Chapter 3

Question 1

External environments

Answer 1

All events outside a company that can influence or affect it

Question 2

Basic Characteristics of External Environments

Answer 2

• Environmental change
• Environmental complexity
• Resource scarcity

Question 3

Environmental change

Answer 3

Rate at which a company’s general and specific environments change

Question 4

Stable Environment

Answer 4

Rate change = SLOW

Question 5

Punctuated Equilibrium Theory

Answer 5

companies go through long periods of stability during which incremental changes occur, followed by short periods of dynamic, fundamental change, and then a new equilibrium

Question 5

Dynamic Environment

Answer 5

Rate of change = FAST

Question 6

Environmental Complexity

Answer 6

The number and the intensity of external factors in the
environment that affect organizations

Question 7

Simple Environment

Answer 7

= few environmental factors

Question 8

Complex Environment

Answer 8

= many environmental factors

Question 9

Resource Scarcity

Answer 9

the abundance or shortage of critical organizational resources in an organization’s external
environment

Question 10

Uncertainty

Answer 10

extent to which managers can understand or predict which environmental changes and trends will affect their businesses

Question 11

General Environment

Answer 11

the economic, technological,
sociocultural, and political/legal trends that indirectly affect all
organizations

Question 12

Components of the general environment

Answer 12

• Economy
• Technological trends
• Sociocultural trends
• Political/legal trends that indirectly affect all organizations

Question 13

Economy

Answer 13

• Growing economy provides a favorable environment for
  business growth
• Consumers have more money to spend
• Influences basic business decisions
• Managers scan the economic environment for changes

Question 14

Business confidence indices

Answer 14

show managers’ level of
confidence about future business growth

Question 15

Technological Component

Answer 15

• Knowledge, tools, and techniques used to transform inputs into
  outputs
• Technological changes help companies:
• Provide better products
• Produce products more efficiently
• Must be used effectively to improve products or decrease costs

Question 16

Sociocultural Component

Answer 16

*Demographic characteristics, general behavior, attitudes, and
beliefs of people in society
- Changes in demographic characteristics affect how companies staff their businesses
- Sociocultural changes in behavior, attitudes, and beliefs affect demand
for a business’s products and services

Question 17

Political/Legal Components

Answer 17

• Includes the legislation, regulations, and court decisions that govern and regulate business behavior
• Managers must be aware of laws, regulations, and potential
  lawsuits that could affect their businesses

Question 18

Specific Environment

Answer 18

elements unique to an industry and
directly that affect how a company does business

Question 19

Components of the specific environment:

Answer 19

• Customers
• Competitors
• Suppliers
• Industry regulations
• Advocacy groups

Question 20

Customer Component

Answer 20

• Customers purchase products and services
• Companies cannot exist without customer support
• Basic strategies for monitoring customers
  
  • Reactive: identifying and addressing customer trends and problems after they occur
  • Proactive: identifying and addressing customer needs, trends, and customer issues before they occur

Question 21

Competitor Component

Answer 21

Companies in the same industry that sell similar products or
services to customers

Question 22

Competitive analysis

Answer 22

process for monitoring the competition that
involves identifying competitors, anticipating their moves, and
determining their strengths and weaknesses

Question 23

Suppliers

Answer 23

companies that provide material, human, financial, and informational resources to other companies

Question 24

Supplier dependence

Answer 24

degree to which a company relies on a supplier because of the importance of the supplier’s product to the company and the difficulty of finding other sources for that product

Question 25

Buyer dependence

Answer 25

the degree to which a supplier relies on a buyer because of the importance of that buyer to the supplier and the difficulty of finding other buyers for its products

Question 26

Types of behaviors that occur when a high degree of buyer or seller dependence is present

Answer 26

*Opportunistic *Relationship

Question 27

Opportunistic behavior

Answer 27

a transaction in which one party in the relationship benefits at the expense of the other

Question 28

Relationship behavior

Answer 28

the establishment of mutually beneficial, long-term exchanges between buyers and suppliers

Question 29

Industry regulation

Answer 29

regulations and rules that govern business practices and procedures of specific industries, businesses, and professions * Federal agencies and regulatory commissions administer regulations for consumer safety, environmental use, business relations, competitive practices, etc

Question 30

Advocacy groups

Answer 30

concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions

Question 31

Techniques used by Advocacy Groups

Answer 31

Public communications: an advocacy group tactic that relies on voluntary participation by the news media and the advertising industry to get the advocacy group’s message out * Media advocacy: an advocacy group tactic that involves framing issues as public issues; exposing questionable, exploitative, or unethical practices; and forcing media coverage by buying media time or creating controversy that is likely to receive extensive news coverage * Product boycott: an advocacy group tactic that involves protesting a company’s actions by persuading consumers not to purchase its product or service

Question 32

Processes managers use to make sense of changes in their external environments

Answer 32

* Environmental scanning * Interpreting environmental factors * Acting on threats and opportunities

Question 33

Environmental scanning

Answer 33

searching the environment for important events or issues that might affect an organization * Helps managers stay up-to-date on important factors in their industry * Affects the development of organizational strategies, and vice versa * Contributes to organizational performance

Question 34

Interpreting and Acting on Environmental Factors

Answer 34

* Managers assess environmental information as either threats or opportunities * Decide how to act on threats and opportunities in face of uncertainty

Question 35

Cognitive maps

Answer 35

graphic depictions of how managers believe environmental factors relate to possible organizational actions

Question 36

Internal environment

Answer 36

events and trends inside an organization that affect management, employees, and organizational culture

Question 37

Organizational culture

Answer 37

values, beliefs, and attitudes shared by organizational members - Company founders create organizations in their own images and imprint them with their beliefs, attitudes, and values

Question 38

Organizational stories

Answer 38

stories told by organizational members to make sense of organizational events and changes and to emphasize culturally consistent assumptions, decisions, and actions

Question 39

Organizational heroes

Answer 39

people celebrated for their qualities and achievements within an organization

Question 40

Organizational ceremonies

Answer 40

gatherings in which symbolic acts commemorate or celebrate notable achievements or changes

Question 41

Keys to an Organizational Culture That Fosters Success

Answer 41

* Adaptability * Employee Involvement * Clear Mission * Consistency

Question 42

Company mission

Answer 42

a company’s purpose or reason for existing

Question 43

Consistent organizational culture

Answer 43

a company culture in which the company actively defines and teaches organizational values, beliefs, and attitudes

Question 44

Three Levels of OC

Answer 44

1. Seen 2. Heard 3. Believed

Question 45

Behavioral addition

Answer 45

the process of having managers and employees perform new behaviors that are central to and symbolic of the new organizational culture that a company wants to create

Question 46

Behavioral substitution

Answer 46

the process of having managers and employees perform new behaviors central to the new organizational culture in place of behaviors that were central to the old organizational culture

Question 47

Visible artifacts

Answer 47

visible signs of an organization’s culture, such as the office design and layout, company dress code, and company benefits and perks, such as stock options, personal parking spaces, or the private company dining room