Global Organizations

 Organizations that operate and

compete not only domestically, but also
globally

 Uncertain and
unpredictable

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 Organizational Environment
 Set of forces and conditions outside the
organization’s boundaries that have the
potential to affect the way the
organization operates
 Opportunities and threats

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 Task Environment
 Set of forces and conditions that
originate with suppliers, distributors,
customers, and competitors
 Affect an organization’s ability to obtain
inputs and dispose of its outputs
 Most immediate and direct effect on
managers
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 Forces in the Organizational
Environment

Figure 6.1
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 Global Outsourcing
Purchase of inputs from foreign suppliers
or the production of inputs abroad to
lower production
costs and improve
product quality and
design

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 Barriers to Entry and Competition

Figure 6.2
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 General Environment

Economic

Technological Socio-cultural
Forces

Demographic Political and Legal

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 Declining Barriers to Trade and
Investment
Tariff
 A tax that government imposes on imported
or, occasionally, exported goods.
 Intended to protect domestic industry and jobs
from foreign competition
 Other countries usually retaliate their own tariffs,
actions that eventually reduce the overall
amount of trade and impedes economic growth.

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 GATT and the Rise of Free Trade
Free-Trade Doctrine
 The idea that if each country specializes in
the production of the goods and services
that it can produce most efficiently, this will
make the best use of global resources
 If India is more efficient in making textiles, and
the United States is more efficient in making
computer software, then each country should
focus on their respective strengths and trade for
the other’s goods.
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 Declining Barriers of Distance and
Culture
 Distance
 Markets were essentially closed because of the
slowness of communications over long distances.
 Culture
 Language barriers and cultural practices made
managing overseas businesses difficult
 Changes in Distance and Communication
 Improvement in transportation technology and fast,
secure communications have greatly reduced the
barriers of physical and cultural distances.
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 The Role of National Culture
Values
 Ideas about 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
very slow to change.

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 The 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 (e.g.,
dress codes and social manners)
 Mores—behavioral norms that are considered central to
functioning of society and much more significant than
folkways (e.g., theft and adultery), and they are often
enacted into law.
 Norms vary from country to country.

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 Hofstede’s Model of National Culture

Figure 6.4
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 National Culture and Global
Management
 Management practices that are effective
in one culture often will not work as well
in another culture
 Managers must be sensitive to the
value systems and norms
of an individual’s country
and behave accordingly

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