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INTRODUCTION: THE EVOLUTION OF MODERN BUSINESS - Chapter 1: Theme of the book states the complexity of business that cannot be referenced just by the main activities (innovation, operations, marketing, human resource, finance accounting) but can be fully understood just when the contexts in which they operate are understood too. Two main theoretical approaches to analyse business organizations:  THE SYSTEM  CONTINGENCY APPROACHES. We can say that businesses operate in all kinds of areas, and most importantly they vary in terms of size (grocery store/Toyota), the main idea is to challenge the view that all businesses are exclusively profit oriented. Even the main institutions, which we had always considered non-forprofit organizations, are now shifting to competitive markets and have as a common focus to survive the fierce competition (hospitals/universities). Business activities As we said before the 5 main activities covered by business are the following: 1. Innovation 2. Operations 3. Marketing 4. Human resources 5. Finance and accounting. There are two main points to consider when dealing with business activities: the first one is that activities interact with one another (operation decision influences quality and quantity of a product). The second one states that activities do not exist in a vacuum, but they are shaped by the context within which they operate. We can possibly identify 3 types of context: 1. Strategic 2. Organizational 3. Environmental Business contexts Strategic level concerns management decisions and the particular influence on those decisions that determine the directions of the business. Strategic decisions will influence the range of products, money spent on advertising, number and type of people employed, shape and nature of organization. Strategic issues are inseparable from organizational and environmental ones, in which they operate and alter the other two crucial contexts. Organizational level instead refers to goals, structure, ownership, size and corporate culture. All these issues are interrelated and we can say that organizational factors along with management strategy work towards the creation of a distinctive organisational culture. Environmental level instead refers to 5 other concepts: Economy, State, technology, labour, cultural and institutional differences. All these concepts are discussed in the globalization chapter and all have interaction between each other. We clearly need to know what are the state and labour laws in that market, how is the economy going, the cost of production of a particular

product and the cultural diversities present in the area. All these factors are closely related to our first context, the strategic level, because depending on the environmental situation the firm will decide how to operate in that particular market. The system approach: This approach assumes that all organizations are made up of interdependent parts that can only be understood by reference to the whole. Thus, organisations may be analysed in term of INPUTS, PROCESS and OUTPUTS. So, we can say that an organisation must perfectly balance these 3 aspects in order to adapt to the current environment (create equilibrium). Social system and technical system operate between each other in a complex way. Inputs = materials, labour, methods, finance, technology, information Process = strategy formulation, innovation, operations, marketing, human resource management, accounting process Outputs = goods, services, profit, information, waste, job satisfaction/dissatisfaction, economic growth The contingency approach: fully cantered on the relationship between the organization and its environment. It states that best operating business are the ones that take advantage of the environmental influences, businesses that try to match environmental opportunities and threats with the their personal strengths and weaknesses. However, a criticism could be that the environment is not only influencing the business but even a particular business strategy could influence environmental contingencies....