success or failure of any organization. Managers should not react to changes in the environment; they should be proactive and at least try to influence their environment. The economic environment refers to the conditions of the economic system in which an organization operates. Goals of the canadian economic system: economic growth, economic stability, and full employment. Tools we use to measure economic growth are: aggregate output, standard of living, gross domestic product, and productivity. Agricultural efficiency has improved because we devised better ways of producing products and invented better technology for getting the job done. So the agricultural production has grown because we have been able to increase total output in the agricultural sector.