Chapter+4+Slides

Chapter Overview

• Managing in the Global Environment

  • Author: Huan (Harry) Wang

  • Department: Management, Siena College

  • Focus on education for a global perspective.

Learning Objectives

1. Recognize the importance of perceiving, interpreting, and responding to the organizational environment for managerial success.

2. Distinguish between the global task environment and the global general environment.

3. Identify main forces in the global environments and their managerial challenges.

4. Understand the significance of globalization and the associated opportunities, complexities, challenges, and threats for managers.

5. Appreciate the differences in national cultures and the effects of trade barriers on political and social systems.

Global Environment Definition

• Global Organizations:

  • Operate across multiple countries.

  • Face uncertainty and unpredictability.

• Global Environment:

  • Comprises global forces and conditions that impact organizational resource acquisition and utilization.

Forces in the Global Environment

General Environment

• Encompasses wide-ranging global forces affecting organizations:

  • Technological Forces

  • Economic Forces

  • Political and Legal Forces

  • Sociocultural Forces

  • Demographic Forces

Task Environment

• Forces and conditions affecting organizations directly include:

  • Suppliers

  • Distributors

  • Customers

  • Competitors

Task Environment Forces

Suppliers

• Provide necessary inputs for goods and services:

  • Raw materials

  • Component parts

  • Employees

• Global purchasing possibilities alter supplier dynamics.

  • Bargaining power varies based on market conditions.

Distributors

• Facilitate sales of goods and services:

  • Must balance power to avoid controlling access to markets.

Customers

• Essential for revenue:

  • Understanding and meeting customer needs is critical for success.

Competitors

• Similar organizations offering comparable goods/services:

  • High rivalry can result in price competition.

  • Potential competitors pose future threats.

General Environment Forces

Economic Forces

• Factors like interest rates, inflation, and unemployment that impact national or regional economies.

Technological Forces

• Influences from tools, machines, and knowledge impacting production and distribution efficiencies.

Sociocultural Forces

• Pressures from social structures and cultural norms affecting organizational behavior.

Demographic Forces

• Changes in population characteristics influencing market dynamics:

  • Aging populations in industrialized nations.

Political and Legal Forces

• Changes in laws/regulations impacting organizational operations and practices.

Globalization Overview

• Globalization: Integration of economic, political, and social systems across nations, leading to interdependence.

  • Capital flows include human, financial, resource, and political.

Trade and Investment Barriers

Tariff

• Tax on imported/exported goods affecting trade dynamics.

Free-Trade Doctrine

• Advocates specialization for optimal global resource use.

GATT and WTO

• Historical agreements to reduce tariffs and promote free trade:

  • GATT replaced by WTO, continuing trade negotiations.

Regional Trade Agreements

• USMCA: Revision of NAFTA highlighting changes in car manufacturing, labor policies, and market access.

National Culture Components

Definition

• Comprises values and norms deemed important within a society.

Values

• Ideas surrounding goodness, beauty, and societal beliefs influencing personal freedoms and responsibilities.

Norms

• Unwritten codes defining expected behavior in society:

  • Mores: Critical societal norms.

  • Folkways: Everyday social conventions.

Hofstede’s Model of National Culture

Dimensions

1. Individualism vs. Collectivism: Focus on individual rights vs. group goals.

2. Power Distance: Acceptance of power inequalities.

3. Achievement vs. Nurturing Orientation: Values on success versus quality of life.

4. Uncertainty Avoidance: Tolerance for ambiguity and risk.

5. Long-Term vs. Short-Term Orientation: Perspectives on future goals versus present stability.

The Globe Project

• Nine cultural dimensions shaping business practices:

  1. Performance orientation

  2. Assertiveness

  3. Future orientation

  4. Human orientation

  5. Institutional collectivism

  6. In-Group collectivism

  7. Gender egalitarianism

  8. Power distance

  9. Uncertainty avoidance

Implications for Global Management

• Effective management practices may vary by country.

  • Sensitivity to value systems and cultural norms is crucial for international success.