11/4/2022

The Management Environment

BUSINESS LEARNING OBJECTIVE
1
MANAGEMENT Explain what the external environment is
and why it’s important.
LECTURE 3

THE
Eyjafjallajökull EXTERNAL
volcano ENVIRONMENT

(photo credits: M. Rietze)

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The economic component of an The demographic component of an

organization’s general environment organization’s general environment
is the overall health and vitality of the economic system in which the is concerned with trends in population characteristics such as age, race,
organization operates (Griffin, 2021). This component is based on economics, gender, education level, geographic location, and family composition
the science that focuses on understanding how people of a particular
community or nation produce, distribute, and use various goods and services.
Particularly important economic factors for business are interest rates, inflation,
employment/unemployment rates, disposable income levels, stock market fluctuations, and
business cycle stages
 Economic Inequality and the Economic Context.
 The Sharing Economy.

The technological component of an

organization’s general environment
Technology is the combination of tools, machines, computers, skills,
information, and knowledge that managers use to design, produce, and
distribute goods and services; this component is made up of the methods
available for converting resources into products or services.

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The sociocultural component of an The legal component of an organization’s

organization’s general environment general environment
is concerned with societal and cultural factors such as values, attitudes, trends, looks at local laws, as well as laws of other countries and global laws
traditions, lifestyles, beliefs, tastes, and patterns of behavior.
The legal system partially defines what an organization can and cannot do.
 Social structure: traditional system of relationships established between people and
groups in a society
 National culture
Power distance
Individualism versus collectivism
Achievement versus nurturing
Uncertainty avoidance
Long-term versus short-term orientation

The political component of an The ecological component of an

organization’s general environment organization’s general environment
consists of government regulation of business and the relationship between stands green issues such as pollution, waste and climate change.
business and government
It also includes a country’s political conditions and stability

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The global component of an

organization’s general environment The Management Environment
which includes events originating in foreign countries, as well as new
opportunities for domestic companies in other countries
LEARNING OBJECTIVE
2
Discuss how the external environment
affects managers

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The Management Environment

LEARNING OBJECTIVE
3
Describe managerial ethics and the ethical
environment of management

The Management Environment

LEARNING OBJECTIVE
4
Describe social responsibility and why it is
important

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