GSGM7223 & Managing Organisation

Management Environment and International Management

Link (to Course

TOPIC 2 SUB-TOPIC(s)
Learning Outcome)
Management 2.1 The Internal and External Stakeholders Community in the Organisation CLO1 - Articulate
Environment and 2.2 The Environment of Organisation the essential
International 2.3 Globalisation: The Elimination of Distance and Time principles of
Management 2.4 How Companies Expand Internationally management in an
2.5 The Nine Cultural Dimensions in Globe Project organisational
setting.

CLO2 - Analyze
behavior
dimensions
affected by
organisational
dynamics.

2.1 The Internal and External Stakeholders Community in the Organisation

In general, stakeholders are the people whose interests are affected by an organisation’s activities. They are divided into two
categories of internal and external stakeholders.

The internal stakeholder’s community consists of employees, owners (who can obtain the organisation as their legal property),
and the board of directors (representatives chosen by the shareholders to see that the corporation is being managed based
on their interests).

On the other side, external stakeholders’ community are individuals or parties in the company's external environment that are
influenced by its task like customers, competitors, suppliers, creditors, the local community, society, and the government.

Watch the following videos on The Internal and External Stakeholders Community in the Organisation:

Title: “Internal & External Stakeholders | Unit 1.4 IB Business Management”

https://www.youtube.com/watch?v=hryI368XiAc

Title: “The Interests of Internal and External Stakeholders”

https://www.youtube.com/watch?v=NxTigbKp7zU

2.2 The Environment of Organisation

The environment, in general, for the organisation includes task environment and general environment. Th task environment
on its own includes the following:

Customers: Those who pay to make use of a company's goods or services.

Competitors: Individuals or companies that contend for customers or services.
Suppliers: An individual or an organisation that delivers raw materials, services, equipment, labor force or energy to other
corporations.
Distributor: An individual or corporation that assists another company sell its products including services and goods to buyers
Strategic Allies: Explains the association of two companies who join forces to accomplish benefits that neither of them could
perform on its own.
Government Regulators: Regulatory agencies that establish ground rules under which organisations may operate.
Special Interest Groups: Groups whose members try to influence specific issues.
Local Communities
Mass Media

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Management Environment and International Management

Financial Institutions
Employee Organisations: Unions & Associations

On the other side, the general environment includes the following forces:

Economic Forces: Comprise of the general economic circumstances and developments – economic growth -unemployment,
interest rates, inflation – that may influence a company's functioning and performance.
Sociocultural Forces: Impacts and trends initiating in a country’s, a society’s, or a culture’s human relationships and values
that may influence a company.
Political-Legal Forces: Shifts in the way politics form laws and laws affect the opportunities for and threats to a company.
International Forces: Shifts in the economic, political, legal, and technological global system that might influence a
corporation.
Demographic Forces: Impacts on a corporation occurring from shifts in the traits and characteristics of a people, such as
ethnic origin, gender, or age.
Technological Forces: New advancements in techniques for converting resources into products including goods and services.

Watch the following video for Organizational Environment:

Title: “Organizational Environment”

https://www.youtube.com/watch?v=m2wWTo-fhiM

2.3 Globalisation: The Elimination of Distance and Time

Globalisation is the tendency of the world economy on the road to turn into a more interdependent system. There are several
terms and concepts that are shaped based on the globalisation as follows:

The first one is Global Village which is the “shrinking” of space and time when the electronic media and air travel have
created much simpler for the citizens of the world to connect with each other.

The next one is E-commerce which can be defined as the purchasing and selling of goods and services over computer
systems and networks.

Another term is Global Economy which is defined as the increasing tendency of the economies of the world to interact with
one another as one market instead of many national markets.

If we look at the globalisation from America perspective as the first economy in the world at least before China takes over.
There are some positive and some negative effects as follows:

• Positive Effects: More opportunities and markets for products that can be exported from America to the rest of the
world.
• Negative Effects: The financial crisis in 2008 which was caused by enormous excess funds from global investments
poured into America which were invested badly in subprime mortgages and caused later on a significant impact on
the rest of the world economy as well.

From small and medium enterprises perspective, it is much easier for these mini firms to operate worldwide as small companies
can begin and start the operation more easily as well as the fact that these small companies can maneuver faster and be
more agile.

Watch the following video the globalisation better and in deeper way:

Title: “Globalization Explained (explainity® explainer video)”

https://www.youtube.com/watch?v=JJ0nFD19eT8

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Management Environment and International Management

2.4 How Companies Expand Internationally

There are several ways for the companies to expand internationally. The following are those possible ways:

Global Outsourcing which is about using suppliers outside the home country to deliver goods, labor, or services.

Importing which is defined as a firm acquires goods outside the country and resells them locally.

Exporting is defined as a company makes goods locally and sells them outside the country.

Countertrading which is bartering products for products.

Licensing which is when a company permits a foreign company to pay it a charge to make or distribute the company's good
or service.

Franchising is defined as when a company permits a foreign company to pay it a fee and a give out some of the profit in
response for using the company's brand name and a package of materials and services.

Joint Ventures is established with a foreign firm to share the rewards and risks of setting up a new venture jointly with a foreign
country which is also known as a strategic alliance.

Wholly Owned Subsidiary which is a foreign subsidiary which is totally owned and controlled by an organization.

Greenfield Venture which is an overseas subsidiary that the holding organisation has formed from scratch.

Watch the following videos to understand How Companies Expand Internationally:

Title: “What Are The Modes of Entry in International Business?”

https://www.youtube.com/watch?v=Flw-l6AMdt8

Title: “Global Market Entry Strategies: Exporting to Direct Investment”

https://www.youtube.com/watch?v=VgVTfU9kVmA

2.5 The Nine Cultural Dimensions in Globe Project

There are nine cultural dimensions that are discussed in a comprehensive theory in international environment as follows:
Power Distance: How much should be the difference in distribution of power in corporations and society as a whole.
Uncertainty Avoidance: How much should society depend on social standards and guidelines to stay away from uncertainty.
Institutional Collectivism: How much should leaders inspire and reward loyalty to the social unit.
In-group Collectivism: How much dignity, pride, devotion, and loyalty should people have for their family or their organisation.
Gender egalitarianism: How much should society increase, boost, and maximize gender role differences.
Assertiveness: How prevalent, dominant, and confrontational should people be in social relationships.
Future Orientation: How much should individuals delay enjoyment, pleasure, and gratification by preparing, storing, and
saving for the future.
Performance Orientation: How much should people be compensated for progress, improvement, merit, and excellence.
Humane Orientation: How much should society inspire and compensate individuals for being nice, honest, pleasant and
welcoming, and giving (generous).

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Watch the following video to understand the Nine Cultural Dimensions:

Title: “Dimensions of Culture”
https://www.youtube.com/watch?v=_672G-Qs7BE

Additional Reading Materials

Article Titled: “Identifying and Managing Internal and External Stakeholder Interests”
https://www.healthknowledge.org.uk/public-health-textbook/organisation-management/5b-understanding-ofs/managing-
internal-external-stakeholders

Publication Titled: “Globalization and Deglobalization”

https://www.bis.org/publ/bppdf/bispap100.pdf

- end of topic –

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