Course Notes on Principles of Management

The Global environment In the past, managers fill viewed the global domain as closed. Each country or market was assumed to be isolated from others. Firms did non consider global competition, exports. Todays environs is precise different. Managers need to view it as an open market. Organizations buy and swop around the world. Managers need to learn to compete globally. Tariff Barriers A tariff is a barriers to trade. Tariffs be taxes levied upon imports. These seek to protect jobs in the shoes country. new(prenominal) countries usually retaliate.Free trade in a guiltless trade agreement, each country seeks to specialize in things they make most efficaciously. If India is more than efficient in making textiles, and the USA in making computer software, thus each country should focus on these. Distance & polish Barriers The min leading ca wont of trade barriers. Distance closed the markets as far as some managers were concerned. Communications could be difficult. Lang uages and cultures were different. During the last 50 years, communications and transportation technology has dramatically improved.Jet aircraft, fiber optics, satellites down provided fast, secure communications and transportation. These have also decreased cultural differences. Effects on Managers Declining barriers have opened great opportunities for managers. Managers can non only sell goods and serve but also buy resources and components globally. Managers now face a more dynamic and exciting job out-of-pocket to global competition. Free interchange 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 be are lower in Mexico. Can serve Mexico with a found in Mexico and reduce freight. Managers face new opportunities and threats. Global Task Environment Suppliers & Dist ributors Managers buy products from global suppliers or make items abroad and supply themselves. separate is to keep quality high and costs low. Global outsourcing firms buy inputs from passim the world. GM might build engines in Mexico, transmissions in Korea, and seats in the U. S. Finished goods be let global products.Distributors each country often has a unique system of distribution. Managers must identify all the issues. Customers & Competitors Formerly obvious national markets are merging into a huge global market. accredited for both consumer and furrow goods. Creates large opportunities. Still, managers often must customize products to fail the culture. McDonalds sells a local soft drink in Brazil. Global competitors evince new threats. Increases competition abroad as well as at home. Forces in the Global General Environment Political-Legal ForcesResults from diverse and changing disposition of each countries political system. Representative democracies such as the U. S. , Britain, Canada. Citizens elect leaders who make decisions for electorate. Usually has a number of safeguards such as liberty of expression, a fair court system, regular elections, and limited terms for officials. sanitary defined legal system and economic freedom. Totalitarian regimes a wiz political party or person monopolize world power in a country. Typically do not recognize or leave opposition. Most safeguards found in a democracy do not exist.Examples include Iran, Iraq, and China. These are difficult to do business with given the deprivation of economic freedom. Further, human rights issues also cause managers to avoid dealing with these countries. sparing Systems Free market economy production of goods and services is in insular ownership. Production is dictated by supply and demand. Command economy decisions on what to produce, how much, done by the government. Most command economies are moving outside(a) from the command economy. Mixed economy certain econ omic sectors controlled by unavowed business, others are government controlled.Many mixed countries are moving toward a free enterprise system. Recent Trends Current shift away from totalitarian dictators toward pop regimes. Very dramatic example seen in the collapse of the former Soviet Republic. Also very pronounced in Latin America and Africa. With this shift, has come a strong movement toward free market systems. This provides great opportunities to business managers on a global level. Many businesses are investing millions in former totalitarian countries to seize these opportunities. Changing Political and Economic Forces sociocultural ForcesNational culture includes the value, norms, knowledge, beliefs, and other practices that unite a country. Values abstract ideas or so what a nightspot believes to be good, desirable and beautiful. Provides attitudes for democracy, truth, appropriate roles for men, and women. Usually not static but very slow to change. Norms social rule s prescribing behavior in a given situation. Folkways routine social conventions including dress codes and manners. Mores Norms that are primeval to functioning of society. much more significant that folkways. More examples include theft, adultery, and are often enacted into law.Norms vary from country to country. Hofstedes Model of National Culture Individualism v. Collectivism Individualism world view that values individualistic freedom and self-expression. Usually has a strong belief in individualised rights and need to be judged by achievements. Collectivism world view that values the group over the individual. Widespread in Communism. Prevalent in lacquer as well. Managers must understand how their workers relate to this issue. Power Distance A societys acceptance of differences in the well being of citizens due to differences in heritage, and physical and intellectual capabilities.In high power outstrip societies, the prisonbreak between rich and poor gets very wide. In low power distance societies, any gap between rich and poor is reduced by taxation and welfare programs. Most western cultures (U. S. , Germany, United Kingdom) have relatively low power distance and high individualism. Many economically poor countries such as Panama, Malaysia have high power distance and low individualism. Achievement vs Nurture Achievement oriented societies value assertiveness, performance, success. The society is results-oriented. Nurturing-oriented value quality of life, personal relationships, service.The U. S. and Japan are achievement-oriented while Sweden, Denmark are more nurturing-oriented. Uncertainty Avoidance Societies and people differ on their willingness to output on risk. Low uncertainty avoidance (U. S. , Hong Kong), value diversity, and tolerate differences. substantiate a wide range of opinions and beliefs. High uncertainty avoidance (Japan and France) are more rigid and do not tolerate people playacting differently. High conformity to norms is expected. Long Term Outlook Long-term view is based on values of saving, and persistence.Taiwan and Hong Kong are cultures that are long -term in outlook. Short-term outlook seeks the maintenance of personal stability or gladness right now. France and the U. S. are examples of this approach. international working out Importing and Exporting the least complex method of expansion. Exporting firm makes products and sells abroad. Importing firm sells products make abroad. Licensing firm allows extraneous organization to make and distribute goods for a fee. Helps the home firm since it does not have to set up a commit production and distribution network.Franchising company sells a foreign organization the rights to use brand name and know-how in return for payment and profit percentage. International Options Strategic Alliances managers pool resources with a foreign firm and both organizations contend the rewards and risks. Allows firm to maintain control which is a problem with exporting, licensing, and franchising. Wholly-owned foreign marcher firm invests in production operations in a foreign country. Many Japanese auto firms have done this in the U. S. This is very expensive but can yield high returns. International Expansion