Chapter 5: The External Environment

Task Environment

Actual and potential competitors, suppliers, and buyers (customers or distributors); firms that provide substitute products to those sold in the industry; and firms that provide complements.

Database

An electronic storage file where information is kept; one use of databases is to store vast amounts of information about consumers.

Economies of Scale

Cost advantages associated with large operations.

Technology

Everything from phones and copiers to computers, medical imaging devices, personal digital assistants, and the various software programs that make business processes more efficient and productive.

Internal Environment

Everything inside a firm that affects managers' ability to pursue actions or strategies.

External Environment

Everything outside a firm that might affect the ability of the enterprise to attain its goals.

Barriers to Entry

Factors that make it difficult and costly for an organization to enter a particular task environment or industry.

Empowerment

Giving frontline workers the responsibility, authority, and freedom to respond quickly to customer requests.

Customers

Individuals and groups that buy the goods and services that an organization produces.

Suppliers

Individuals and organizations that provide an organization with the input resources that it needs to produce goods and services.

Distributors

Organizations that help other organizations sell their goods or services to customers.

Potential Competitors

Organizations that presently are not in a task environment but could enter if they so choose.

Competitors

Organizations that produce goods and services that are similar to a particular organization's goods and services.

General Environment

Political and legal forces, macroeconomic forces, demographic forces, sociocultural forces, technological forces, and international forces.

Productivity

The amount of output you generate given the amount of input.

E-commerce

The buying and selling of goods and services over the Internet.

Identity Theft

The obtaining of private information about a person, such as Social Security number and/or credit card number, and using that information for illegal purposes, such as buying things with it.

Global Outsourcing

The purchase of inputs from overseas suppliers or the production of inputs abroad to lower production costs and improve product quality or design.

Task Environment

The set of forces and conditions that originate with suppliers, distributors, customers, and competitors and affect an organization's ability to obtain inputs and dispose of its outputs because they influence managers on a daily basis.

Demography

The statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income.

Business Environment

The surrounding factors that either help or hinder the development of businesses.

General Environment

The wide-ranging global, economic, technological, sociocultural, demographic, political, and legal forces that affect an organization and its task environment.

Brand Loyalty

customers' preference for the products of organizations currently existing in the task environment.