Chapter 2: Environmental Constraints on Managers

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Chapter 2 Environmental Constraints on Managers

• Understanding the Global Environment
• Business Management 12

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Understanding the Global Environment

• The global environment presents both
  opportunities and challenges for managers.
• With the marketplace now global and national
  borders becoming increasingly irrelevant, the
  potential for organizations to grow is expanding
  dramatically.

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Understanding the Global Environment

• Managers working within the global environment
  must deal with
• Cultural differences
• Economic differences
• Political differences
• New competition from around the globe that can
  appear at any time

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Global Trade

• An important part of the global environment is
  global trade.
• Global trade has been around for centuries, and
  is shaped by several regional trading alliances
  and agreements that are negotiated through the
  World Trade Organization
• Examples European Union (EU)
• North America Free Trade Agreement
  (NAFTA)

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The Legal-Political Environment

• Canadian managers are used to stable legal and
  political systems, this however is not the case
  in some countries of the world
• Managers in such countries face uncertainty and
  are not always to accurately predict outcomes due
  to such circumstances
• Example Google in China
• See clip http//abcnews.go.com/Technology/video/g
  oogle-shuts-down-china-site-10177013

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The Economic Environment

• The global manager must be aware of the economic
  system under which a country operates when
  conducting business globally
• A market economy is one in which resources are
  primarily owned and controlled by the private
  sector (Ex. Canada)
• A planned economy is one in which all economic
  decisions are planned by a central government

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The Cultural Environment

• National culture has a greater effect on
  employees than does their organizations
  culturewhat is national culture?
• National culture are the values and attitudes
  shared by individuals from a specific country
  that shape their behaviour and beliefs about what
  is important.

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HOFSTEDES CULTURAL DIMENSIONS

• Studied 116,000 IBM employees in 40 different
  countries
• He was able to classify their values and
  attitudes into four distinct categories
• His research proved useful to managers in
  determining Canadas placement (Scale High to
  low)
• Good managers must recognize the differences in
  order to be successful.

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Individualism Vs. Collectivism

• Individualism Look after their own
• interests and those of the immediate family
  (Example US, Canada)
• Collectivism - People prefer to act as members
  of a group and expect to be looked after and
  protected. (Example Mexico, Thailand)

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Power Distance

• Power Distance A society that accepts that
  power is unequal within an organization or
  institution. Employees have a high regard and
  respect for those in positions of authority.

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Uncertainty Avoidance

• Uncertainty Avoidance This refers to the degree
  to which people tolerate risk and prefer
  structured over unstructured situations. People
  in a society with high uncertainty avoidance tend
  to be stressed, nervous and aggressive.

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Achievement Vs. Nurturing

• Achievement is the degree to which values such as
  assertiveness, making money and buying material
  goods and competition is seen as important
  (Example US, Japan)
• Nurturing emphasizes relationships and concern
  for others. (Example France, Sweden)

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Long Term and Short Term Orientation

• This attribute looks at a countrys orientation
  toward work and life.
• Long term Orientation People look to the future
  and value thrift and persistence leisure time
  unimportant. (Example China, Japan)
• Short term Orientation People value the past
  and present and emphasizes respect for tradition
  and fulfilling social obligations leisure time
  important (Example Canada, US, Australia)

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Canada has Individualism (IDV) as the highest
ranking (80) Hofstede Dimension, and is
indicative of a society with a more
individualistic attitude and relatively loose
bonds with others.
Canadian's lowest ranking Dimension is Long Term
Orientation at 23, this low LTO ranking is
indicative of societies' belief in meeting its
obligations and tends to reflect an appreciation
for cultural traditions.