External Environment: Economic & Legal-Political

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Questions and Answers

Which of the following best describes the role of top managers and C-suite executives in relation to an organization's external environment?

  • To monitor external conditions and ensure the organization's mission, strategies, and practices align with these conditions. (correct)
  • To isolate the organization from the influences of the external environment to maintain internal stability.
  • To primarily focus on internal practices and ignore external conditions to increase efficiency.
  • To lobby the government to change laws and regulations to benefit the organization.

Which of the following is the MOST direct effect of reshoring initiatives on the economic environment?

  • Reduced need for quality control in manufacturing processes
  • Job creation and a financial boost for local economies (correct)
  • Decreased consumer spending due to higher product costs
  • Increased unemployment rates in domestic markets

How do legal-political conditions in the global business environment MOST significantly affect multinational corporations?

  • They require corporations to adapt to varied laws, regulations, and political philosophies. (correct)
  • They eliminate the need for corporations to engage in corporate social responsibility initiatives.
  • They ensure uniform standards across all countries, simplifying international operations.
  • They allow corporations to operate without oversight in countries with less strict regulations.

Which action BEST exemplifies how a company responds to socio-cultural conditions related to gender equality?

<p>Creating mentorship programs to support the advancement of women into leadership positions. (D)</p> Signup and view all the answers

How have technological advancements MOST affected the work-life balance of employees?

<p>By blurring the lines between work and personal life, making it difficult to disconnect from job responsibilities. (A)</p> Signup and view all the answers

Which of the following actions BEST demonstrates an organization's proactive response to natural environment concerns?

<p>Implementing sustainable practices and investing in green technologies. (D)</p> Signup and view all the answers

Which of the following scenarios BEST represents the complexities organizations face when dealing with Internet censorship in different countries?

<p>A global firm adhering to local laws by restricting access to certain content, while also trying to promote free expression. (B)</p> Signup and view all the answers

What is the PRIMARY challenge for organizations when managing a workforce comprised of different generational cohorts?

<p>Addressing differing expectations, communication styles, and approaches to work. (D)</p> Signup and view all the answers

Which factor MOST significantly drives the shift from offshoring to reshoring for companies like Superior Radiant?

<p>Rising labour costs overseas, higher shipping costs, and concerns over quality control (C)</p> Signup and view all the answers

How do extreme imbalances in economic conditions MOST directly impact organizational strategy?

<p>They require organizations to reassess and adjust their strategies to adapt to changing consumer behaviours and market dynamics. (D)</p> Signup and view all the answers

What is the PRIMARY implication of the digital native phenomenon on workplace dynamics?

<p>Digital natives bring a different set of expectations, skills, and communication preferences to the workplace. (D)</p> Signup and view all the answers

Which of the following scenarios BEST explains why the regulation of 'fintech' companies is being debated?

<p>Unregulated fintech companies broaden access to financial services but also pose risks like security breaches and solvency issues. (C)</p> Signup and view all the answers

Which of the following BEST describes the potential impact of high executive pay on socio-cultural conditions?

<p>It may draw public criticism related to income inequality and fairness, especially during times of high unemployment. (B)</p> Signup and view all the answers

Which of the following BEST illustrates how technology impacts employee productivity from the employer’s perspective?

<p>Employees' personal use of technology during work hours can decrease productivity, termed 'social notworking'. (D)</p> Signup and view all the answers

Why is there increasing emphasis on organizations to adopt 'carbon neutral,' 'green,' and 'sustainable' practices?

<p>To protect natural resources, ensure their availability for future generations, and meet consumer expectations. (A)</p> Signup and view all the answers

What is the PRIMARY ethical issue associated with offshoring e-waste to countries like Ghana, China, and Vietnam?

<p>Low-cost disposal leads to adverse environmental and health effects for local labourers and communities. (C)</p> Signup and view all the answers

Based on learning objective 4.1, how might an organization prepare for possible future developments in the technological environment?

<p>By continuously monitoring technological trends and adapting strategies to incorporate relevant advancements. (A)</p> Signup and view all the answers

In the context of value creation, how do businesses MOST effectively create value for their suppliers?

<p>By establishing long-term business relationships that provide mutual benefits. (C)</p> Signup and view all the answers

Which of the following is the BEST example of how changing socio-cultural conditions have influenced advertising strategies?

<p>Advertisements featuring diverse representation and addressing social issues to align with changing values. (A)</p> Signup and view all the answers

How might increased awareness of income inequality MOST likely affect a company's compensation policies?

