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PowerPoint Presentation by Charlie Cook© Copyright The McGraw-Hill Companies, Inc., 2004. All rights reserved.

Managing in a Global Managing in a Global EnvironmentEnvironment

Managing in a Global Managing in a Global EnvironmentEnvironment

Essentials ofContemporary Management

© Copyright 2004 McGraw-Hill. All rights reserved. 4–2

Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives

• After studying the chapter, you should be able to:After studying the chapter, you should be able to: Explain why the ability to Explain why the ability to perceive, interpret, perceive, interpret,

and respondand respond to the organizational environment is to the organizational environment is crucial for managerial success.crucial for managerial success.

Identify the main forces in Identify the main forces in a global a global organization’s task and general organization’s task and general environmentsenvironments, and describe the challenges that , and describe the challenges that each force presents to managers.each force presents to managers.

Explain why the Explain why the global environmentglobal environment is becoming is becoming more open and competitive and why barriers to the more open and competitive and why barriers to the global transfer of goods and services are falling, global transfer of goods and services are falling, increasing opportunities, complexities, challenges, increasing opportunities, complexities, challenges, and threats that managers face.and threats that managers face.


What Is the Organizational What Is the Organizational EnvironmentEnvironment

What Is the Organizational What Is the Organizational EnvironmentEnvironment

• Organizational EnvironmentOrganizational Environment The set of forces and conditions that operate The set of forces and conditions that operate

beyond an organization’s boundaries but beyond an organization’s boundaries but affect a manager’s ability to acquire and affect a manager’s ability to acquire and utilize resources.utilize resources.

Forces and conditions change over time Forces and conditions change over time creating:creating:• OpportunitiesOpportunities for managers to enhance revenues, for managers to enhance revenues,

enter new markets, and strengthen the firm’s enter new markets, and strengthen the firm’s competitive position.competitive position.

• ThreatsThreats to the firm from new competitors, economic to the firm from new competitors, economic downturns, and diminished access to critical downturns, and diminished access to critical resources.resources.


Forces in the Organizational EnvironmentForces in the Organizational EnvironmentForces in the Organizational EnvironmentForces in the Organizational Environment

Figure 4.1


The Task EnvironmentThe Task EnvironmentThe Task EnvironmentThe Task Environment

• SuppliersSuppliers Individuals and organizations that provide an Individuals and organizations that provide an

organization with the input resources that it organization with the input resources that it needs to produce goods and services.needs to produce goods and services.• Raw materials, component parts, labor (employees)Raw materials, component parts, labor (employees)

Relationships with suppliers can be difficult Relationships with suppliers can be difficult due to materials shortages, unions, and lack due to materials shortages, unions, and lack of substitutes.of substitutes.• Suppliers that are the sole source of a critical item are Suppliers that are the sole source of a critical item are

in a strong bargaining position to raise their prices.in a strong bargaining position to raise their prices.

• Managers can reduce supplier effects by increasing Managers can reduce supplier effects by increasing the number of suppliers of an input.the number of suppliers of an input.The lock-in effect caused by the suppliers


The Task Environment (cont’d)The Task Environment (cont’d)The Task Environment (cont’d)The Task Environment (cont’d)

• Global OutsourcingGlobal Outsourcing The purchase of inputs from foreign The purchase of inputs from foreign

suppliers, or the production of inputs abroad, suppliers, or the production of inputs abroad, to lower production costs and improve to lower production costs and improve product quality.product quality.



• DistributorsDistributors Organizations that help other organizations Organizations that help other organizations

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

through its control of customers in those markets.through its control of customers in those markets.

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

Moral hazard and the free riding behavior



• CustomersCustomers Individuals and groups that buy goods and Individuals and groups that buy goods and

services that an organization produces.services that an organization produces.• Identifying an organization’s main customers and Identifying an organization’s main customers and

producing the goods and services they want is crucial producing the goods and services they want is crucial to organizational and managerial success.to organizational and managerial success.

