COMM 1800 Module 1

Business

A dynamic organizational system that creates value by allocating resources to meet needs.

Organization

A social collective with a recognized boundary engaged in goal-directed activities.

Objectivist philosophy

A view of business grounded in quantitative analysis and measurement.

Subjectivist philosophy

A view of business grounded in interpretation and sensemaking.

Division of Labor

Breaking work into specialized tasks to increase durability, reliability, and accountability.

Large-Scale Technology

Organizing lets businesses leverage big, expensive technology individuals cannot afford.

Power and Control

Organizing allows a business to limit non-conforming behavior across many people.

Legal Benefits of Organizing

Incorporating provides contract rights, clear ownership, and liability protection.

Planned economy

The government or community owns and controls most or all production factors.

Market economy

Individuals own and control factors of production in theory.

Mixed/Hybrid economy

A combination of planned and market elements found in real economies.

Perfect competition

A market structure with many small firms, none controlling price.

Monopolistic competition

A market structure with many buyers and sellers offering differentiated products.

Oligopoly

A market structure dominated by only a few sellers.

Monopoly

A market structure with a single seller.

For-profit organization

Structured to generate profit for owners and shareholders.

Non-profit organization

An organization not structured around generating profit for owners.

Social enterprise

Pursues a social mission using commercial business methods.

Governmental agency

A public-sector organization that acts as a specific environment player.

Social organization

Built around social and community goals rather than commercial ones.

Sole Proprietorship

A business owned by one person with maximum flexibility and personal risk.

Partnership — General

Partners share management and liability equally.

Partnership — Limited

Reduces risk for some investors who do not manage the business.

Corporation — Private

Owned by an individual or family without publicly sold stock.

Corporation — Public

Stock is sold publicly and governed by a Board of Directors.

Joint Venture

Two or more businesses combining resources for one specific project.

Strategic Alliance

Same-industry businesses cooperating to extend capabilities with less risk.

Co-Operative

Small businesses joining forces while staying independent on other tasks.

Socrates (5th century BC)

Asked whether leadership is transferable, an early leadership theory seed.

Sun Tzu (5th century BC)

Noted terrain affects outcomes and environments interact with each other.

Adam Smith (1776)

Argued division of labor and technology yield the greatest efficiency gains.

Industrial Revolution (1800s)

Machinery and technology enabled factories, labor subordination, and professional managers.

Karl Marx (1860s)

Focused on managerial control of labor through subordination, alienation, and resistance.

Frederick Winslow Taylor (1915)

Scientific Management broke jobs into components to maximize efficiency.

Max Weber (1922)

Bureaucracy with formalized rules, hierarchy, and career paths.

Weber's Traditional Authority

Authority based on long-standing custom or inherited position.

Weber's Charismatic Authority

Authority based on the personal appeal or charisma of a leader.

Weber's Rational-Legal Authority

Authority based on formal rules and legally established positions.

Mary Parker Follett (1926)

Argued compliance is context-dependent and situations give orders.

Hawthorne Studies (1941)

Showed working conditions, observation, and informal standards impact performance.

Herb Simon (1946)

Formulated bounded rationality and satisficing in decision-making.

Bounded Rationality

Real limits on information processing, alternatives, and predicting outcomes.

Satisficing

Choosing a good enough option rather than the optimal one.

History Arc Big Picture

Swing from efficiency and control toward humanism and adaptability.

Open Systems Theory

Organizations exist in dynamic environments and must actively respond.

Open Systems Model

Environment surrounds the organization taking inputs, throughputs, and outputs.

Inputs

Resources like labor, capital, and materials pulled from the environment.

Throughputs

Internal processes converting inputs into outputs.

Outputs

Goods, services, or results released back into the environment.

Feedback

Information flowing back to adjust future inputs and throughputs.

Differentiation

The movement toward specialization within a system over time.

Entropy

The natural tendency of any system toward disorder.

Homeostasis

A system's tendency toward a steady, stable state.

Equifinality

Multiple paths can lead to the same successful end state.

Environment (Systems Definition)

Entities outside organization boundaries providing inputs and absorbing outputs.

Social & Demographic Environment

Population-level factors like age structure shaping markets.

Cultural Environment

People, traditions, and customs shaping local business practices.

Legal Environment

Laws, courts, and regulatory frameworks governing businesses.

Political Environment

Governments and political systems affecting the business landscape.

Economic Environment

Macro factors like exchange rates, tariffs, and currency values.

Trade Environment

International trade frameworks and agreements like USMCA.

Technology Environment

The infrastructure, availability, and cost of business technology.

Physical Environment

Physical and geographic conditions a business operates within.

Specific Environment — Customers

The people or organizations buying goods or services.

Specific Environment — Distributors

Organizations moving goods and services to customers.

Specific Environment — Unions/Labor

Organized labor groups interacting with a business.

Specific Environment — Competitors

Other businesses vying for the same customers and resources.

Specific Environment — Regulators

Public bodies directly regulating a specific business's operations.

Complexity (Environment)

The number of environmental elements and how interconnected they are.

Dynamism (Environment)

The speed at which an environment changes.

Richness (Environment)

The availability of resources within an environment.

Environmental Uncertainty

Determined jointly by complexity, dynamism, and richness.

Ethics

Moral principles defining right and wrong for individuals or groups.

Sources of Ethics

Human history, laws, religion, culture, and societal morality.

Ethical Drift

Small compromises gradually eroding a person's ethical standards.

Unethical Self-Interest

Acting unethically for personal benefit.

Peer Pressure in Ethics

Behaving unethically because of external pressure from others.

Rewarding Unethical Behavior

Organizations implicitly encouraging bad behavior through rewards.

Unethical vs. Illegal

Behavior can be legal yet still completely unethical.

Leadership in Ethics

Leadership sets the organizational tone for ethical decisions.

Ethical Controls

Building formal mechanisms like a code of conduct.

Ethical Culture

Creating an organizational culture where ethics is baked in early.

Behaving Ethically

Acting ethically across all stakeholder relationships.

Shareholder Model

The view that business moral duty is profit maximization for owners.

Stakeholder Model

Serving interests of all internal and external parties involved.

Corporate Social Responsibility

Actions furthering social good beyond legal and profit requirements.

Triple Bottom Line

Evaluating a business on People, Planet, and Profit dimensions.

Benefits of Ethical Organizations

Higher engagement, brand affinity, lower fraud costs, and profitability.

Organizational Evolution

Aldrich's model of variation, selection, and retention in business emergence.

Variation Stage

Internal or external changes happening within an organizational system.

Selection Stage

Internal or market forces determining which variations survive.

Retention Stage

Successful variations becoming institutionalized as standard practice.

Emergence Stage

The initial startup phase with lower capital requirements and high failure rates.

Emergence Planning

Strategic analysis and deciding whether to be a first-mover.

Emergence Requirements

Social networks, experience, funding, and balancing niches against density.

Midlife Stage

Surviving startup phase, defined by functional and market differentiation.

Midlife Characteristics

Sub-systems get established and firms copy what already works.

Business Decline

Reduction in internal organizational worth over time.

Kinds of Decline

Decline can be intentional versus unintentional and partial versus complete.

Erosion Path of Decline

An active response where an organization tries to rebuild.