MGM3101 Chapter 4 Global Environment PDF

Managing in the Global Environment CHAPTER 4  Learning Objectives Explain why the ability to perceive, interpret, and respond appropriately to the organizational environment is crucial for managerial success. Differentiate between the global task and global general environments. Identify...

Managing in the Global Environment CHAPTER 4  Learning Objectives Explain why the ability to perceive, interpret, and respond appropriately to the organizational environment is crucial for managerial success. Differentiate between the global task and global general environments. Identify the main forces in both the global task and general environments and describe the challenges that each force presents to managers. 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. 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. Overview Global Organizations: Global Environment: Operate in more than one country. Set of global forces and conditions that Uncertainty and unpredictability. operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources. Forces in the Global Environment Access the text alternative for slide images. What Is the Global Environment? Task Environment: General Environment: A collection of forces and circumstances The wide–ranging global, economic, stemming from suppliers, distributors, customers, technological, socio–cultural, and competitors that impact an organization’s demographic, political, and legal capacity to acquire inputs and sell its outputs. forces that affect an organization and These elements have a daily influence on managers' decisions. its task environment. The Task Environment Suppliers: Global outsourcing: Individuals and organizations that provide an The purchase or production of inputs or final organization with the input resources that it needs products from overseas suppliers to lower costs and to produce goods and services. improve product quality or design. Raw materials, Component parts, Employees. Globally, managers can purchase products from foreign suppliers or manufacture their own products abroad. A supplier’s bargaining position may be either Distributors: strong or weak depending on changes in the Organizations that assist other businesses in selling marketplace. their products or services to consumers hold a Nature of suppliers. significant role. However, if distributors grow too Number of supplies. large and influential, they may gain the ability to Types of suppliers. control customer access to these goods and Managers must respond to the opportunities and services. This can pose a threat to the organization, threats in the global marketplace. as they might demand modifications to the products or services offered. The Task Environment Competitors: Competitors: Organizations that produce goods and services Organizations that produce goods and services that are similar to the goods and services that are similar to the goods and services produced by another organization. produced by another organization. A high level of rivalry typically results in price A high level of rivalry typically results in price competition, and falling prices reduce revenues competition, and falling prices reduce revenues and profits. and profits. Potential Competitors: Organizations that presently are not in a task environment but could enter if they so choose. 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. The Task Environment Barriers to Entry: Brand Loyalty: Factors that make it difficult and costly for the Customers’ preference for the products of organization to enter a particular task organizations currently existing in the task environment. environment or industry. Economies of Scale: Government Regulations: Cost advantages associated with large In some cases, act as a barrier to entry at operations. both the industry and the country level. Barriers to Entry and Competition Access the text alternative for slide images. The General Environment Economic Forces: Technological Forces: Technology: Interest rates, inflation, Outcomes of changes in the The combination of tools, unemployment, economic growth, technology that managers use to machines, computers, skills, and other factors that affect the design, produce, or distribute information, and knowledge used general health and well–being of a goods and services. to design, produce and distribute nation or the regional economy of goods and services. an organization. The General Environment Sociocultural Forces: Social Structure: National Culture: Pressures emanating from the The traditional system of Set of values that a society social structure of a country or relationships established between considers important and the norms society or from the national culture. people and groups in a society. of behavior that are approved or sanctioned in that society. The General Environment Political and Legal Demographic Forces: Forces: Outcomes of changes in or changing Outcomes of changes in laws and attitudes toward the characteristics of a regulations, such as the deregulation of population, such as age, gender, ethnic industries, the privatization of origin, race, sexual orientation, or social organizations, and an increased class. emphasis on environmental protection. Most industrialized nations are experiencing the aging of their populations. The Changing Global Environment The Process of 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. The four principal forms of capital flowing between countries: human, financial, resource, and political. The Role of National Culture Cultural Values and Norms Values Mores: Ideas about what a society believes to be good, Norms that are considered to be central to functioning desirable and beautiful. of society and to social life. Provides the underpinnings for notions of individual E.g: in U.S drinking alcohol is widely accepted; but in freedom, democracy, truth, justice, honesty, loyalty, Muslim countries it will consider as a serius violation social obligation, collective responsibility. Very slow to change. Norms: Folkways: Unwritten informal codes of conduct that prescribe how Routine social conventions of everyday life. people should act in particular situations and are People are expected to behave for particular situations considered important by most members of a group or Who violate folkways are thought as ill-mannered organization. The Role of National Culture Hofstede’s Model of National Culture Individualism: Collectivism: A worldview that values individual freedom and self– A worldview that values subordination of the expression and adherence to the principle that people individual to the goals of the group and adherence to should be judged by their individual achievements the principle that people should be judged by their rather than by their social background.(e.g Western contribution to the group. (e.g Japan) countries) 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. The Role of National Culture Hofstede’s Model of National Culture Achievement Orientation: Nurturing Orientation: (masculine traits) (feminine traits) Worldview that values assertiveness, performance, Worldview that values quality of life, warm personal success, and competition. – U.S friendships, and care for the weak. (Netherlands, Sweden) Uncertainty Avoidance: Degree to which societies are willing to tolerate uncertainty and risk. Societies low uncertainty avoidance (U.S, Hong Kong) are easy going, value diversity and tolerate differences Societies high on uncertainty avoidance (Japan and France) are more rigid and skeptical to those people beliefs or behaviors differs from others The Role of National Culture Hofstede’s Model of National Culture Long–Term Orientation: Short–Term Orientation: Worldview that values thrift and persistence in Worldview that values personal stability or achieving goals. happiness and living for the present. Taiwan and Hong Kong – well known for their high U.S and France – spend more and save less rate of per capita savings The Role of National Culture The Globe Project Nine cultural dimensions: Performance orientation. Assertiveness. Russia scored high on Future orientation. power distance Human orientation. Singapore scored low on Institutional collectivism. humane orientation In–Group collectivism. China scored high on Gender egalitarianism. gender differentiation. Power distance. Uncertainty avoidance. The Role of National Culture The Globe Project - Malaysia The Role of National Culture The Globe Project - China The Role of National Culture 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. Accessibility Content: Text Alternatives for Images Forces in the Global Environment, Text Alternative Return to parent-slide containing images. The graphic is set in a circle that shows the organization at the center, surrounded by the task environment (competitors, distributors, customers, and suppliers). The general environment is the outer circle, consisting of technological forces, sociocultural forces, demographic forces, political and legal forces, and economic forces. Barriers to Entry and Competition, Text Alternative Return to parent-slide containing images. Economies of scale, brand loyalty, and government regulation lead to the creation of barriers to entry, which lead to deterring potential competitors. 45