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Introduction to Business

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Introduction to Business ­MGT 211
VU
Lesson 02
ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS
All businesses, regardless of their size, location, or mission, operate within a larger
external
environment.
External environment--everything outside an organization's boundaries that
might affect it.
a.
Organizational Boundaries--that which separates the organization
from its environment.  Today boundaries are becoming increasingly
complicated and hard to pin down.
b.
Multiple Environments include economic conditions, technology,
political-legal considerations, social issues, the global environment,
issues of ethical and social responsibility, the business environment
itself, and numerous other emerging challenges and opportunities.
1. THE ECONOMIC ENVIRONMENT
Economic environment--Conditions of the economic system in which an organization
operates
a.
Economic Growth
i.
Aggregate Output and Standard of Living
1.  Business  cycle--Pattern  of  short-term  ups  and  downs
(expansions and contractions) in an economy
2.  Aggregate output--Total quantity of goods and services produced
by an economic system during a given period
3.  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
ii.
Gross domestic product (GDP)--Total value of all goods and services
produced within a given period by a national economy through
domestic factors of production
Gross national product (GNP)--Total value of all goods and
services produced by a national economy within a given period
regardless of where the factors of production are located
1.
Real Growth Rate--the growth rate of GDP adjusted for inflation
and changes in the value of the country's currency
2.
GDP per Capita--GDP per person and reflects the standard of
living.
3.
Real GDP--GDP calculated to account for changes in currency
values and price changes versus Nominal GDP, GDP
measured in current dollars or with all components
valued at current prices.
4.
Purchasing Power Parity--Principle that exchange rates are set
so that the prices of similar products in different countries
are about the same.
iii.
Productivity--Measure of economic growth that compares how much a
system produces with the resources needed to produce it.
There are a number of factors which can inhibit the growth of an economic system including:
1.  Balance of Trade--the economic value of all the products that a
country exports minus the economic value of imported
products.
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Introduction to Business ­MGT 211
VU
a.
Trade Deficit--A positive balance of trade results when
a country exports (sells to other countries) more
than it imports (buys from other countries).
b.
Trade Surplus--A negative balance of trade results
when a country imports more than it exports.
National Debt--Amount of money that a government owes its creditors.
b. Economic Stability
Condition in an economic system in which the amount of money available and
the quantity of goods and services produced are growing at about the same
rate.
Factors which threaten stability include:
i. Inflation--Occurrence of widespread price increases throughout an
economic system
Measuring Inflation: The CPI--Measure of the prices of typical products purchased by
consumers living in urban areas
ii. Unemployment--Level of joblessness among people actively seeking
work in an economic system. Unemployment may be a symptom of
economic downturns.
1. Recessions
and
Depressions
Recession--Period during which aggregate output, as measured
by real GDP, declines
2. Depression--Particularly severe and long-lasting recession
c. Managing the U.S. Economy
i. Fiscal policies--Government economic policies that determine how the
government collects and spends its revenues
ii. Monetary policies--Government economic policies that determine the
size of a nation's monetary supply
iii. Stabilization policy--Government policy, embracing both fiscal and
monetary policies, whose goal is to smooth out fluctuations in output
and unemployment and to stabilize prices
iv. Three Major Forces
1. The information revolution will continue to enhance productivity
across all sectors of the economy, most notably in such
information-dependent industries as finance, media, and wholesale
and retail trade.
2. New technological breakthroughs in areas such as biotechnology
will create entirely new industries.
3. Increasing globalization will create much larger markets while also
fostering tougher competition among global businesses; as a
result, companies will need to focus even more on innovation and
cost cutting.
v. Projected Trends and Patterns--There are a number of projections for
the near future. Sudden changes in environmental factors, such as war,
can alter these projections.
2.
THE TECHNOLOGICAL ENVIRONMENT
Technology has a variety of meanings, but as applied to the environment of business, it
generally includes all the ways by which firms create value for their constituents.
a. Product and Service Technologies--the technologies employed for creating
products (both physical goods and services) for customers. Although many
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Introduction to Business ­MGT 211
VU
people associate technology with manufacturing, it is also a significant force in
the service sector.
b. Business Process Technologies--are used not so much to create products
as to improve a firm's performance of internal operations (such as accounting,
managing information flows, creating activity reports, and so forth). They also
help create better relationships with external constituents, such as suppliers
and customers.
