Global Business Environment Chapter 3

Study Notes

Global business environment encompasses all factors outside a company's control that can influence its performance. These factors aren't excuses for poor performance, but they should be considered proactively.
Environmental scanning helps identify and analyze opportunities and threats influencing future decisions. Components include trends, competition, technology, customer preferences, and the availability of labor.
Globalization increases interaction and connections between individuals, groups, and organizations worldwide.

BRICS and the European Union are significant global players.
Hofstede's Cultural Dimensions describe cultural variations in power distance, masculinity/femininity, uncertainty avoidance, and long-term/short-term orientation. Individualism vs. collectivism and indulgence vs. restraint dimensions are also often present.

Political-legal context originates from national and international governmental policies and types of governance.
Economic context includes economic cycles (recessions/booms), and trade policies.
Technological context continually introduces new products, services, production, and communication methods.
Social-ethical context involves social trends, values, and corporate social responsibility, along with ethics.

Organizations face competition from several sources, including new entrants, existing competitors, substitute products, and powerful suppliers or buyers.
Cost leadership strategy focuses on low-cost production and pricing.
Differentiation strategy focuses on uniqueness or higher quality.
Focus strategy targets specific market segments with specialized products.

Culture influences how people conduct business in various countries.
Cultural differences affect management practices and approaches. Differences in values and norms can impact how businesses interact.
Unfavorable competitive environments often have high growth industries with few competitors, high barriers to entry, and limited substitutes. Organizations also need to consider the relative power of suppliers and customers.