<p>By reevaluating pay structures to reduce the disparity between executive and average worker compensation. (C)</p> Signup and view all the answers

What strategy BEST exemplifies a company adapting to the increasing demand for 'green products and services'?

<p>Redesigning products and processes to be more environmentally sustainable. (D)</p> Signup and view all the answers

What is a PRIMARY challenge for global firms dealing with varying national policies on Internet censorship?

<p>Adhering to some censorship policies while trying to maintain values of free expression. (D)</p> Signup and view all the answers

How do provinces MOST effectively compete to attract new plants from companies such as General Motors and Toyota?

<p>By offering attractive tax incentives and reducing bureaucratic hurdles. (B)</p> Signup and view all the answers

In what way does the shift toward reshoring directly address public criticism of lost local jobs?

<p>By bringing jobs back to the home country, thereby increasing local employment opportunities. (A)</p> Signup and view all the answers

Which of the following is the MOST direct implication of Apple paying $60 million to retain the iPad name in China?

<p>It highlights the importance of understanding and complying with local intellectual property laws. (C)</p> Signup and view all the answers

What potential risk do airline pilots face due to overreliance on automation, according to the U.S. National Transportation Safety Board?

<p>Potential loss of manual flight skills needed as cross-checks and last resorts. (C)</p> Signup and view all the answers

Which strategic response BEST illustrates an organization addressing the ethical implications of offshore e-waste disposal?

<p>Investing in safe and environmentally responsible e-waste recycling practices, even if they are more expensive. (B)</p> Signup and view all the answers

According to Learning Objective 4.2, how can businesses create value for local communities?

<p>By engaging in responsible corporate citizenship and community support initiatives. (D)</p> Signup and view all the answers

In the context of the external environment, how do regulators MOST directly affect an organization?

<p>By setting and enforcing standards, laws, and regulations that the organization must comply with. (C)</p> Signup and view all the answers

Which of the following is the MOST significant way an organization can create value for its investors/owners?

<p>By consistently generating profits and increasing the value of their investment. (A)</p> Signup and view all the answers

Considering the socio-cultural conditions related to income inequality, what action by a company would BEST demonstrate a commitment to addressing this issue?

<p>Implementing policies that promote fair wages and equal opportunities for all employees. (C)</p> Signup and view all the answers

How might an organization leverage technology to BEST address the socio-cultural condition of limited access to education for some communities?

<p>By developing and providing affordable or free access to online educational resources. (D)</p> Signup and view all the answers

What potential negative impact does 'social notworking' in the workplace have on organizations?

<p>It decreases overall productivity and allows confidential information to be exposed. (C)</p> Signup and view all the answers

In response to concerns about the natural environment, what action BEST demonstrates a company's commitment to sustainability beyond regulatory compliance?

<p>Investing in renewable energy sources and reducing their carbon footprint beyond what is legally required. (B)</p> Signup and view all the answers

How do advocacy groups MOST effectively influence an organization's practices regarding environmental sustainability?

<p>By lobbying, raising public awareness, and pressuring the organization to adopt sustainable practices. (B)</p> Signup and view all the answers

In the context of Learning Objective 4.2, how can a business create value for the broader society, including future generations?

<p>By adhering to ethical practices, supporting community development, and focusing on sustainability. (A)</p> Signup and view all the answers

How might shifts in socio-cultural conditions MOST likely influence a company's approach to employee benefits and well-being programs?

<p>By offering more diverse and inclusive benefits that cater to a wider range of employee needs and values. (A)</p> Signup and view all the answers

What is the PRIMARY role of top managers and C-suite executives regarding an organization's external environment?

<p>To ensure the organization's internal practices align with and respond to external conditions. (B)</p> Signup and view all the answers

A company is deciding whether to offshore or reshore its manufacturing operations. Which consideration reflects an economic environmental factor?

<p>The comparative labor costs and transportation expenses between the foreign country and the home country. (B)</p> Signup and view all the answers

Which situation BEST illustrates the challenges organizations face due to legal-political conditions in the global environment?

<p>A technology firm encounters difficulties when trying to enforce its software patents in a country with weak intellectual property laws. (C)</p> Signup and view all the answers

An organization implements a mentorship program specifically designed to support women in leadership roles. Which condition is this organization MOST likely addressing?

<p>Socio-cultural pressures for greater gender equality in the workplace. (C)</p> Signup and view all the answers

How have technological advancements specifically impacted the demand for continuous employee training and development?

