discussion 4

Because learning changes everything. ®

CHAPTER 4 Managing in the Global Environment

© 2021 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom.

No reproduction or further distribution permitted without the prior written consent of McGraw Hill.

© McGraw Hill

Learning Objectives 1

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.

© McGraw Hill

Learning Objectives 2

4. 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.

5. 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.

© McGraw Hill

What Is the Global Environment? 1

Global Organizations:

• Operate 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

© McGraw Hill

Forces in the Global Environment

Figure 4.1

Access the text alternative for slide images.

Copyright © McGraw-Hill Education. Permission required for reproduction or display.

© McGraw Hill

TOPICS FOR DISCUSSION 1

Why is it important for managers to understand the forces in the global environment that are acting on them and their organizations? [LO 4-1]

© McGraw Hill

What Is the Global Environment? 2

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.

© McGraw Hill

What Is the Global Environment? 3

General Environment:

• The wide-ranging global, economic, technological, socio-cultural, demographic, political, and legal forces that affect an organization and its task environment.

© McGraw Hill

The Task Environment 1

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).

© McGraw Hill

Suppliers

Globally, managers can purchase products from foreign suppliers or manufacture their own products abroad.

A supplier’s bargaining position may be either strong or weak depending on changes in the marketplace.

• Nature of suppliers.

• Number of supplies.

• Types of suppliers.

Managers must respond to the opportunities and threats in the global marketplace.

© McGraw Hill

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.

© McGraw Hill

The Task Environment 2

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 goods and services, they can threaten the organization by demanding changes to its goods and services.

© McGraw Hill

The Task Environment 3

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.

© McGraw Hill

The Task Environment 4

Competitors:

• Organizations that produce goods and services that are similar to the goods and services produced by another organization.

• A high level of rivalry typically results in price competition, and falling prices reduce revenues and profits.

Potential Competitors:

• Organizations that presently are not in a task environment but could enter if they so choose.

© McGraw Hill

The Task Environment 5

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.

© McGraw Hill

The Task Environment 6

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.

© McGraw Hill

Barriers to Entry and Competition

Figure 4.2

Jump to Appendix 2 long image description.

Copyright © McGraw-Hill Education. Permission required for reproduction or display.

© McGraw Hill

The General Environment 1

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.

© McGraw Hill

TOPICS FOR DISCUSSION 2

How do political, legal, and economic forces shape national culture? What characteristics of national culture do you think have the most important effect on how successful a country is in doing business abroad? [LO 4-3, 4-5]

© McGraw Hill

The General Environment 2

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.

© McGraw Hill

The General Environment 3

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.

© McGraw Hill

The General Environment 4

National Culture:

Set of values that a society considers important and the norms of behavior that are approved or sanctioned in that society.

Mahathir Mohd Yasin/Shutterstock

© McGraw Hill

The General Environment 5

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.

© McGraw Hill

TOPICS FOR DISCUSSION 3

The population is aging because of a combination of declining birth rates, declining death rates, and the aging of the baby boom generation. What might some of the implications of this demographic trend be for (a) a pharmaceutical company, and (b) the home construction industry? [LO 4-1, 4-2, 4-3]

© McGraw Hill

The General Environment 6

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.

© McGraw Hill

The Process of Globalization 1

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.

© McGraw Hill

The Process of Globalization 2

Forces That Drive Globalization:

• Human capital.

• Financial capital.

• Resource capital.

• Political capital.

© McGraw Hill

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.

© McGraw Hill

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.

© McGraw Hill

Regional Trade Agreements

U.S.–Mexico–Canada Agreement (USMCA):

• Revised NAFTA agreement.

• Changes in auto manufacturing, agricultural products, and labor protections.

© McGraw Hill

The Role of National Culture 1

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.

kritchanut/123RF

© McGraw Hill

The Role of National Culture 2

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.

© McGraw Hill

Hofstede’s Model of National Culture 1

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.

© McGraw Hill

Hofstede’s Model of National Culture 2

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.

Imagemore Co., Ltd./Corbis

© McGraw Hill

Hofstede’s Model of National Culture 3

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.

© McGraw Hill

Hofstede’s Model of National Culture 4

Achievement Orientation:

• Worldview that values assertiveness, performance, success, and competition.

Nurturing Orientation:

• Worldview that values quality of life, warm personal friendships, and care for the weak.

© McGraw Hill

Hofstede’s Model of National Culture 5

Uncertainty Avoidance:

• Degree to which societies are willing to tolerate uncertainty and risk.

© McGraw Hill

Hofstede’s Model of National Culture 6

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.

© McGraw Hill

The GLOBE Project

Nine cultural dimensions: • Performance orientation.

• Assertiveness.

• Future orientation.

• Human orientation.

• Institutional collectivism.

• In-Group collectivism.

• Gender egalitarianism.

• Power distance.

• Uncertainty avoidance.

© McGraw Hill

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.

© McGraw Hill

BE THE MANAGER

Analyze the major forces in the task environment of a retail clothing store.

Because learning changes everything.®

www.mheducation.com

End of Main Content

© 2021 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom.

No reproduction or further distribution permitted without the prior written consent of McGraw Hill.