《Contemporary Management》chpt 4 The Global Environmen

The global Environment o CThe McGraw-Hill Companies, Inc, 2000

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 4-1 The Global Environment 4

4-2 The Global Environment In the past, managers have viewed the global sector as closed Each country or market was assumed to be isolated from others Firms did not consider global competition. exports Today' s environment is very different Managers need to view it as an open market Organizations buy and sell around the world Managers need to learn to compete globally " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 4-2 The Global Environment ⚫In the past, managers have viewed the global sector as closed. ◼ Each country or market was assumed to be isolated from others. ◼ Firms did not consider global competition, exports. ⚫Today’s environment is very different. ◼ Managers need to view it as an open market. ◼ Organizations buy and sell around the world. ◼ Managers need to learn to compete globally

4-3 Tariff barriers oa tariff is a barriers to trade Tariffs are taxes levied upon imports These seek to protect jobs in the home country Other countries usually retaliate o Free trade: in a free trade agreement, each country seeks to specialize in things they make most efficiently. If India is more efficient in making textiles, and the USa in making computer software. then each country rwia should focus on these Hill CThe McGraw-Hill Companies, Inc, 2000

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 4-3 Tariff Barriers ⚫A tariff is a barriers to trade. ◼ Tariffs are taxes levied upon imports. ◼ These seek to protect jobs in the home country. ◼ Other countries usually retaliate. ⚫Free trade: in a free trade agreement, each country seeks to specialize in things they make most efficiently. ◼ If India is more efficient in making textiles, and the USA in making computer software, then each country should focus on these

4-4 Distance culture barriers oThe second leading cause of trade barriers Distance closed the markets as far as some managers were concerned Communications could be difficult Languages and cultures were different during the last 50 years, communications and transportation technology has dramatically improved. Jet aircraft, fiber optics, satellites have provided fast secure communications and transportation These have also reduced cultural differences " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 4-4 Distance & Culture Barriers ⚫The second leading cause of trade barriers. ◼ Distance closed the markets as far as some managers were concerned. ◼ Communications could be difficult. ◼ Languages and cultures were different. ⚫During the last 50 years, communications and transportation technology has dramatically improved. ◼ Jet aircraft, fiber optics, satellites have provided fast, secure communications and transportation. ◼ These have also reduced cultural differences

4-5 Effects on Managers o Declining barriers have opened great opportunities for managers. Managers can not only sell goods and services but also buy resources and components globally o Managers now face a more dynamic and exciting job due to global competition. win/MeGraw-Hill CThe McGraw-Hill Companies, Inc, 2000

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 4-5 Effects on Managers ⚫Declining barriers have opened great opportunities for managers. ◼ Managers can not only sell goods and services but also buy resources and components globally. ⚫Managers now face a more dynamic and exciting job due to global competition

4-6 Free Trade NAFTA: North american free Trade As greement Abolishes most tariffs on goods traded between Mexico. Canada and the U.s Allows unrestricted cross-border flows of resources Many U.s. firms have now invested in Mexico This is a manufacturing opportunity. Wage costs are lower in Mexico Can serve Mexico with a plant in Mexico and reduce freight o Managers face new opportunities and reats。 " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 4-6 Free Trade NAFTA: North American Free Trade Agreement. ◼ Abolishes most tariffs on goods traded between Mexico, Canada and the U.S. ◼ Allows unrestricted cross-border flows of resources. ◼ Many U.S. firms have now invested in Mexico. ⚫This is a manufacturing opportunity. ◼ Wage costs are lower in Mexico. ◼ Can serve Mexico with a plant in Mexico and reduce freight. ⚫Managers face new opportunities and threats

4-7 Global Task Environment Figure 4.2 Suppliers Forces yielding CompetitorsOpportunities Distributors and threats Customers " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 4-7 Global Task Environment Suppliers Distributors Customers Competitors Forces yielding Opportunities and threats Figure 4.2

4-8 Suppliers distributors o Managers buy products from global suppliers or make items abroad and supply themselves. Key is to keep quality high and costs low o Global outsourcing: firms buy inputs from throughout the world GM might build engines in mexico. transmissions in Korea and seats in the u. s Finished goods become global products o Distributors: each country often has a unique system of distribution. Managers must identify all the issues " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 4-8 Suppliers & Distributors ⚫Managers buy products from global suppliers or make items abroad and supply themselves. ◼ Key is to keep quality high and costs low. ⚫Global outsourcing: firms buy inputs from throughout the world. ◼ GM might build engines in Mexico, transmissions in Korea, and seats in the U.S. ◼ Finished goods become global products. ⚫Distributors: each country often has a unique system of distribution. ◼ Managers must identify all the issues

4-9 Customers Competitors e Formerly distinct national markets are merging into a huge global market True for both consumer and business goods Creates large opportunities Still. managers often must customize products to fit the culture. McDonald's sells a local soft drink in brazil o Global competitors present new threats. Increases competition abroad as well as at home win/MeGraw-Hill CThe McGraw-Hill Companies, Inc, 2000

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 4-9 Customers & Competitors ⚫Formerly distinct national markets are merging into a huge global market. ◼ True for both consumer and business goods. ◼ Creates large opportunities. ⚫Still, managers often must customize products to fit the culture. ◼ McDonald's sells a local soft drink in Brazil. ⚫Global competitors present new threats. ◼ Increases competition abroad as well as at home

4-10 Forces in the global general environment Fiqure 4.3 Political Legal Systems Sociocultural Forces yielding Economic Opportunities ystem system and threats " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 4-10 Forces in the Global General Environment Political & Legal Systems Economic system Sociocultural System Forces yielding Opportunities and threats Figure 4.3