Chapter 1 1 6 6 Managing in a Global Environment.
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Transcript of Chapter 1 1 6 6 Managing in a Global Environment.
Ch
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Ch
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66Managing in a
Global EnvironmentManaging in a
Global Environment
6-2© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Results of Examination #1Results of Examination #1
A: 10
B: 8
C: 5
D: 1
6-3© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
OverviewOverview
Managers must be able to perceive, interpret, and respond appropriately to the organizational environment.
Each of the main forces in a global organization’s task and general environments present challenges.
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
6-4© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
OverviewOverview
The global environment is becoming more competitive and complex; opportunities, challenges and threats are increasing
Managers have global perspective, knowledge of other cultures, and monitor developments
6-5© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Global OrganizationsGlobal Organizations Most organizations now operate and compete both
domestically and globally Virtually everyone, whether overseas or in their
back yard, is forced to think globally If you don’t go find the world, it will come find you!
6-6© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Organizational EnvironmentOrganizational Environment
Forces and conditions outside the organization that can potentially affect the way it operates
Opportunities and threats: the same thing. You say “tomato”, I say “tomahto.” Successful people view nearly everything as an opportunity.
6-7© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Task EnvironmentTask Environment
Forces and conditions that originate with suppliers, distributors, customers, and competitors
Affect an organization’s ability to obtain inputs and dispose of outputs
Most immediate and direct effect on managers – the inner ring
6-8© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The Task EnvironmentThe Task Environment
SuppliersIndividuals and organizations that provide
resources to produce goods and servicesSupply-chain management is the foundation
of value creation. Sole-source suppliers of a critical item are in a strong
bargaining position; aggravated by just-in-time supply chain (solution: multiple suppliers)
What does Wal-Mart do when it gets more than 70% of a supplier’s business?
6-9© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The Task EnvironmentThe Task Environment
Distributors and FranchiseesOrganizations that help other organizations sell their goods or services to customers Powerful distributors/franchisees can limit access to
markets through control of customers in those markets.
Auto dealer to automaker: “These are my customers, not yours!”
Managers can counter the effects of distributors by seeking alternative distribution channels – go around them – unless hobbled by law and regulation.
6-10© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
WarningWarning
Make suppliers and distributors partners; make your success their success. Companies following this strategy usually have a long-term stakeholder perspective.
6-11© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The Task EnvironmentThe Task Environment
CustomersIndividuals and groups that buy goods and services an organization producesIdentifying your main customers and giving them
what they want is crucial to success.WHO WILL BUY? All of business based on
answering this key question and three others we will explore later.
6-12© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The Task EnvironmentThe Task Environment
Competitors – present and potential:
> Organizations that produce similar goods and services or could do so
> Strong rivalry improves quality and reduces price, but can create lower profits, product commoditization, and mutually assured destruction
6-13© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The Task EnvironmentThe Task Environment
Barriers to Entry Factors that make it difficult for an organization to
enter a particular market or industry (for example, heavy capital investment)
Economies of scale and brand loyalty enjoyed by competitors already in the market (example: full-sized trucks)
Government regulations (Japan, Korea, France, China)
6-14© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The General EnvironmentThe General Environment
Economic Forces Interest rates, inflation, unemployment, economic
growth, and other factors that affect the general health and well-being of a national or a regional economy
The Fed, the President, Congress, the price of oil, global warming…
These forces profoundly impact the firm but are largely beyond your control.
Welcome to the outer ring!
6-15© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The General EnvironmentThe General Environment
Technological ForcesOutcomes of changes in the technology that managers use to design, produce, or distribute goods and services Result in new opportunities or threats Often obsolete products quickly and disruptively Can change how managers manage (example: IT) Developing examples – Toyota’s big
bet on hybrids, I-phone, Blackberry, Kindle
6-16© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The General EnvironmentThe General Environment
Sociocultural ForcesPressures emanating from a country’s social structure (the arrangement of relationships between individuals and groups)> National culture: the values a society holds dear and the
behavioral norms approved or disapproved in that society
> Cultures, social structures, values, and norms differ throughout the world and they evolve; observe and adapt (When in Rome…)
6-17© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The General EnvironmentThe General Environment
Demographic Forces
Examples:Entry of women into the workforce expands
the need for child careRe-designing products for aging boomersNeed to automate factories because of a
shrinking workforce
“Demographics are destiny”
6-18© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The General Environment The General Environment
Political and Legal Forces Outcomes of changes in laws and regulations,
such as the deregulation of industries, the privatization of organizations, increased emphasis on environmental protection, changing trade agreements Changes in laws and regulations increase the cost of
resources and/or limit their use – lead, asbestos, mercury, DDT, but also can present new opportunities.