Lead users, Heavy users, Opinion users, Co-option users



• CompetitorsCompetitors Organizations that produce goods and Organizations that produce goods and

services that are similar to a particular services that are similar to a particular organization’s goods and services.organization’s goods and services.

Potential CompetitorsPotential Competitors• Organizations that presently are not in the task Organizations that presently are not in the task

environment but could enter if they so chose.environment but could enter if they so chose.

Strong competitive rivalry results in price Strong competitive rivalry results in price competition, and falling prices reduce access competition, and falling prices reduce access to resources and lower profits.to resources and lower profits.

Price attrition, substitutability & market contestability



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

the organization to enter a particular task the organization to enter a particular task environment or industry.environment or industry.

Economies of scaleEconomies of scale• Cost advantages associated with large operations.Cost advantages associated with large operations.

Brand loyaltyBrand loyalty• Customers’ preference for the products of Customers’ preference for the products of

organizations currently existing in the task organizations currently existing in the task environment.environment.


Analysis of entry/exit barrierAnalysis of entry/exit barrierAnalysis of entry/exit barrierAnalysis of entry/exit barrier

Exit barrier

En

try b

arrie

r

low high

hig

hlo

w e.g., 蚵仔麵線

e.g., 石化 , 製藥 ,半導體… etc

$₤₡¥e.g., 祖傳祕方

e.g., 黑道


Barriers to Entry and CompetitionBarriers to Entry and CompetitionBarriers to Entry and CompetitionBarriers to Entry and Competition

Figure 4.2


The General EnvironmentThe General EnvironmentThe General EnvironmentThe General Environment

• Economic ForcesEconomic Forces Interest rates, inflation, unemployment, Interest rates, inflation, unemployment,

economic growth, and other factors that economic growth, and other factors that affect the general health and well-being of a affect the general health and well-being of a nation or the regional economy of an nation or the regional economy of an organization.organization.

Managers usually cannot impact or control Managers usually cannot impact or control these.these.

Forces have profound impact on the firm.Forces have profound impact on the firm.


The General EnvironmentThe General EnvironmentThe General EnvironmentThe General Environment

• TechnologicalTechnological Forces Forces Outcomes of changes in the technology that Outcomes of changes in the technology that

managers use to design, produce, or managers use to design, produce, or distribute goods and services.distribute goods and services.• Results in new opportunities or threats to managersResults in new opportunities or threats to managers

• Often makes products obsolete very quickly.Often makes products obsolete very quickly.

• Can change how managers manage.Can change how managers manage.


The General Environment (cont’d)The General Environment (cont’d)The General Environment (cont’d)The General Environment (cont’d)

• SocioculturalSociocultural Forces Forces Pressures emanating from the social Pressures emanating from the social

structure of a country or society or from the structure of a country or society or from the national culture.national culture.• Social structure: the arrangement of relationships Social structure: the arrangement of relationships

between individuals and groups in society.between individuals and groups in society.

• National culture: the set of values that a society National culture: the set of values that a society considers important and the norms of behavior that considers important and the norms of behavior that are approved or sanctioned in that society.are approved or sanctioned in that society.

Cultures and their associated social Cultures and their associated social structures, values, and norms differ widely structures, values, and norms differ widely throughout the world.throughout the world.



• DemographicDemographic Forces Forces Outcomes of change in, or changing Outcomes of change in, or changing

attitudes toward, the characteristics of a attitudes toward, the characteristics of a population, such as age, gender, ethnic population, such as age, gender, ethnic origin, race, sexual orientation, and social origin, race, sexual orientation, and social class.class.• During the past two decades, women have entered During the past two decades, women have entered

the workforce in increasing numbers and most the workforce in increasing numbers and most industrial countries’ populations are aging.industrial countries’ populations are aging.

• This will change the opportunities for firms competing This will change the opportunities for firms competing in these areas as demands for child care and health in these areas as demands for child care and health care are forecast to increase dramatically.care are forecast to increase dramatically.



