1. Managing in the Global Environment
Chapter 6
Managing in the Global Environment

2. Global Management Global Organizations Global Environment
Operate and compete globally
Uncertain and unpredictable
Global Environment
Forces and conditions in the world outside the organization’s boundaries
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3. Forces in the Organizational Environment
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4. Task Environment
Set of forces and conditions that originate with suppliers, distributors, customers, and competitors
Affect an organization’s ability to obtain inputs and dispose of its outputs
Most immediate and direct effect on managers
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5. Suppliers
Individuals and organizations that provide an organization with input resources
Relationships can be difficult due to materials shortages, unions, and lack of substitutes
Managers can reduce supplier effects by increasing the number of suppliers
Low-cost products made abroad can be an opportunity for U.S. companies
Global Outsourcing
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6. The Task Environment Distributors Customers Competitors
Organizations that help other organizations sell their goods or services to customers
Customers
Individuals and groups that buy goods and services that an organization produces
Competitors
Current
Potential
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7. Competitors
Rivalry between competitors is potentially the most threatening force
Price competition
Falling prices
Reduces access to resources
Lowers profits
Vs.
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8. Barriers to Entry and Competition
Figure 6.2
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9. General Environment Economic Technological Demographic Socio-cultural
Political and Legal
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10. Economic Forces
Interest rates, inflation, unemployment, economic growth, and other factors affecting the general financial health
Successful managers:
Realize the effects of economic forces
Pay close attention to what is occurring in the national and regional economies
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11. Technological Forces
Outcomes of changes in the technology that managers use to design, produce, or distribute goods and services
Results in new opportunities or threats
Often makes products obsolete very quickly
Changes are altering the very nature of work itself, including the manager’s job
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12. Socio-cultural Forces
Pressures emanating from the social structure of a country or society or from the national culture
Societies differ substantially in the values and norms they emphasize
Effective managers are sensitive to differences between societies and adjust their behaviors accordingly
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13. Demographic Forces Aging populations in most industrialized nations
Organizations need to find ways to motivate and utilize older workers
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14. The General Environment
Political and Legal Forces
Outcomes of changes in laws and regulations, such as the deregulation of industries, the privatization of organizations, and increased emphasis on environmental protection
Increasingly nations are joining together into political unions that allow for the free exchange of resources and capital
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15. Process of Globalization
Specific and general forces that work together to connect economic, political, and social systems
Nations and peoples become increasingly interdependent
Forms of capital that flow between countries:
Human capital
Financial capital
Resource capital
Political capital
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16. 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
Free-Trade Doctrine
Each country should specialize in the production of the goods and services that it can produce most efficiently
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17. Declining Barriers of Distance and Culture
Markets were essentially closed because of the slowness of communications
Culture
Language barriers and cultural practices
Changes in distance and communication
Improvements in transportation technology and fast, secure communications
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18. Effects of Free Trade NAFTA CAFTA
Abolishes 99% of tariffs on goods traded between Mexico, Canada and the United States
Increased investment by U.S. firms in Mexican manufacturing facilities
CAFTA
Same as NAFTA between United States and all countries in Central America
Approved by Dominican Republic, El Salvador, Guatemala, Nicaragua, and Honduras
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19. The Role of National Culture
Values
Ideas about what a society believes to be good, desirable and beautiful
Provide the basic underpinnings for notions of freedom, democracy, honesty, loyalty, etc.
Norms
Unwritten rules and codes of conduct that prescribe how people should act
Mores
Behavioral norms that are considered central to functioning of society
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20. Hofstede’s Model of National Culture
Figure 6.4
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