Textbook Notes (230,677)
CA (157,302)
UTSG (11,035)
Rotman Commerce (1,034)
RSM100Y1 (432)
Chapter

study guide for 2nd chapter

3 Pages
111 Views
Fall 2010

Department
Rotman Commerce
Course Code
RSM100Y1
Professor
Michael Szlachta

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Understanding the Environment of Business
1Organizational Boundaries and Environment
External environment: Everything outside an organizations boundaries but might
affect it.
1. Organizational Boundaries: That which separates the organization from its
environment
2. Multiple Organizational Environments: Figure 2.1
Economic Environment, Technological environment, socio-cultural Environment,
Business Environment, Emerging Challenges and Opportunities, Global Environment,
Political Environment
2The Economic Environment
Conditions of economic system in which an organization operates
1. Economic Growth
(1)Business Cycle: patterns of short term ups and downs(expansion  and
contraction  )
(2)Aggregate output: Total quantity of goods and services produced by an
economic system during a given period
Standard of living: Total quantity and quality of goods and services that a country’s
citizens can purchase with the currency used in their economic system
(3)GDP: Government Expenditure+foreign invest+ exports, (import!),domestic
GNP: citizen
Real Growth rate: depends on output increasing faster than the population;
Standard of living increase if real growth rate exceed growth
Real GDP:GDP adjusted to exclude the changes in currency value and prices
Nominal GDP: measured in dollars or with all components valued at current prices
(4)Productivity: any activity that adds value to some input, transforming it into an
output for a customer( whether external or internal)
Balance if trade: exports – imports
National Debt: The total amount of money that a country owes its creditors
Budget deficit  Government spending more in one year than it take in during that
year
Governments sell bonds to anyone.  The more money government borrows,
the less money is available for investment.——affect economic growth
2. Economic Stability
Stability: the amount of money available and the quantity of goods and services
produced are growing at the same rate
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Description
Understanding the Environment of Business1Organizational Boundaries and EnvironmentExternal environment Everything outside an organizations boundaries but might affect it1Organizational Boundaries That which separates the organization from its environment2Multiple Organizational Environments Figure 21Economic Environment Technological environment sociocultural Environment Business Environment Emerging Challenges and Opportunities Global Environment Political Environment2The Economic EnvironmentConditions of economic system in which an organization operates1Economic Growth1Business Cycle patterns of short term ups and downsexpansionand contraction2Aggregateoutput Total quantity of goods and services produced by an economic system during a given periodStandard of living Total quantity and quality of goods and services that a countrys citizens can purchase with the currency used in their economic system3GDP Government Expendit
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