Managing in the Global Environment chapter six lecture 2 McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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. 6-2

The General Environment 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 6-3

The General Environment Sociocultural Forces – Pressures emanating from the social structure of a country or society or from the national culture 6-4

Sociocultural Forces Social structure – the arrangement of relationships between individuals and groups in society National culture – the set of values that a society considers important and the norms of behavior that are approved or sanctioned in that society. 6-5

The General Environment Demographic Forces – Outcomes of change in, or changing attitudes toward, the characteristics of a population, such as age, gender, ethnic origin, race, sexual orientation, and social class 6-6

The General Environment Political and Legal Forces – Outcomes of changes in laws and regulations, such as deregulation of industries, privatization of organizations, and increased emphasis on environmental protection. 6-7

The Global Environment Figure

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. 6-9

Principal Forms of Capital that Flow Between Countries 6-10 Human capital Financial capital Resource capital Political capital

Declining Barriers to Trade and Investment Tariff – A tax that government imposes on imported or, occasionally, exported goods. – Intended to protect domestic industry and jobs from foreign competition 6-11

USITC The United States International Trade Commission is an “independent, quasi-judicial Federal agency with broad investigative responsibilities on matters of trade.” The Commission also serves as a Federal resource where trade data and other trade policy-related information are gathered and analyzed. 7-12

GATT and the Rise of Free Trade 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 and will result in lower prices – General Agreement on Tariffs and Trade 6-13

Declining Barriers of Distance and Culture - Unilever Distance – Markets were essentially closed because of the slowness of communications over long distances. Culture – Language barriers and cultural practices made managing overseas businesses difficult Changes in Distance and Communication – Improvement in transportation technology and fast, secure communications have greatly reduced the barriers of physical and cultural distances. 6-14

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. – Increased intensity of global competition such that managers now have a more dynamic and exciting job of managing. 6-15