<p>Increased demand, because employees need to update their skills to effectively use and adapt to rapid technological change. (A)</p> Signup and view all the answers

A company invests in renewable energy sources to power its manufacturing plants and reduces its carbon footprint. Which environmental factor is the company addressing with these actions?

<p>Natural environment. (C)</p> Signup and view all the answers

What challenge do organizations MOST likely face when operating in countries with strict Internet censorship policies?

<p>Reduced ability to effectively market products and communicate with customers. (A)</p> Signup and view all the answers

Considering the presence of multiple generational cohorts in the workplace, which management approach is generally MOST effective?

<p>Adopting a flexible management style that accommodates the diverse values and expectations of different generations. (D)</p> Signup and view all the answers

Which of the following factors would MOST likely drive a company's decision to move from offshoring back to reshoring?

<p>Rising labor costs in foreign countries, coupled with domestic government incentives. (B)</p> Signup and view all the answers

How can extreme imbalances in economic conditions MOST directly affect an organization's strategic planning?

<p>By necessitating more frequent and adaptable strategic adjustments. (A)</p> Signup and view all the answers

What is the PRIMARY impact of 'digital natives' on workplace communication and collaboration?

<p>An increased expectation for seamless digital integration and instant communication. (C)</p> Signup and view all the answers

Why is the regulation of 'fintech' companies a subject of ongoing debate?

<p>Because there is a need to balance innovation and consumer protection. (C)</p> Signup and view all the answers

How might high executive pay impact socio-cultural conditions of a community?

<p>It can increase public scrutiny and debate about income inequality. (A)</p> Signup and view all the answers

From an employer's perspective, how does technology BEST enhance employee productivity?

<p>By providing employees with tools to efficiently manage their time and workload. (B)</p> Signup and view all the answers

Why is there increasing emphasis on organizations adopting 'carbon neutral,' 'green,' and 'sustainable' practices?

<p>Because of increasing societal pressure to protect resources for future generations. (A)</p> Signup and view all the answers

What is the PRIMARY ethical challenge associated with offshoring e-waste to developing countries?

<p>The exposure of workers and communities to hazardous materials and pollution. (C)</p> Signup and view all the answers

How can an organization proactively prepare for potential future developments in the technological environment?

<p>By investing in continuous learning and development programs for employees. (B)</p> Signup and view all the answers

What is the BEST way for a business to create value for its suppliers?

<p>By maintaining consistent demand and offering fair terms that support long-term relationships. (C)</p> Signup and view all the answers

How have socio-cultural conditions influenced advertising strategies in recent years?

<p>Advertising strategies have become more inclusive and reflect diverse values and lifestyles. (B)</p> Signup and view all the answers

How can increased awareness of income inequality MOST affect a company's compensation policies?

<p>Companies may re-evaluate pay ratios and implement initiatives to address disparities. (D)</p> Signup and view all the answers

What is the BEST example of a company adapting to the increasing demand for 'green products and services'?

<p>A manufacturing company invests in more efficient internal processes to reduce waste and reuses materials. (C)</p> Signup and view all the answers

What is a PRIMARY difficulty for global firms dealing with varying national policies on Internet censorship?

<p>The need to balance global standards with local legal requirements. (C)</p> Signup and view all the answers

How can businesses create value for local communities?

<p>By engaging in corporate philanthropy and investing in community development. (B)</p> Signup and view all the answers

How can an organization create the MOST value for its investors/owners?

<p>By maximizing profits through sustainable and ethical practices. (D)</p> Signup and view all the answers

How can a business create value for the broader society, including future generations?

<p>Engaging in sustainable business practices and minimizing environmental harm. (B)</p> Signup and view all the answers

What organizational capability is MOST essential for effectively navigating the dynamic external environment?

<p>Cultivating a culture of adaptability and continuous monitoring of environmental forces. (A)</p> Signup and view all the answers

How do organizations MOST effectively balance the benefits of technological advancements with the potential drawbacks of increased employee availability demands?

<p>By promoting a culture that values work-life integration along with clear boundaries and support for employee well-being. (D)</p> Signup and view all the answers

What proactive step can organizations take to address the ethical concerns associated with the use of offshore e-waste disposal?

<p>Investing in sustainable recycling processes and taking responsibility for the end-of-life management of their products. (D)</p> Signup and view all the answers

Which strategy would BEST enable a company to address socio-cultural conditions related to income inequality?

<p>Implementing a progressive compensation policy that reduces the pay gap between executives and the average worker. (C)</p> Signup and view all the answers

When considering 'reshoring' initiatives, how can companies BEST reconcile the potential for increased labor costs with the need to maintain competitive pricing?

