Pdf - Week 02 Understanding Business Environment

understanding The environment of business

Chapter 2 :

Understanding the Environment of Business

Organizational boundaries and environments

Organizational boundaries Multiple organizational environment Economic growth

Economic environment

Economic stability

Aggregate output & standard of living, GDP & GNP, productivity Inflation, unemployment

Global economy in 21st century

Technological environment

Product & service technology Business process technology

PoliticalPolitical-legal environment Sociocultural environment

Customer preferences and taste Ethical compliance and responsible business behavior Redrawing corporate boundaries

Presented by : Anna Riana Putriya [email protected]

Organizational Boundaries

Business environment Emerging challenges and opportunities in the environmet of business

Outsourcing, Viral marketing, Business process management [email protected]

Dimensions of the External Environment

That which separates the organization from its environment

External Environments All businesses —regardless of their size, location or mission— mission— operate within a larger external environment.

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ECONOMIC ENVIRONMENT

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Key Goals of Economic System • Economic Growth – Aggregate Output and Standard of Living – Gross Domestic Product (GDP) & Gross National Product (GNP) • Purchasing Power Parity – Productivity – Balance of Trade – National Debt

Conditions of the economic system in which an organization operates

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• Economic Stability – Inflation – Unemployment • Recessions and Depressions • Global economy in 21st century

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Aggregate Output and Standard of Living • Business cycle is a pattern of shortshort-term ups and downs (expansions and contractions) in an economy • Aggregate output is the total quantity of goods and services produced by an economic system during a given period • Standard of living is the total quantity and quality of goods and services that a country’ country’s citizens can purchase with the currency used in their economic system

Gross Domestic Product • GDP, or gross domestic product, product, is the total value of all goods and services produced within a given period by a national economy through domestic factors of production

• GNP, or gross national product, product, is the 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

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What Is Productivity?

What Is Purchasing Power Parity?

Principle that exchange rates are set so that the prices of similar products in different countries are about the same

Measure of economic growth that compares how much a system produces with the resources needed to produce it

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What Is Balance of Trade?

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What Is Stability?

Economic value of all the products that a country exports minus the economic value of imported products 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

What Is National Debt? Amount of money that a government owes its creditors

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Recessions and Depressions

What Is Inflation? Occurrence of widespread price increases throughout an economic system

• Recession is a period during which aggregate output, as measured by real GDP, declines

• Depression is a particularly severe and longlong-lasting recession

What Is Unemployment? Level of joblessness among people actively seeking work in an economic system

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The Global Economy in the 21st Century

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TECHNOLOGY

Major forces driving the economy: – The information revolution will continue to enhance productivity across all economic sectors. – New technological breakthroughs will create entirely new industries. – Increasing globalization will create much larger markets while fostering tougher competition among global businesses.

All the ways by which firms create value for their constituents

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Product and Service Technologies

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Business Process Technologies

Technologies employed for creating products —both physical goods and services— services— for customers

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Business process technologies are used not so much to create products as to improve a firm’ firm’s performance of internal operations. – Enterprise Resource Planning, or ERP, ERP, is a largelarge-scale information system for organizing and managing a firm’ firm’s processes across product lines, departments and geographic locations

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POLITICALPOLITICAL-LEGAL ENVIRONMENT

ERP Applications

Conditions reflecting the relationship between business and government

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SOCIOCULTURAL ENVIRONMENT

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Customer Preferences and Tastes

Conditions including the customs, mores, values and demographic characteristics of the society in which an organization functions

• Customer preferences and tastes vary both across and within national boundaries. • Consumer preferences can vary widely within the same country. • Consumer preferences and tastes change over time.

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Emerging Challenges and Opportunities in the Business Environment

BUSINESS ENVIRONMENT • Redrawing Corporate Boundaries – Core competencies are the skills and resources with which an organization competes best and creates the most value for owners • Disruption management is a method by which some organizations are responding to crises in their environments

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• Outsourcing is the strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services • Viral marketing is a strategy of using the Internet and wordwordofof-mouth marketing to spread product information • Business process management is an approach by which firms move away from departmentdepartment-oriented organization and toward processprocess-oriented team structures that cut across old departmental boundaries

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