• PoliticalPolitical Forces Forces Outcomes of changes in laws and Outcomes of changes in laws and

regulations, such as the deregulation of regulations, such as the deregulation of industries, the privatization of organizations, industries, the privatization of organizations, and increased emphasis on environmental and increased emphasis on environmental protection.protection.• Increases in laws and regulations increase the costs Increases in laws and regulations increase the costs

of resources and limit the uses of resources that of resources and limit the uses of resources that managers are responsible for acquiring and using managers are responsible for acquiring and using effectively and efficiently.effectively and efficiently.



• Global ForcesGlobal Forces Outcomes of changes in international Outcomes of changes in international

relationships; changes in nations’ economic, relationships; changes in nations’ economic, political, and legal systems; and changes in political, and legal systems; and changes in technology, such as falling trade barriers, the technology, such as falling trade barriers, the growth of representative democracies, and growth of representative democracies, and reliable and instantaneous communication.reliable and instantaneous communication.

Important opportunities and threats to Important opportunities and threats to managers:managers:• The economic integration of countries through free-The economic integration of countries through free-

trade agreements (GATT, NAFTA, EU) that decrease trade agreements (GATT, NAFTA, EU) that decrease the barriers to trade.the barriers to trade.


The Changing Global EnvironmentThe Changing Global EnvironmentThe Changing Global EnvironmentThe Changing Global Environment

• Global OrganizationGlobal Organization An organization that operates and competes An organization that operates and competes

in more than one country.in more than one country.

• The Challenges of Global CompetitionThe Challenges of Global Competition Establishing operations in a foreign country.Establishing operations in a foreign country. Obtaining inputs from foreign suppliers.Obtaining inputs from foreign suppliers. Managing in a foreign culture.Managing in a foreign culture.

• The Global Environment Is OpenThe Global Environment Is Open Managers need to Managers need to learnlearn to compete globally. to compete globally.


The Global EnvironmentThe Global EnvironmentThe Global EnvironmentThe Global Environment

Figure 4.3


Declining Barriers to Trade and Declining Barriers to Trade and InvestmentInvestment

Declining Barriers to Trade and Declining Barriers to Trade and InvestmentInvestment

• TariffTariff A tax that government imposes on imported A tax that government imposes on imported

or, occasionally, exported goods.or, occasionally, exported goods.• Intended to protect domestic industry and jobs from Intended to protect domestic industry and jobs from

foreign competition.foreign competition.

• Other countries usually retaliate with their own tariffs, Other countries usually retaliate with their own tariffs, actions that eventually reduce the overall amount of actions that eventually reduce the overall amount of trade and impede economic growth.trade and impede economic growth.


GATT and the Rise of Free TradeGATT and the Rise of Free TradeGATT and the Rise of Free TradeGATT and the Rise of Free Trade

• Free-Trade DoctrineFree-Trade Doctrine The idea that if each country specializes in The idea that if each country specializes in

the production of the goods and services the production of the goods and services that it can produce most efficiently, this will that it can produce most efficiently, this will make the best use of global resources.make the best use of global resources.• If India is more efficient in making textiles, and the If India is more efficient in making textiles, and the

United States is more efficient in making computer United States is more efficient in making computer software, then each country should focus on their software, then each country should focus on their respective strengths and trade for the other’s goods.respective strengths and trade for the other’s goods.


Declining Barriers of Distance and Declining Barriers of Distance and CultureCulture

Declining Barriers of Distance and Declining Barriers of Distance and CultureCulture

• DistanceDistance Markets were essentially closed because of the Markets were essentially closed because of the

slowness of communications over long slowness of communications over long distances.distances.

• CultureCulture Language barriers and cultural practices made Language barriers and cultural practices made

managing overseas businesses difficult.managing overseas businesses difficult.

• Changes in Distance and CommunicationChanges in Distance and Communication Improvement in transportation technology and Improvement in transportation technology and

fast, secure communications have greatly fast, secure communications have greatly reduced the barriers of physical and cultural reduced the barriers of physical and cultural distances.distances.The common platforms on the Internet,

English language, and US$


Effects of Free Trade on ManagersEffects of Free Trade on ManagersEffects of Free Trade on ManagersEffects of Free Trade on Managers

• Declining Trade BarriersDeclining Trade Barriers Opened enormous opportunities for Opened enormous opportunities for

managers to expand the market for their managers to expand the market for their goods and services.goods and services.