<p>Implementing automation and advanced manufacturing technologies to improve productivity and offset higher labor costs. (A)</p> Signup and view all the answers

Flashcards

External Environment

All external conditions that influence managerial decision-making.

External Environment Factors

Economic, legal-political, socio-cultural, technological, and natural environment conditions.

Macro-economic Conditions

Financial markets, inflation, income levels, and job creation impacting an economy’s health.

Offshoring

Outsourcing work to lower-cost foreign locations.

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Reshoring

Moving jobs back to the company's home country.

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Legal-Political Conditions

Current and proposed laws, regulations, government policies, and political party objectives.

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Fintech

The financial technology industry; unregulated online financial services.

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Internet Censorship

Deliberate blocking of public access to Internet information.

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Socio-Cultural Conditions

Demographics, norms, and social values related to employment, gender roles, ethics, and lifestyles.

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Generational Cohorts

People born within a few years who experience similar life events during formative years.

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Digital Immigrants

Individuals who have had to learn technology later in life.

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Digital Natives

Individuals who grew up with technology.

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Sustainability

Protecting natural resources and ensuring their availability for future generations.

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E-waste

Discarded devices requiring batteries or electricity.

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Specific/Task Environment

Organizations, groups, and persons an organization interacts with.

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Stakeholders

Persons, groups, and institutions affected by an organization’s performance.

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Study Notes

  • The external environment consists of external conditions that set the context for managerial decision-making
  • This environment includes economic, legal-political, socio-cultural, technological, and natural environment conditions
  • Top managers monitor these conditions and link them with the organization’s mission, strategies, and internal practices

Economic Conditions

  • Economic conditions include long-term joblessness, income inequality, and China’s growing economic power
  • Economic conditions are part of a changing set of environmental forces.
  • Macroeconomic conditions affect the prospects for companies, consumer spending, and provincial/national priorities
  • Provinces compete on tax incentives to attract new plants, involving hundreds of jobs and financial boosts
  • Companies are considering reshoring jobs back home due to costs and other factors
  • Legal-political issues include immigration, education, tax, and health care reform
  • These reflect laws, regulations, government policies, and the objectives of political parties
  • Canadian lawmakers debate financial regulation, trade agreements, job protection, and minimum wage
  • Corporate execs monitor trends like regulating "fintech" companies
  • Legal-political conditions vary globally, requiring firms to adjust to different laws and politics
  • Countries vary on internet censorship, posing dilemmas for global firms like Google, Yahoo!, and Twitter

Socio-Cultural Conditions

  • Socio-cultural issues include income inequality, labor disadvantages, and discrimination
  • These issues relate to education, social networks, technology access, mentoring, and the "glass ceiling"
  • Socio-cultural conditions involve demographics, norms, and social values related to employment, gender roles, ethics, human rights, and lifestyles
  • The workplace is a mix of generational cohorts, such as digital natives and digital immigrants
  • Generational differences affect shopping, learning, and work styles
  • 75% of women aged 18–32 believe more must be done to ensure workplace equality
  • Social attitudes toward women at work are shifting positively, but gender wage gaps and bias remain
  • Canadian women earn 87 cents per dollar earned by men
  • Social values affect organizations' employment practices, reputation management, and product development
  • Public is growing more critical of high executive pay, with Canada’s 100 highest-paid CEOs receiving an average of $11.8 million each in 2018

Technological Conditions

  • More work duties go into employees personal lives due to technology
  • Some employers see employees doing personal things online, a loss of productivity called "social notworking.”
  • There are worries about pilot training due to high technological dependency and automation

Natural Environment Conditions

  • Concerns for the environment are ever present and global
  • Calls for being "carbon neutral," "green," and "sustainable" are common
  • People are working to reduce water consumption, waste, improve energy efficiency, and eliminate pollution
  • Consumers are asking for "green products and services" in their every day lives
  • There are rising concerns on organizations preserving/respecting the environment
  • E-waste is often sent to graveyards in countries like Ghana, China, and Vietnam
  • Canada is one of the worst e-waste offenders
  • E-waste workers face hazards disassembling and salvaging the products

Environment and Value Creation

  • Specific or task environment: The organizations/groups/persons with whom an organization interacts and conducts business
  • Stakeholders: The persons/groups/institutions affected by the organization’s performance
  • Stakeholders include customers, suppliers, competitors, regulators, advocacy groups, investors/owners, employees, and society
  • Organizations contribute to their environments by creating value for their stakeholders
  • Businesses create value for customers through product pricing and quality, and for owners in profits

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