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Questions and Answers
Environmental uncertainty encompasses both the frequency of change and the number of components in an organization’s environment.
Environmental uncertainty encompasses both the frequency of change and the number of components in an organization’s environment.
True
The competitive environment is solely determined by general economic conditions affecting all organizations.
The competitive environment is solely determined by general economic conditions affecting all organizations.
False
Demographic factors in the general environment include characteristics such as age and gender.
Demographic factors in the general environment include characteristics such as age and gender.
True
Technological factors in the general environment refer exclusively to the advancements in telecommunications.
Technological factors in the general environment refer exclusively to the advancements in telecommunications.
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International factors in the general environment do not include economic growth rates of foreign countries.
International factors in the general environment do not include economic growth rates of foreign countries.
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Government regulation falls under the socio-cultural factors of the general environment.
Government regulation falls under the socio-cultural factors of the general environment.
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Environmental factors in the general environment focus solely on pollution from production methods.
Environmental factors in the general environment focus solely on pollution from production methods.
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The PESTEL analysis includes the evaluation of socio-cultural attitudes towards foreign companies and staff.
The PESTEL analysis includes the evaluation of socio-cultural attitudes towards foreign companies and staff.
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The intensity of rivalry among competitors increases when there is stagnant or increasing demand.
The intensity of rivalry among competitors increases when there is stagnant or increasing demand.
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A strong organizational culture is characterized by employees who do not identify with company values and send contradictory messages.
A strong organizational culture is characterized by employees who do not identify with company values and send contradictory messages.
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Barriers to entry in an industry affect the threat of new entrants; lower barriers lead to decreased industry profits.
Barriers to entry in an industry affect the threat of new entrants; lower barriers lead to decreased industry profits.
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Suppliers with higher bargaining power can lead to increased industry profits.
Suppliers with higher bargaining power can lead to increased industry profits.
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Organizational culture only includes visible artifacts and does not pertain to values or beliefs.
Organizational culture only includes visible artifacts and does not pertain to values or beliefs.
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The bargaining power of buyers increases when there are fewer options available for them.
The bargaining power of buyers increases when there are fewer options available for them.
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Strong connection between behaviors and values is a trait of a weak organizational culture.
Strong connection between behaviors and values is a trait of a weak organizational culture.
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Rivalry among competitors is less intense when products are highly differentiated.
Rivalry among competitors is less intense when products are highly differentiated.
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A company’s internal stakeholders include customers and external creditors.
A company’s internal stakeholders include customers and external creditors.
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Organizational culture is solely established by the actions of the lower-level employees.
Organizational culture is solely established by the actions of the lower-level employees.
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Adaptability as a dimension of organizational culture refers to employees being discouraged from taking risks and experimenting.
Adaptability as a dimension of organizational culture refers to employees being discouraged from taking risks and experimenting.
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One of the roles of distributors is to help manufacturers sell their goods and services to customers.
One of the roles of distributors is to help manufacturers sell their goods and services to customers.
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Stakeholders such as local communities do not play a crucial role in a company's operations.
Stakeholders such as local communities do not play a crucial role in a company's operations.
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The threat of substitutes is high when products from other industries meet similar customer needs.
The threat of substitutes is high when products from other industries meet similar customer needs.
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Study Notes
Business Environment
- Environment encompasses external factors influencing organizational performance.
- Environmental uncertainty arises from change and complexity.
- Degree of change: Frequency of components' alteration within the environment.
- Complexity: Number and comprehensibility of organizational environment components.
General Environment
- General environment comprises broad factors influencing all organizations.
- Includes political, economic, socio-cultural, technological, environmental, legal, and international factors.
- Major forces in the general environment include:
- Economic: Interest rates, inflation, unemployment, economic growth
- Technological: Infrastructure, innovation, production/distribution technological changes
- Political and legal: Political stability, regulations, laws
- Socio-cultural: Customs, values, beliefs, traditions
- Demographic: Population characteristics (age, gender, etc.)
- Environmental: Environmental impact of production methods, resource usage
- International: Global business involvement
Competitive Environment
- Competitive environment consists of industry-specific forces.
- Includes customers, suppliers, distributors, competitors.
- Porter's Five Forces model analyzes industry attractiveness:
- Rivalry among competitors: Intensity inversely correlates with industry profits. Factors include: competitor number, size balance, demand growth, product differentiation, exit barriers.
- Threat of new entrants: Low entry barriers negatively impact industry profitability. Factors include capital requirements, economies of scale, licenses, customer loyalty.
- Bargaining power of suppliers: Higher supplier power reduces industry profit. Factors include supplier number, customer purchasing patterns, supplier expansion potential, switching costs.
- Bargaining power of buyers: Higher buyer power reduces industry profit.
- Threat of substitutes: Similar alternatives in other industries posing competition.
Organizational Culture
- Organizational culture comprises shared values, principles, traditions, and behaviors.
- Strong culture: Shared values and behaviors strongly connected, clear employee identification.
- Weak culture: Values restricted to top management, inconsistent messaging, poor employee identification.
- Levels of organizational culture:
- Visible artefacts: Observable aspects (dress, behavior, symbols, ceremonies, layout).
- Invisible aspects: Values, beliefs (interpreting from symbols and language), underlying assumptions (role models, myths, coded language).
- Dimensions of organizational culture:
- Adaptability, attention to detail, outcome orientation, people orientation, team orientation, integrity.
- How is culture established?: Founder's vision, stories, symbols, language, employee selection and socialization, top managers' actions maintain
Stakeholders
- Stakeholders are individuals or groups with interests in a company.
- Stakeholder groups include:
- External: Customers, suppliers, creditors, governments, unions, communities, general public.
- Internal: Stockholders, employees, managers, senior executives, board members.
- Stakeholder claims and responsibilities:
- Stockholders: Maximize returns on investment.
- Managers: Prioritize stakeholder benefits and efficient resource utilization.
- Employees: Fair rewards, development.
- Suppliers: Fair payment cycles.
- Distributors: Quality products, fair prices.
- Customers: Attracting to stay in business.
- Community: Provision of operating infrastructure.
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Description
This quiz focuses on the various external factors that influence organizational performance. It covers key concepts such as environmental uncertainty, the degree of change, and the complexity of the general environment, including political, economic, socio-cultural, technological, legal, and international factors. Test your understanding of how these elements affect businesses today.