Allowed managers to now both buy and sell Allowed managers to now both buy and sell goods and services globally.goods and services globally.

Increased intensity of global competition Increased intensity of global competition such that managers now have a more such that managers now have a more dynamic and exciting job of managing.dynamic and exciting job of managing.


Effects of Free Trade on Managers Effects of Free Trade on Managers (cont’d)(cont’d)

Effects of Free Trade on Managers Effects of Free Trade on Managers (cont’d)(cont’d)

• North American Free Trade Agreement North American Free Trade Agreement (NAFTA)(NAFTA) Abolishes 99% of tariffs on goods traded Abolishes 99% of tariffs on goods traded

between Mexico, Canada and the United between Mexico, Canada and the United States.States.• Unrestricted cross-border flows of resources.Unrestricted cross-border flows of resources.

• Increased investment by U.S. firms in Mexican Increased investment by U.S. firms in Mexican manufacturing facilities due lower wage costs in manufacturing facilities due lower wage costs in Mexico.Mexico.

Opportunities and ThreatsOpportunities and Threats• The opportunity to serve more markets.The opportunity to serve more markets.

• Increased competition from NAFTA competitors.Increased competition from NAFTA competitors.


The Role of National CultureThe Role of National CultureThe Role of National CultureThe Role of National Culture

• National cultureNational culture The set of values, norms, knowledge, beliefs, The set of values, norms, knowledge, beliefs,

and other practices that unite the citizens of and other practices that unite the citizens of a country.a country.

• ValuesValues Ideas about what a society believes to be Ideas about what a society believes to be

good, desirable and beautiful.good, desirable and beautiful.• Provides conceptual support for democracy, truth, Provides conceptual support for democracy, truth,

appropriate roles for men, and women.appropriate roles for men, and women.

• Usually not static but very slow to change.Usually not static but very slow to change.


Sociocultural Forces (cont’d)Sociocultural Forces (cont’d)Sociocultural Forces (cont’d)Sociocultural Forces (cont’d)

• NormsNorms Unwritten rules and codes of conduct that Unwritten rules and codes of conduct that

prescribe how people should act in particular prescribe how people should act in particular situations.situations.• FolkwaysFolkways—routine social conventions of daily life —routine social conventions of daily life

(e.g., dress codes and social manners).(e.g., dress codes and social manners).

• MoresMores—behavioral norms that are considered central —behavioral norms that are considered central to functioning of society and much more significant to functioning of society and much more significant than folkways (e.g., theft and adultery), and they are than folkways (e.g., theft and adultery), and they are often enacted into law.often enacted into law.

Norms vary from country to country.Norms vary from country to country.


Hofstede’s Model of National CultureHofstede’s Model of National CultureHofstede’s Model of National CultureHofstede’s Model of National Culture

Figure 4.4


Hofstede’s Model of National CultureHofstede’s Model of National CultureHofstede’s Model of National CultureHofstede’s Model of National Culture

• IndividualismIndividualism A worldview that values individual freedom A worldview that values individual freedom

and self-expression and holds a strong belief and self-expression and holds a strong belief in personal rights and the need for persons in personal rights and the need for persons to be judged by their achievements rather to be judged by their achievements rather their social background.their social background.

• CollectivismCollectivism A worldview that values subordination of the A worldview that values subordination of the

individual to the goals of the group.individual to the goals of the group. Widespread under communism and Widespread under communism and

prevalent in Japan as well.prevalent in Japan as well.


Hofstede’s Model of National Culture Hofstede’s Model of National Culture (cont’d)(cont’d)


• Power DistancePower Distance A society’s acceptance of differences in the A society’s acceptance of differences in the

well being of citizens due to differences in well being of citizens due to differences in heritage, and physical and intellectual heritage, and physical and intellectual capabilities (individualism).capabilities (individualism).• In high power distance societies, the gap between In high power distance societies, the gap between

rich and poor becomes very wide (e.g., Panama and rich and poor becomes very wide (e.g., Panama and Malaysia).Malaysia).

