Chapter 3: External Environment and Small Business

Vocabulary flashcards covering key concepts from the video lecture on the external environment and its impact on small businesses.

Boundary

The place or scope a business occupies in the market (physical location or online presence) that shapes how customers perceive it.

Resources

Assets brought to start and sustain a business, including money, products, and knowledge.

Intention

The purpose or plan to start and pursue the business.

Exchange

The transaction where customers receive goods or services in return for money.

Task environment

External factors that directly impact day-to-day operations, including customers, competitors, suppliers, industry regulations, and advocacy groups.

General environment

Broad, global forces that affect the business, such as economy, political/legal factors, technology, globalization, and society/culture.

Customers

Individuals or organizations that buy your goods/services and influence product direction through feedback.

Competitors

Other firms offering similar products/services that affect market share and strategy.

Suppliers

Entities providing inputs needed to produce goods/services; disruptions affect operations.

Industry regulations

Rules governing an industry at local/state/federal levels that affect how you operate and sell.

Advocacy groups

Organized groups tied to your industry or cause that lobby for policy or public attitudes.

Economy (general environment)

Overall economic conditions at local or national levels that influence purchasing power and performance.

Political and legal environment

Regulatory and policy framework impacting business operations and planning.

Technology

Tools and systems adopted to improve products, services, and operations.

Globalization

Opportunities and challenges from international trade, outsourcing, and cross-border sourcing.

Society and culture

Changing norms and cultural factors that influence demand and business practices.

Environmental scan

A simple assessment of general and task environment factors to identify the most pressing issues facing a business.

Legitimacy

The perception that a business is credible and trustworthy, encouraging others to engage with it.

Reputation

How the community and stakeholders view the business based on past actions, quality, and service.

Networks

Relationships and connections with customers, suppliers, peers, and the community that support the business.

Professional business email

Using a formal business domain instead of a free email (e.g., Gmail) to convey credibility and legitimacy.

Strategy to respond to environmental factors

A plan to address the most pressing general and task environment issues, including implementation steps.

Monitoring

Tracking the effectiveness of the strategy and adjusting as needed.

Minimum wage policy impact ( Nebraska example )

Real‑world illustration of how wage increases affect payroll, pricing, staffing, and operations.