1. Managing in the Global Environment
Chapter Four
McGraw-Hill/Irwin
Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

2. Learning Objectives
LO1 Explain why the ability to perceive, interpret, and respond appropriately to the organizational environment is crucial for managerial success
LO2 Differentiate between the global task and global general environments
LO3 Identify the main forces in a global task and general environments, and describe the challenges that each force presents to managers

3. Learning Objectives
LO4 Explain why the global environment is becoming more open and competitive and identify the forces behind the process of globalization that increase the opportunities, complexities, challenges, and threats that managers face
LO5 Discuss why national cultures differ and why it is important that managers be sensitive to the effects of falling trade barriers and regional trade associations on the political and social systems of nations around the world

4. What is the Global Environment?
Global Organizations
Organizations that operate and compete in more than one country
Global Environment
Set of global forces and conditions that operate beyond an organization’s boundaries
Affects a manager’s ability to acquire and utilize resources
Uncertain and unpredictable
Any examples??
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5. Forces in the Global Environment
Figure 4.1
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6. What is the Global Environment?
Task Environment
Set of forces and conditions that originate with: Suppliers, Distributors, Customers & Competitors
Affects an organization’s ability to obtain inputs and dispose of its outputs
Influences managers on a daily basis

7. What is the Global Environment?
General Environment
The wide-ranging global forces that affect an organization and its task environment
Economic, Technological, Socio-cultural, Demographic, Political and Legal forces

8. 1-The Task Environment/Suppliers
Individuals and organizations that provide an organization with the input resources that it needs to produce goods and services
Provide raw materials, component parts, labor (employees) = inputs!

9. 1-The Task Environment/Suppliers
Relationships with suppliers can be difficult
Material shortages, unions, lack of substitutes
Suppliers that are the only source of a critical item are in a strong position to raise prices
Managers can reduce these supplier effects by increasing the number of suppliers per input
Is this always possible or practical?

10. Global Outsourcing Global Outsourcing
Purchase of inputs from foreign suppliers or the production of inputs abroad to lower production costs and improve product quality or design

11. 2-The Task Environment/Distributors
Organizations that help other organizations sell their goods or services to customers
Powerful distributors can limit access to markets through its control of customers in those markets.

12. 3-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

13. 4-The Task Environment/Competitors
Organizations that produce goods and services that are similar to a particular organization’s goods and services
Strong competitive rivalry results in: -Price competition & lower prices -BUT falling prices reduce access to resources and lower profits
Potential Competitors
Organizations that presently are not in the task environment but could enter if they so chose

14. The Task Environment-Barriers to Entry
Factors that make it difficult and costly for the organization to enter a particular task environment or industry

15. The Task Environment-Barriers to Entry
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
Government policies that may limit imports of goods

16. Barriers to Entry and Competition
Figure 4.2
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17. 1-General Environment/Economics
Economic Forces
Interest rates
Inflation
Unemployment
Economic growth
Other factors that affect the general health and well-being of a nation or the regional economy of an organization

18. 2-General Environment/Technology
Technological Forces
Outcomes of changes in the technology that managers use to design, produce, or distribute goods and services
Products may become obsolete (Other People’s Money)
Better/faster/more efficient products and services
Technology – the combination of skills and equipment that managers use in the design, production, and distribution of goods and services

19. 3-General Environment/Sociocultural
Sociocultural Forces
Pressures emanating from the social structure of a country or society or from the national culture
Technology – the combination of skills and equipment that managers use in the design, production, and distribution of goods and services

20. 3-General Environment/Sociocultural
Social structure
Arrangement of relationships between individuals and groups in society
National culture
Set of values that a society considers important and the norms of behavior that are approved or sanctioned in that society.
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21. 4-General Environment/Demographics
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
Most industrialized nations are experiencing the aging of their populations

22. 5-General Environment/Political-Legal
Political and Legal Forces
Outcomes of changes in laws and regulations include:
Deregulation of industries
Privatization of organizations
Increased emphasis on environmental protection
Free exchange of resources and capital

23. The Global Environment-EU
Figure 4.3
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24. The Process of Globalization
Set of specific and general forces that work together to integrate and connect economic, political, and social systems across countries, cultures, or geographical regions, resulting in:
Nations become increasingly interdependent
Changes in Globalization result from Capital
Human/People- Financial/Money- Resources/Raw Materials and Political/Power

25. 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
Tariff
Tax imposed on imported goods

26. The Role of National Culture
Values
Ideas about what is good, desirable and beautiful
Provides conceptual support for democracy, truth, appropriate roles for men, and women
Usually not static but very slow to change
Norms
Unwritten informal codes of conduct

27. Norms Folkways Mores Routine social conventions of everyday life
Norms that are considered to be central to functioning of society and to social life
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28. Hofstede’s Model of National Culture
Figure 4.4
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29. 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 individual achievements rather than by their social background

30. Hofstede’s Model of National Culture
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

31. 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
Low power distance = more equality/opportunity
High power distance = economical poor countries
US/UK = low power distance/high individualism
S.A. = high power distance/low individualism

32. National Culture and Global Management
Management practices that are effective in one culture might be troublesome in another
Managers must be sensitive to the value systems and norms of an individual’s country and behave accordingly
Examples include:
Wages
Holidays
Teamwork

33. Discussion Question?
What technology has had the biggest impact on business in the last 50 years? Think about…..
New technology has made the world smaller
Technology has changed how a manager manages
Money spent on IT department now vs. 50 years ago
Can you imagine not being “connected” in some way?
Could you go without IM or for a week?
What happens to businesses when networks go down?
This would be a starting point to discuss how new technologies have made the world smaller. Students should discuss some of the impacts technology has made on how a manager actually manages now. How much money do companies spend on IT related matters now, compared with 50 years ago. Most students cannot imagine a time when they were not “connected” in some way. Ask them if they could go without IM or for a week. What happens to businesses now when their networks go down for any length of time.
If students wonder about the TV remotes impact, ask if advertising firms have changed because of viewers habits during commercial breaks.
A. Internet B. Cell Phones C. Computers D.