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

2. Learning Objectives
Describe the task environment and the forces within it – suppliers, distributors, customers and competitors
Describe the general environment and its forces on the organization – economic, technological, sociocultural, demographic, political and legal and global.
Identify global and regional trade agreements which impact U.S. organizations
Describe Hofstede’s model of national culture.

3. The Organizational Environment
The Organizational Environment
Forces and conditions existing outside the organization's boundaries that potentially affect the organization.
Changes in conditions present opportunities and threats
Two Layers
Task environment.
General environment.

4. Customers Labor Market Competitors Suppliers Figure 6.1
Figure 6.1
Forces in the Organizational Environment
Customers
Labor Market
Competitors
Suppliers

5. Task Environment
Sectors that conduct daily transactions with the organization
Directly impact the organization’s basic operations
Includes
Suppliers
Distributors
Customers
Competitors
Labor Market

6. Suppliers
The people or organizations which provide the raw materials, components or employees to produce the product or service
Managers must ensure reliable supply of inputs
Difficulties arise due to material shortages, unions, lack of substitutes

7. Suppliers
The cost of inputs are affected by the bargaining position of a supplier
A Supplier has a strong bargaining position when
It is the sole source of input
The input is vital to the organization
A Supplier is in a weak bargaining position when there are other suppliers available to the organization

8. Suppliers
Traditionally the role has been adversarial; many companies now are looking to cooperation.

9. Distributors
The organizations which help other organizations sell their goods or services to customers.
Large and powerful distributors can affect an organization’s access to customers

10. Customers
Individuals or groups that buy goods or services from the organization.
Every organization has customers: profit or non-profit
Identifying the organization’s main customers is crucial to success
Customer focus should be reflected in mission, goals and strategies

11. Competitors
Organizations that provide goods or services to the same set of customers
Each industry is characterized by specific competitive issues.
Competition can be based on price or features
Lower prices to maintain market share
Increase products or services
Increase cost of switching to competitors – reward programs

12. Competitors
Managers must also identify potential substitutes for product

13. Competitors
Potential for new competitors is a function of barriers to entry.

14. General Environment Affects organizations indirectly
General Environment
Affects organizations indirectly
Typically will not change day-to-day operations immediately
Includes
Technological
Demographic
Socio-cultural
Economic
Political and Legal
Affects all organizations about equally

15. Economic Forces
Factors that affect general well-being of a nation or regional economy of an organization
Consumer purchasing power.
The number of households with below average income is growing much faster than those with above-average income
Unemployment rate.
Interest rates and inflation.

16. Technology
Includes scientific and technological advancements in specific industry and society at large.
Changes the way organizations design, produce and distribute goods and services
Can make your product or service obsolete or open opportunities for new products

17. Sociocultural Forces
Norms, customs, and values of the general population.
Social structure is the arrangement of relationships between individuals and groups in a society
National culture is the set of values that a society considers important

18. Demographic Forces
Changes in characteristics of the population such as age, gender, ethnicity, race
Aging of population in industrialized nations
Women are going to college in greater numbers than men.

19. Political and Legal Forces
Political and Legal Forces
Changes in laws and regulations
Government regulations
Local
State
Federal