6-19© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The General Environment The General Environment
Global Forces Outcomes of changes in international
relationships; changes in nations’ economic, political, and legal systems; and changes in technology, such as falling trade barriers, the growth of representative democracies, and reliable and instantaneous communication (example: Iraq will eventually be a significant U.S. trade partner)
Important opportunities and threats to managers: The economic integration of countries through free-trade
agreements (GATT, NAFTA, EU) that decrease the barriers to trade. Toyota’s “Americas” blueprint
6-20© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Barriers to Trade and InvestmentBarriers to Trade and Investment
Tariff (self-defeating over long term) A tax that government imposes on imported
or, occasionally, exported goods.Intended to protect domestic industry and jobs
from foreign competitionOther countries usually retaliate with their own
tariffs, which can eventually reduce the overall amount of trade, impeding global economic growth
Smoot-Hawley and the Great Depression
6-21© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
GATT and the Rise of Free TradeGATT and the Rise of Free Trade
Comparative Advantage (Ricardo)If each country specializes in making the goods and
services it can produce most efficiently, this will make the best use of global resources.
If China is more efficient at making textiles and the United States is more efficient at making computer software, then each country should focus on its respective strength and trade for the other’s goods.
Status quo, job dislocation and the associated politics often upset this ideal. The U.S. Congress should focus on preparation and support, not protectionism.
6-22© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Declining Barriers of Distance and Culture
Declining Barriers of Distance and Culture
Distance Markets were essentially closed because of the slowness of
long-distance communications – now Beijing is next door to Biloxi.
Culture Language barriers and cultural practices made managing
overseas businesses difficult – by in large, English is now the language of international business.
Changes in Distance and Communication Improvement in transportation technology and fast, secure
communications have greatly reduced the barriers of physical and cultural distances.
6-23© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Effects of Free Trade on ManagersEffects of Free Trade on Managers
Declining Trade Barriers; both threat and opportunity Open enormous opportunities for managers
to purchase inputs and market outputs globally
But also increase intensity and complexity of global competition – more excitement and more risk (policing your supply chain)
For every yin there is a yang.
6-24© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The Role of National CultureThe Role of National Culture
Values What a society believes to be good,
desirable and beautiful.Provides conceptual support for democracy,
truth, appropriate roles for men and women.Usually not static, but
slow to change
6-25© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
The Role of National CultureThe Role of National Culture
Norms Unwritten rules and codes of conduct that
prescribe how people should act in particular situations. Folkways: routine social conventions of daily life (dress
codes and social manners) Mores: behavioral norms considered central to functioning
of society and much more significant than folkways (theft and adultery); often enacted into law
Norms vary from country to country
6-26© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Hofstede’s Model of National Culture
Hofstede’s Model of National Culture
Individualism A view that values individual freedom, self-expression,
personal rights, and the need for persons to be judged by achievement rather than social background – the U.S. and to a lesser degree the U.K.
Collectivism A view that subordinates individual goals to group goals –
Japan and communist countries and maybe the U.S. if we continue along the path we are currently traveling
6-27© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Hofstede’s Model of National Culture
Hofstede’s Model of National Culture
Power DistanceA society’s acceptance of differences in the well-being of citizens due to differences in heritage and capability>High power distance societies tolerate misery and a very
wide gap between rich and poor (e.g., Panama and Malaysia)
>Low power distance societies such as the United States and Germany reduce the gap by taxation and welfare programs that transfer wealth from rich to poor (progressives: “From greed to need”)
6-28© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Hofstede’s Model of National Culture
Hofstede’s Model of National Culture
Achievement versus Nurturing
>Achievement-oriented societies value assertiveness, performance, and results (U.S., Korea)
>Nurturing-oriented societies value quality of life, personal relationships, and service (Sweden, Denmark)
6-29© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Hofstede’s Model of National Culture
Hofstede’s Model of National Culture
Long-term Outlook
Societies with a long-term outlook(Japan)
value saving and persistence (Ants)
Societies with a short-term viewpoint
(United States) seek immediate personal
gratification (Grasshoppers)