Course Notes on Principles of Management
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.
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.
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.
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.
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.
Global Task Environment
Suppliers & Distributors
Managers
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.
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.
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.
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.
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.
Global Task Environment
Suppliers & Distributors
Managers