i. Enterprise Resource Planning--Large-scale information system for
organizing and managing a firm's processes across product lines,
departments, and geographic locations
11
Table of Contents:
  1. INTRODUCTION:CONCEPT OF BUSINESS, KINDS OF INDSTRY, TYPES OF TRADE
  2. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:THE ECONOMIC ENVIRONMENT
  3. BUSINESS ORGANIZATION:Sole Proprietorship, Joint Stock Company, Combination
  4. SOLE PROPRIETORSHIP AND ITS CHARACTERISTICS:ADVANTAGES OF SOLE PROPRIETORSHIP
  5. PARTNERSHIP AND ITS CHARACTERISTICS:ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
  6. PARTNERSHIP (Continued):KINDS OF PARTNERS, PARTNERSHIP AT WILL
  7. PARTNERSHIP (Continued):PARTNESHIP AGREEMENT, CONCLUSION, DUTIES OF PARTNERS
  8. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:ETHICS IN THE WORKPLACE, SOCIAL RESPONSIBILITY
  9. JOINT STOCK COMPANY:PRIVATE COMPANY, PROMOTION STAGE, INCORPORATION STAGE
  10. LEGAL DOCUMENTS ISSUED BY A COMPANY:MEMORANDUM OF ASSOCIATION, CONTENTS OF ARTICLES
  11. WINDING UP OF COMPANY:VOLUNTARY WIDNIGN UP, KINDS OF SHARE CAPITAL
  12. COOPERATIVE SOCIETY:ADVANTAGES OF COOPERATIVE SOCIETY
  13. WHO ARE MANAGERS?:THE MANAGEMENT PROCESS, BASIC MANAGEMENT SKILLS
  14. HUMAN RESOURCE MANAGEMENT:Human Resource Planning
  15. STAFFING:STAFFING THE ORGANIZATION
  16. STAFF TRAINING & DEVELOPMENT:Typical Topics of Employee Training, Training Methods
  17. BUSINESS MANAGERíS RESPONSIBILITY PROFILE:Accountability, Specific responsibilities
  18. COMPENSATION AND BENEFITS:THE LEGAL CONTEXT OF HR MANAGEMENT, DEALING WITH ORGANIZED LABOR
  19. COMPENSATION AND BENEFITS (Continued):MOTIVATION IN THE WORKPLACE
  20. STRATEGIES FOR ENHANCING JOB SATISFACTION AND MORALE
  21. MANAGERIAL STYLES AND LEADERSHIP:Changing Patterns of Leadership
  22. MARKETING:What Is Marketing?, Marketing: Providing Value and Satisfaction
  23. THE MARKETING ENVIRONMENT:THE MARKETING MIX, Product differentiation
  24. MARKET RESEARCH:Market information, Market Segmentation, Market Trends
  25. MARKET RESEARCH PROCESS:Select the research design, Collecting and analyzing data
  26. MARKETING RESEARCH:Data Warehousing and Data Mining
  27. LEARNING EXPERIENCES OF STUDENTS EARNING LOWER LEVEL CREDIT:Discussion Topics, Market Segmentation
  28. UNDERSTANDING CONSUMER BEHAVIOR:The Consumer Buying Process
  29. THE DISTRIBUTION MIX:Intermediaries and Distribution Channels, Distribution of Business Products
  30. PHYSICAL DISTRIBUTION:Transportation Operations, Distribution as a Marketing Strategy
  31. PROMOTION:Information and Exchange Values, Promotional Strategies
  32. ADVERTISING PROMOTION:Advertising Strategies, Advertising Media
  33. PERSONAL SELLING:Personal Selling Situations, The Personal Selling Process
  34. SALES PROMOTIONS:Publicity and Public Relations, Promotional Practices in Small Business
  35. THE PRODUCTIVITY:Responding to the Productivity Challenge, Domestic Productivity
  36. THE PLANNING PROCESS:Strengths, Weaknesses, Threats
  37. TOTAL QUALITY MANAGEMENT:Planning for Quality, Controlling for Quality
  38. TOTAL QUALITY MANAGEMENT (continued):Tools for Total Quality Management
  39. TOTAL QUALITY MANAGEMENT (continued):Process Re-engineering, Emphasizing Quality of Work Life
  40. BUSINESS IN DIGITAL AGE:Types of Information Systems, Telecommunications and Networks
  41. NON-VERBAL COMMUNICATION MODES:Body Movement, Facial Expressions
  42. BUSINESS ORGANIZATIONS:Organization as a System
  43. ACCOUNTING:Accounting Information System, Financial versus Managerial Accounting
  44. TOOLS OF THE ACCOUNTING TRADE:Double-Entry Accounting, Assets
  45. FINANCIAL MANAGEMENT:The Role of the Financial Manager, Short-Term (Operating) Expenditures