• In the low power distance societies of western In the low power distance societies of western cultures (e.g., United States and Germany), the gap cultures (e.g., United States and Germany), the gap between rich and poor is reduced by taxation and between rich and poor is reduced by taxation and welfare programs.welfare programs.




• Achievement versus Nurturing OrientationAchievement versus Nurturing Orientation Achievement-oriented societies value Achievement-oriented societies value

assertiveness, performance, and success assertiveness, performance, and success and are results-oriented.and are results-oriented.

Nurturing-oriented cultures value quality of Nurturing-oriented cultures value quality of life, personal relationships, and service.life, personal relationships, and service.

The United States and Japan are The United States and Japan are achievement-oriented; Sweden and Denmark achievement-oriented; Sweden and Denmark are more nurturing-oriented.are more nurturing-oriented.




• Uncertainty AvoidanceUncertainty Avoidance Societies and people differ in their tolerance Societies and people differ in their tolerance

for uncertainty and risk.for uncertainty and risk. Low uncertainty avoidance cultures (e.g., Low uncertainty avoidance cultures (e.g.,

U.S. and Hong Kong) value diversity and U.S. and Hong Kong) value diversity and tolerate a wide range of opinions and beliefs.tolerate a wide range of opinions and beliefs.

High uncertainty avoidance societies (e.g., High uncertainty avoidance societies (e.g., Japan and France) are more rigid and expect Japan and France) are more rigid and expect high conformity in their citizens’ beliefs and high conformity in their citizens’ beliefs and norms of behavior.norms of behavior.




• Long Term OutlookLong Term Outlook Cultures (e.g., Taiwan and Hong Kong) with a Cultures (e.g., Taiwan and Hong Kong) with a

long-term in outlook are based on the values long-term in outlook are based on the values of saving, and persistence.of saving, and persistence.

Short-term outlook societies (e.g., France Short-term outlook societies (e.g., France and the United States) seek the maintenance and the United States) seek the maintenance of personal stability or happiness in the of personal stability or happiness in the present.present.


National Culture and Global National Culture and Global ManagementManagement

National Culture and Global National Culture and Global ManagementManagement

• Management practices that are effective in Management practices that are effective in one culture often will not work as well in one culture often will not work as well in another culture.another culture. Expatriate managers (managers who go Expatriate managers (managers who go

abroad to work for a global organization) abroad to work for a global organization) need advance training to understand the need advance training to understand the cultural context of their host country.cultural context of their host country.

Managers who do not understand the values, Managers who do not understand the values, folkways, and mores that guide behavior in a folkways, and mores that guide behavior in a culture will encounter difficulties in culture will encounter difficulties in managing within that culture.managing within that culture.


ATPATP網球公開賽網球公開賽ATPATP網球公開賽網球公開賽•請上網查看請上網查看 ATPATP網球公開賽的賽程網球公開賽的賽程(ATPtennis.com)(ATPtennis.com)

•是否發現第一輪的賽程，世界排名前面的高手總是是否發現第一輪的賽程，世界排名前面的高手總是先與會外賽進入的新手或較弱者比賽先與會外賽進入的新手或較弱者比賽 ? ? 你覺得公平你覺得公平嗎嗎 ??

•是否發現勝利者的獎金與積分遠大於失敗者是否發現勝利者的獎金與積分遠大於失敗者 ? ?

•若覺得公平，這種比賽機制可能有何目的若覺得公平，這種比賽機制可能有何目的 ? ? 或管理或管理上的意義上的意義 ??

•若覺得不公平，你有何新的建議若覺得不公平，你有何新的建議 ? ? 試想你的新建議試想你的新建議是否會有其它缺失是否會有其它缺失 ? ? 相較於你所認為的不公平，孰相較於你所認為的不公平，孰輕孰重輕孰重 ??

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