Understanding Organizational Environment and Global Challenges

Organizational environment

Forces and conditions affecting resource use.

Internal environment

Strategy, structure, human resources, culture, and control mechanisms.

External environment

Industry-specific (task) and general environment.

Failure to adapt

Leads to competitive failure in the global economy.

Industry-specific (task) environment

Suppliers, distributors, customers, competitors.

General environment

Political, economic, sociocultural, technological, and international (PESTI) forces.

Globalization

Integration of economic, political, and social systems worldwide.

Factors driving globalization

Lower trade barriers, investment flow, cultural integration.

Trade wars

Conflicts leading to protectionism and restricted trade.

Global organizations

Companies operating across multiple countries.

Free-trade doctrine

The idea that unrestricted trade benefits all nations.

Tariff

Tax on imported goods.

Outsourcing

Using external firms for business processes.

Opportunities and threats

Depend on complexity and rate of change in the environment.

Strategic foresight

Predicting and preparing for future business trends.

Environmental change

Shifts in external forces requiring adaptation.

Government regulations

Laws affecting business operations.

Deregulation

Reducing government restrictions on businesses.

Privatization

Shifting public sector businesses to private ownership.

Competitive advantage

Achieved through efficiency, quality, innovation, and customer responsiveness.

Environmental, social, and governance (ESG) goals

Ethical responsibility in business.

Diversity, equity, and inclusion (DEI) goals

Promoting workplace inclusivity.

Artificial intelligence (AI)

Technology improving decision-making and automation.

Innovation

Developing new products, services, or processes.

Technology

Tools and systems advancing business operations.

Suppliers

Provide necessary inputs for production.

Distributors

Deliver products to customers.

Customers

End-users of goods and services.

Competitors

Other companies in the same industry.

Potential competitors

Businesses that might enter the market.

Barriers to entry

Factors preventing new companies from entering an industry.

Brand loyalty

Customer preference for a particular brand.

Economies of scale

Cost advantages from large-scale production.

Economic forces

Factors like inflation, unemployment, and economic growth.

Demographic forces

Population trends affecting business.

Sociocultural forces

Cultural and social trends influencing organizations.

Social structure

How a society is organized.

National culture

Shared values and beliefs of a country.

Power distance

Acceptance of unequal power distribution in society.

Individualism

Prioritizing personal goals over group goals.

Collectivism

Emphasizing group goals over individual interests.

Nurturing orientation

Valuing relationships, quality of life, and care.

Achievement orientation

Valuing competitiveness and success.

Long-term orientation

Prioritizing future rewards over short-term gains.

Short-term orientation

Focusing on immediate benefits.

B2B (business-to-business) commerce

Transactions between companies.

B2C (business-to-customer) commerce

Selling directly to consumers.

B2B marketplaces

Online platforms for business transactions.

Ecommerce

Online buying and selling.

Creating shared value (CSV)

Business strategies that benefit both companies and society.

Community economic development

Economic initiatives supporting local communities.

Uncertainty

Unpredictable external changes.

Uncertainty avoidance

Degree to which people feel uncomfortable with risk.

Certainty

Stability and predictability in the environment.

Protectionism

Policies restricting imports to protect domestic industries.