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- 1. CHAPTER 2 : THE FIRM and its ENVIRONMENT The business environment may be classified into two types: EXTERNAL BUSINESS ENVIRONMENT refers to the forces/factors outside the organization which my affect, either positively or negatively, the performance of the organization. INTERNALBUSINESS ENVIRONMENT refers to the forces/factors within the organization which my affect, either positively or negatively, the performance of the organization.
- 2. CHAPTER 2 : THE FIRM and its ENVIRONMENT The GENERAL EXTERNAL BUSINESS ENVIRONMENT includes: Economic Socio-cultural Politico-legal Demographic Technological World and ecological situations.
- 3. CHAPTER 2 : THE FIRM and its ENVIRONMENT The SPECIFIC EXTERNAL BUSINESS ENVIRONMENT includes: Stakeholders Customers Pressure groups Investors Employees
- 4. CHAPTER 2 : THE FIRM and its ENVIRONMENT The INTERNAL BUSINESS ENVIRONMENT includes: The organizations resources Research and development Production Procurement of supplies Products and services offered
- 5. CHAPTER 2 : THE FIRM and its ENVIRONMENT ENVIRONMENTAL SCANNING Involves the seeking for and sorting through data about the organizations environment. is a process of gathering, analyzing, and dispensing information for tactical or strategic purposes. It is monitoring and interpreting sweep of social, political, economic, ecological, and technological events to spot budding trends that could eventually impact industry
- 6. CHAPTER 2 : THE FIRM and its ENVIRONMENT ENVIRONMENTAL SCANNING Involves the seeking for and sorting through data about the organizations environment. is a process of gathering, analyzing, and dispensing information for tactical or strategic purposes. It is monitoring and interpreting sweep of social, political, economic, ecological, and technological events to spot budding trends that could eventually impact industry
- 7. CHAPTER 2 : THE FIRM and its ENVIRONMENT COMPONENTS OF ENVIRONMENTAL SCANNING The development of a competitive mindset Considering of future business scenarios Business prediction/forecasting Benchmarking The process of measuring or comparing ones own products services and practices with those of the recognized industry leaders in order to identify areas for improvement
- 8. CHAPTER 2 : THE FIRM and its ENVIRONMENT CULTURAL INTELLIGENCE Is an individuals ability to favorably receive and adjust to an unfamiliar way of doing things. MONOCHRONIC CULTURE Is a culture where people tend to do one thing at a time. POLYCHRONIC CULTURE Is a culture that is more flexible on time and it is used to accomplish many different things at one time.
- 9. CHAPTER 2 : THE FIRM and its ENVIRONMENT ECONOMIC DEVELOPMENT Is a total process which includes not only economic growth or the increase in the amount of goods and services produced by the countrys economy but also consider the social, political, cultural and spiritual aspects of the countrys growth.
- 10. CHAPTER 2 : THE FIRM and its ENVIRONMENT ECONOMIC DEVELOPMENT PHASES/STAGES Economic growth Improvement of human development index Availability of benefits provided by science and technology Societal improvement of the opportunities and General welfare of its members.
- 11. CHAPTER 2 : THE FIRM and its ENVIRONMENT BUSINESS ORGANIZATION Is a collection of people working together to achieve a common purpose related to their organizations mission, vision, goals and objectives and sharing a common organizational culture. ORGANIZATIONAL CULTURE Is the set of beliefs and values shared by organization members and which guide them as they work together to achieve their common purpose.
- 12. CHAPTER 2 : THE FIRM and its ENVIRONMENT BUSINESS ORGANIZATION Is a collection of people working together to achieve a common purpose related to their organizations mission, vision, goals and objectives and sharing a common organizational culture. ORGANIZATIONAL CULTURE Is the set of beliefs and values shared by organization members and which guide them as they work together to achieve their common purpose.
- 13. CHAPTER 2 : THE FIRM and its ENVIRONMENT TYPES OF BUSINESS ORGANIZATION SIMPLE BUSINESS ORGANIZATION Is an organization with few departments, centralized authority with a wide span of control, with few formal rules and regulations FUNCTIONAL BUSINESS ORGANIZATION Groups together people with similar or related duties, practices, delegation of authority to functional managers like the personal manager, sales manager or financial managers but allow CEOs to retain authority for strategic decisions.
