Managing in the Global

Environment

chapter sixlecture 1

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives

1. Explain why the ability to perceive, interpret, and respond appropriately to the global 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

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Learning Objectives (cont.)

4. Explain why the global environment is becoming more open and competitive and identify the forces behind the process of globalization that increases 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

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Global Organizations

• Global Organizations – Organizations that operate and compete not only

domestically, but also globally– Uncertain and

unpredictable

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What Is the Global Environment?

• Global Environment – Set of forces and conditions in the world outside

the organization’s boundaries that affect the way it operates and shape its behavior

– Changes over time– Presents managers with opportunities and threats

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Forces in the Global Environment

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Figure 6.1Page 212

What Is the Global Environment?

• Task Environment – Set of forces and conditions that originate with

suppliers, distributors, customers, and competitors

– Affects an organization’s ability to obtain inputs and dispose of its outputs

– Most immediate and direct effect on managers

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What Is the Global Environment?

• General environment – The wide-ranging global, economic, technological,

sociocultural, demographic, political, and legal forces that affect an organization and its task environment.

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The Task Environment

• 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)

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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.

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The Task Environment

• Distributors– Organizations that help other organizations sell

their goods or services to customers• Powerful distributors can limit access to

markets through its control of customers in those markets.

• Managers can counter the effects of distributors by seeking alternative distribution channels.

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The Task Environment

• Customers– Individuals and groups that buy 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.

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The Task Environment

• Competitors– Organizations that produce goods and services

that are similar to a particular organization’s goods and services• Rivalry between competitors is potentially the most

threatening force that managers deal with

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The Task Environment

• Barriers to Entry– Factors that make it difficult and costly for the

organization to enter a particular task environment or industry

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Barriers to Entry

• Economies of scale– Cost advantages associated with large operations

• Brand loyalty– Customers’ preference for the products of

organizations currently existing in the task environment.

• Government regulations– that impede entry

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Barriers to Entry and Competition

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Figure 6.2

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