Chapter 02: The External and Internal Environments

Vocabulary flashcards covering macroenvironment, competitive environment, organizational responses, and corporate culture from Chapter 2.

Inputs

Goods and services organizations take in and transform into products.

Outputs

The products and services organizations create.

External Environment

All relevant forces outside a firm’s boundaries, such as competitors, customers, the government, and the economy.

Competitive Environment

Includes the firm and its rivals, suppliers, buyers, new entrants, and substitute or complementary products.

Macroenvironment

Affects all organizations and includes economic, technological, legal and political, demographic, social, and natural environment factors.

Securities and Exchange Commission (SEC)

Governmental agency that protects investors and maintains fair, honest, and efficient markets.

Occupational Safety and Health Administration (OSHA)

Governmental agency that enforces workplace safety and health standards.

Equal Employment Opportunity Commission (EEOC)

Governmental agency that enforces federal laws that prohibit discrimination in the workplace.

National Labor Relations Board (NLRB)

Governmental agency that safeguards employees’ rights to organize and determine whether to have unions as their bargaining representative.

Office of Federal Contract Compliance Programs (OFCCP)

Governmental agency that monitors federal contractors to make sure they take affirmative action to ensure equal employment opportunities.

Demographics

Measures of various characteristics of the people who make up groups or other social units.

Barriers to Entry

Conditions that prevent new companies from entering an industry.

Substitutes

Alternative products or services that represent a potential threat to a firm.

Complements

Products or services that increase purchases of other products, representing a potential opportunity.

Supply Chain Management

Managing the acquisition of materials, their transformation into products, and the distribution of products to customers; also known as the extended enterprise.

Switching Costs

The fixed costs buyers face changing suppliers.

Business-to-Business (B2B) Selling

Selling to intermediate customers such as wholesalers and retailers.

Environmental Uncertainty

Lack of information needed to understand or predict the future.

Environmental Complexity

The number of issues that must be attended to as well as the interconnectedness of these issues.

Environmental Dynamism

The degree of discontinuous change that occurs within an industry.

Environmental Scanning

Searching for useful information, unavailable to most, sorting that information and interpreting what is important.

Scenario

A narrative that describes a particular set of future conditions.

Competitive Intelligence

Information that helps managers determine how to compete better.

Forecasting

Method for predicting how variables will change the future.

Benchmarking

The process of comparing an organization’s practices and technologies with those of other companies.

Strategic Maneuvering

An organization’s maneuver around potential threats and capitalize on arising opportunities.

Domain Selection

Entrance to a new market or industry with an existing expertise.

Diversification

Occurs when a firm invests in different types of businesses or products.

Mergers

Two or more companies combine with another.

Acquisitions

One firm buys another to form a single company.

Divestitures

Occurs when a firm sells one or more businesses.

Prospectors

Organizations that continuously change the boundaries of their competitive environment by seeking new products and markets, diversifying and merging, or acquiring new enterprises.

Defenders

Organizations that stay within a stable product domain as a strategic maneuver.

Independent Strategies

Strategies that an organization acting on its own uses to change some aspect of its current environment.

Cooperative Diplomacy

Strategies used by two or more organizations working together to manage the external environment.

Competitive Aggression

Exploiting a distinctive competence or improving internal efficiency for competitive advantage.

Competitive Pacification

Taking independent action to improve relations with competitors.

Public Relations

Establishing and maintaining favorable images in people’s minds.

Voluntary Action

Making voluntary commitments to various interest groups, causes, and social challenges.

Legal Action

Engaging a company in a private legal battle.

Political Action

Making efforts to influence elected representatives to create a more favorable business environment or limit competition.

Contraction

Negotiating an agreement between the organization and another group to exchange goods, services, information, patents, and so on.

Cooptation

Absorbing new elements into the organization’s leadership structure to avert threats to its stability or existence.

Coalition

Two or more groups coalescing and acting jointly with respect to some set of issues for some period of time.

Buffering

Creates supplies of excess resources to meet unpredictable needs, such as an inventory or pool of talent.

Smoothing

Levels fluctuations occurring at the environmental boundaries.

Organization Culture

The set of important assumptions about the organization and its goals and practices that its members share.

Strong Cultures

Cultures where the majority of people within the organization agree on organizational goals.

Weak Cultures

Cultures where different people hold different values and there is confusion about corporate goals.