- 14. CHAPTER 2 : THE FIRM and its ENVIRONMENT TYPES OF BUSINESS ORGANIZATION DIVISIONAL BUSINESS ORGANIZATION Is made up of semi-autonomous, separate business units, with a division head responsible for his units performance. NON-PROFIT BUSINESS ORGANIZATION Are organizations designed for the purpose of achieving their goals, giving service to clients without expecting monetary gains or financial benefits for their endeavors
- 15. CHAPTER 2 : THE FIRM and its ENVIRONMENT TYPES OF BUSINESS ORGANIZATION PROFIT BUSINESS ORGANIZATION Are organizations designed for the purpose of achieving their goals and achieving stability through income generation and profit making. OPEN/FLEXIBLE BUSINESS ORGANIZATION Are formed to meet todays changing work environment and includes: Team structures, matrix business organizations, project business structures, boundary less business organizations and virtual business organizations.
- 16. CHAPTER 2 : THE FIRM and its ENVIRONMENT COMPETITIVE ENVIRONMENT Refers to specific groups of people with which the company/firm interacts The companys customers, rival firms, new entrants, substitutes and suppliers make up the firms competitive environment forces. The abovementioned competitive environment forces have the power to influence the nature of the competition among rival companies so the firm must learn to adapt to or influence also the said competition.
- 17. CHAPTER 2 : THE FIRM and its ENVIRONMENT COMPETITIVE ENVIRONMENT The less power each of these competitive environment forces have, the more profitable the industry will be. The firms managers must be able to identify the varying needs of its customers and focus on creating customer value. The firm must also know the answers to the questions who are our rival companies? who are the new entrants to the industry? what are their different or new and better ways of providing value to customers?
- 18. CHAPTER 2 : THE FIRM and its ENVIRONMENT COMPETITIVE ENVIRONMENT The firm must realize that the substitutes are the biggest opportunity or threat in an industry and this implies that they may have to think of new strategies in order to compete with them. (landline phones have cellphones as substitute) The firm must also realize the importance of their suppliers that provide them with major inputs: raw materials for manufacturing goods, money from investors, and financial institutions, and people who supply them with new ideas and help in the production of goods and services that they offer.
- 19. CHAPTER 2 : THE FIRM and its ENVIRONMENT COMPANY suppliers customers Rival firms substitutes New entrants
- 20. CHAPTER 2 : THE FIRM and its ENVIRONMENT TASK 1 Identify and list down the customers, rival firms, new entrants, substitutes and suppliers of Philippine Airlines (PAL) or any known Philippine Company listed among the top 100 Philippine Corporations.
- 21. CHAPTER 2 : THE FIRM and its ENVIRONMENT ASSESSMENT 1 Which cultural dimensions are practiced in the Philippines? Put a (/) or an (x) mark beside the cultural dimension to express your affirmative or negative response. 1. Low power distance 6. Collectivism 2. High power distance 7. masculinity 3. Low uncertainty avoidance 8. Femininity 4. High uncertainty avoidance 9. Individualism 5. Short term thinking 10. Long term thinking
- 22. CHAPTER 2 : THE FIRM and its ENVIRONMENT ASSESSMENT 2 Fill in the blanks with the correct answer. Answer may be one of the following: Simple, Functional, Divisional, Profit, Non-Profit, Open/Flexible, Boundaryless or Virtual Business Organization (1) ___________ Business Organizations maintain their stability through income generation. (2) ___________ Business Organizations made up of semi- autonomous units.
- 23. CHAPTER 2 : THE FIRM and its ENVIRONMENT (3) ___________ Business Organizations formed to meet todays changing work environment. (4)___________ Business Organizations is easy to manage because it has few departments, centralized authority and few rules and regulations. (5) ___________ Business Organizations that groups together those with similar or related specialized duties. (6)___________ Business Organizations that assigns experts belonging to different departments to work together on one or more projects.
- 24. CHAPTER 2 : THE FIRM and its ENVIRONMENT (7) ___________ Business Organizations who design is flexible and unstructured. (8)___________ Business Organizations whose members are physically dispersed and who, oftentimes, communicate electronically through computers.