1/23/2024
Managing in the
Global Environment
Learning Objectives
1. Explain why the ability to perceive, interpret, and respond appropriately to
the organizational environment is crucial for managerial success.
2. Differentiate between the global task and global general environments.
3. Identify the main forces in both the global task and general environments,
and describe the challenges that each force presents to managers.
4. Explain why the global environment is becoming more open and
competitive and identify the forces behind the process of globalization
5. Discuss why national cultures differ and why it is important to managers
1
1/23/2024
What Is the Global Environment?
• Global Organizations
• In more than one country
• Uncertainty and unpredictability
• Global Environment
Set of global forces and conditions that operate beyond an
organization’s boundaries but affect a manager’s ability to acquire
and utilize resources
Forces in the Global Environment
• Jump to Appendix 1 long image
description.
2
1/23/2024
What Is the Global Environment?
• General Environment
The wide-ranging global, economic, technological, socio-
cultural, demographic, political, and legal forces that affect an
organization and its task environment
• Task Environment
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 daily
The Task Environment
• Suppliers
- Individuals and organizations that provide an organization with the
input resources that it needs to produce goods and services
Raw materials, component parts, labor (employees)
- Changes in the nature, number, or types of suppliers produce
opportunities and threats to which managers must respond.
- Depending upon these factors, a supplier’s bargaining position may be
either strong or weak.
- At a global level, managers have the opportunity to buy products from
foreign suppliers or to become their own suppliers and manufacture
their own products abroad.
3
1/23/2024
Global Outsourcing
• Global Outsourcing
The purchase or production of inputs or final products from
overseas suppliers to lower costs and improve product quality or
design
The Task Environment
• Distributors: Organizations that help other organizations sell their
goods or services to customers
If distributors become so large and powerful that they can
control customers’ access to a goods and services, they can
threaten the organization by demanding that it reduce the
prices of its goods and services.
4
1/23/2024
The Task Environment
• Customers: Individuals and groups that buy the goods and
services that an organization produces
Identifying an organization’s main customers and producing
the goods and services they want is crucial to organizational
and managerial success.
10
The Task Environment
• Competitors: Organizations that produce goods and services that
are similar to a particular organization’s goods and services
- A high level of rivalry typically results in price competition, and
falling prices reduce customer revenues and profits.
- Potential Competitors: Organizations that presently are not in a
task environment but could enter if they so choose
11
5
1/23/2024
The Task Environment
Barriers to Entry
Factors that make it difficult and costly for the organization to enter a particular
task environment or industry
• Economies of Scale
Cost advantages associated with large operations
• Brand Loyalty
Customers’ preference for the products of organizations currently existing in the
task environment
• Government Regulations
In some cases, act as a barrier to entry at both the industry and the country level
12
Barriers to Entry and Competition
• Figure 4.2
• Jump to Appendix 2 long image description.
13
6
1/23/2024
The General Environment
• Economic Forces
Interest rates, inflation, unemployment, economic growth, and other
factors that affect the general health and well-being of a nation or the
regional economy of an organization
• Technology
The combination of skills and equipment that managers use in
designing, producing, and distributing goods and services
• Technological Forces
Outcomes of changes in the technology that managers use to design,
produce, or distribute goods and services
14
The General Environment
• Sociocultural Forces
Pressures emanating from the social structure of a country or society
or from the national culture
• Social Structure
The traditional system of relationships established between people
and groups in a society
• National Culture
Set of values that a society considers important and the norms of
behavior that are approved or sanctioned in that society
16
7
1/23/2024
The General Environment
• Demographic Forces
Outcomes of changes in or changing attitudes toward the
characteristics of a population, such as age, gender, ethnic origin,
race, sexual orientation, or social class
Most industrialized nations are experiencing the aging of their
populations.
• Political and Legal Forces
Outcomes of changes in laws and regulations, such as the
deregulation of industries, the privatization of organizations, and an
increased emphasis on environmental protection
17
The Process of Globalization
• Globalization
The set of specific and general forces that work together to integrate
and connect economic, political, and social systems across
countries, cultures, or geographical regions so that nations become
increasingly interdependent and similar
• Forces That Drive Globalization
• Human capital
• Financial capital
• Resource capital
• Political capital
19
8
1/23/2024
Declining Barriers to Trade and Investment
• Tariff
A tax that a government imposes on imported or, occasionally,
exported goods
• Free-Trade Doctrine
The idea that if each country specializes in the production of the
goods and services that it can produce most efficiently, this will
make the best use of global resources
20
Effects of Free Trade on Managers
• Declining Trade Barriers
• Opened enormous opportunities for managers to expand the
market for their goods and services
• Allowed managers to now both buy and sell goods and services
globally
21
9
1/23/2024
The Role of National Culture
• Values
• Ideas about what a society believes to be good, desirable and
beautiful
• Provides the underpinnings for notions of individual freedom,
democracy, truth, justice, honesty, loyalty, social obligation,
collective responsibility,
• Very slow to change
22
The Role of National Culture
• Norms
Unwritten informal codes of conduct that prescribe how people
should act in particular situations and are considered important
by most members of a group or organization
• Mores
Norms that are considered to be central to functioning of society
and to social life
• Folkways
Routine social conventions of everyday life
23
10
1/23/2024
Hofstede’s Model of National Culture)
• Individualism
A worldview that values individual freedom and self-expression
and adherence to the principle that people should be judged by
their individual achievements rather than by their social
background
• Collectivism
A worldview that values subordination of the individual to the
goals of the group and adherence to the principle that people
should be judged by their contribution to the group
24
Hofstede’s Model of National Culture)
• Power Distance
The degree to which societies accept the idea that inequalities in
the power and well-being of their citizens are due to differences
in individuals’ physical and intellectual capabilities and heritage
• Uncertainty Avoidance
Degree to which societies are willing to tolerate uncertainty and
risk
25
11
1/23/2024
Hofstede’s Model of National Culture
• Achievement Orientations
Worldview that values assertiveness, performance, success,
and competition
• Nurturing Orientation
Worldview that values quality of life, warm personal friendships,
and care for the weak
26
Hofstede’s Model of National Culture
• Long-Term Orientation
Worldview that values thrift and persistence in achieving goals
• Short-Term Orientation
Worldview that values personal stability or happiness and living
for the present
27
12
1/23/2024
National Culture and Global Management
• Management practices that are effective in one country might be
troublesome in another.
• Managers must be sensitive to the value systems and norms of an
individual’s country and behave accordingly.
28
13