principles 1/25


Chapter 3

Organizational Environments
-external environments
-***all elements outside of the organization that have the potential to affect the organization***
-general environment
-outer layer of external environment; affects an organization indirectly; 5 components
-task environment
– affects directly; influences operations & performances (see chart)
-internal environment
– element’s within the organization’s boundaries
Components of the general environment
1. International: represents events originating in foreign countries as well as opportunities for U.S. companies in other countries
2. Technology: knowledge tools and techniques; ***can be great benefit or daunting threat****
-inputs: raw materials & information
-outputs: products & services
3. Socio-cultural: demographic characteristics; general behavior, attitudes, and beliefs of people
4. Economic: general economic health; recent trends (frequency of mergers and acquisitions & small business sector vitality
General economic health: consumer purchasing power, unemployment rate, interest rates
5. Political/Legal: legislation, regulations, court decisions; must be informed about laws, regulations, and potential lawsuits that could affect business

Task Environment (directly) 4 components
– customers
– competitor

-monitoring customer wants and needs is critical to business success
-reactive customer monitoring: responding to problem, trends, & events (after)
-proactive: anticipating problems, trends, and events (before)
***Competitor: companies that product goods and services to the same customer base***
competitive analysis:
-deciding who your competitors are
-anticipating competitors’ moves
-determining competitors’ strengths and weaknesses


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