C483-Chapter 2: The External and Internal Environments

Which of the following is a characteristic of a strong culture?

A strong culture is one in which everyone understands and believes in the firm's goals, priorities, and practices. In contrast to strong cultures, weak cultures have the following characteristics: different people hold different values, there is confusion about corporate goals, and it is not clear from one day to the next what principles should guide decisions. (Everyone believing in the firm's practices )

In competition, a substitute is best described as a(n):

A substitute is a potential threat; customers use it as an alternative, buying less of one kind of product but more of another. (alternative to a product.)

Identifying the best-in-class performance by a company in a given area, such as customer service, and then comparing the process to one's own is called _____.

Benchmarking means identifying the best-in-class performance by a company in a given area, say product development or customer service, and then comparing your processes to theirs.

Which of the following is a controllable environmental factor that can affect an organization?

Cost leadership strategy External factors that influence an organization are often uncontrollable. Examples include recession, government regulations, competitors' actions, and other factors. However, managers should not ignore controllable internal management issues.

Which of the following is a demographic factor of an organization's macroenvironment?

Demographics are measures of various characteristics of the people who make up groups or other social units, such as the workforce. Work groups, organizations, countries, markets, and societies can be described statistically by referring to demographic measures such as their members' age, gender, family size, income, education, occupation, and so forth.

Pluto Inc. is computer technology corporation that has been manufacturing laptops for the last five years. Recently, in the face of sinking market share, Pluto reduced its dependency on laptops by venturing into tablets and smartphones. This is an example of _____.

Diversification occurs when a firm invests in different types of businesses or products or when it expands geographically to reduce its dependence on a single market or technology.

Complexity and dynamism in the environment result in:

Environmental uncertainty means that managers do not have enough information about the environment to understand or predict the future. Uncertainty arises from two related factors: complexity and dynamism.

Raw materials, services, equipment, capital, and information are _____ for an organization.

Inputs are the goods and services organizations take in and use to create products or services. It includes raw materials, services, equipment, capital, and information

Differences in the way people dress and act, their interactions with each other and with customers, and what qualities are expected and appreciated by their managers and company are examples of the _____.

Organization culture includes the way people dress and behave, the way they interact with each other and with customers, and the qualities that are likely to be valued by their managers.

Which of the following is a component of Porter's competitive environment?

The competitive environment includes rivalry among current competitors and the impact of new entrants, substitute and complementary products, suppliers, and customers.

Which of the following refers to the immediate environment surrounding a firm, including suppliers, customers, rivals, and new entrants?

The competitive environment is the immediate environment surrounding a firm. It includes suppliers, customers, rivals, new entrants, and substitute products.

Which of the following is a dominant attribute of a hierarchical culture?

The hierarchical culture is internally oriented by more focus on control and stability. It values stability and assumes that individuals will comply with organizational mandates when roles are stated formally and enforced through rules and procedures/regulations

The internal environment includes:

The internal environment includes a firm's culture, climate, and values. The external environment includes all relevant forces outside the organization's boundaries.

Why is understanding an organization's environment important?

Without this understanding, organizations tend to miss opportunities or make poor decisions. If managers do not understand how the environment affects their organizations or cannot identify opportunities and threats that are likely to be important, their ability to make decisions and execute plans will be severely limited.

According to Michael Porter's competitive environment model, high switching costs increases _____.

the power of suppliers . Dependence on suppliers, and thus their power, results from high switching costs, the fixed costs buyers face if they change suppliers. For example, once a buyer learns how to operate a supplier's equipment, such as computer software, the buyer faces both economic and psychological costs in changing to a new supplier.