SCRIPT

Subject: Management
Chapter 3: MANAGERIAL ENVIRONMENT
Topic 2: Global Environment
Hello everyone,
Welcome back to study managerial environment, what we are going to study on the topic
is the Global environment of an organization. After studying this topic, you should be
able to use English:
 Explain what the global environment is.
 Identify the forces of general and task environment.
The first objective of this topic is to explain the Global environment. It is defined as a set
of forces and conditions outside the organization that affects organizational performance.
The forces always change over time that they can create opportunities and threats to a
certain organization. Some changes in the global environment, such as the development
of new technology, the availability of lower-cost materials, or the opening of new global
markets through inter-countries trade agreement entry that helps managers catch up
opportunities if they adapt successfully to this changing environment. In contrast, the rise
of new global competitors, a global economic recession, impacts of trade war pose threats
to an organization if managers are unable to sell its products or service. So, the
understanding of forces in the global environment and the ability to respond to changes in
the forces are very essential to managers.
The global environment is divided into two environments, general and task environment.
The task environment also called microenvironment is the set of forces and conditions
that affect an organization's ability to obtain inputs and dispose of its outputs. It consists
of the organization's suppliers, customers, distributors, and competitors, … and has the
most immediate and direct effect on managers.
The general environment also called the macroenvironment is the larger environment
outside an organization that has important effects on forces in the task environment and
indirectly impacts the organization’s performance and its strategy. It includes political,
economic, sociocultural, technological, legal, and natural-environmental forces.
Now let’s move on to the second objective is to identify the forces of general and task
environment.
To begin with the task environment, the first force of the environment is suppliers, they
are individuals and companies that provide an organization with the input resources such
as raw materials, component parts to produce goods and services. In a global
environment, relationships with suppliers can be complicated due to materials shortages
or lack of substitutes. Suppliers who are the only source of a critical item are in a strong
bargaining position to raise their prices. Managers can reduce these supplier effects by
increasing the number of suppliers of an input. Another force of the task environment is
distributors. These are 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 that market. And customers are the main force who purchase the
goods and services of a producer. Identifying an organization's main customers and
producing the goods and services they want is vital to managers. One of the most
important forces in the task environment is competitors. They are organizations that
produce goods and services similar and comparable to a particular organization’s goods
and services. In other words, competitors are organizations trying to attract the same
customers. In addition, there are some other forces such as substitutes, labors, and
potential competitors that they are industry forces, affect directly to the organization’s
operation.
Let’s move to the general environment, called the macroenvironment is the larger
environment outside an organization that has important effects on forces in the task
environment and indirectly impact on the organization’s performance and its strategy. It
includes political, economic, sociocultural, technological, legal, and natural-
environmental forces.
Firstly, political and legal forces are outcomes of changes in laws and regulations of
government. They result from political and legal changes and developments. They
include some factors such as deregulation of industries, privatization of organizations,
and increased emphasis on environmental protection, government stability/instability,
corruption level, government regulation and deregulation, special tariffs, import-export
regulation/restrictions, trade control, competition regulation, …. Another important
political and legal force is the political integration of countries. Nations are forming
political unions that allow the free exchange of resources and capital such as the
Association of Southeast Asian Nations (ASEAN), European Union (EU),
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), ...
The changes in laws and regulations of the government, the political integration of
countries, or deregulation, privatization, and the removal of legal barriers to trade are just
a few of the many ways in which changing political and legal forces can affect or
challenge organizations and managers that face major challenges when they seek to take
advantage of the opportunities created by changing political, legal, and economic forces.
Secondly, economic forces include economy's inflation rate, taxes, interest rates,
exchange rates, trading regulations, and excise duties and other factors that affect the
general health and well-being of a nation or the regional economy of an organization. The
forces create many opportunities and threats for organizations. Let’s look into a few of
the following examples to see how exactly they can affect a business. For example,
increase or decrease exchange rate can affect business if you import or export goods to
other countries. This might affect how much a company has to pay to your international
supplier, which can affect your company’s profit margins. Or the global economic
recession in 2008 made many companies face bankruptcy. A typical example is Mai Linh
corporation that deals with difficult series such as operational costs, debt, and reduce the
number of employees. This made the company has to restructure its operations.
Thirdly, sociocultural forces are pressures emanating from the social structure of a
country or from the national culture and include demographic forces. The factors in the
force that affect the operation of an organization such as attitudes, interests, opinions,
trends of human or characteristics of a population, such as age, gender, ethnic origin,
race, sexual orientation, structure of population, increase of global population, traditions,
level of education, cultural diversity and standards. Most of them affect the business of an
enterprise.
Technological Forces are the fourth forces of the general environment. They are
outcomes of changes in technology that technology is the combination of tools, machines,
computers, skills, information, and knowledge that managers use to design, produce, and
distribute goods and services. Technological advances have greatly changed the manner
in which businesses operate. Nowadays technological progress created a society that
expects instant results. Here we can mention new technologies, capacity for innovation,
globalization. New technologies shorten the Product life cycle and increase demand for
new products. This revolution has increased the rate at which information is exchanged
between stakeholders. A faster exchange of information can benefit companies as they
are able to react quickly to changes.
Finally, natural-environmental forces include protection legislation, pollution, waste
management and disposal, clean air and water, energy-saving technologies, attitudes
towards ecology in society. They affect operations of a business, therefore, managers
need to analyze them to take opportunities and avoid threats from the external
environment of an organization.
In conclusion, the general environment consists of political, economic, socio-cultural,
technological, legal, and natural-environmental forces. These forces can have positive
and negative effects on an organization's strategies and managers' decision-making. If a
business wants to be successful in the marketplace, it is necessary for them to fully
understand what factors exert impact on the development of their company. Therefore,
examining internal and external factors is considered the most important task for mangers
before launch any strategic marketing plan, and that brings us to the end. I’d like to thank
you for your attention and see you in the next chapters.