Managing in a Foreign Environment

Managing from a global perspective requires managers to pay close attention to factors in the external environment which may affect an organizations success. It may be however that factors in the internal environment will also influence success in a global environment. Discuss.

Almost any organisation in the world today, has some kind of vertical hierarchy, where one person is placed higher and endowed with more power that the others. Such a person is the manager. The manager’s job is to guide and direct the people below him in the hierarchy towards a certain objective in order to eventually achieve an organizational goal. Today, more than ever managers find themselves working outside their home country- this is referred to as worldwide management. So how does a manager cope with an increasingly global business environment? And, indeed, in order to succeed in such an environment, what are the challenges faced by the management of corporations today?
Indeed, managing from a global perspective requires managers to acknowledge and understand the factors in the external environment, which may affect an organizations success. As Helms states in the encyclopedia of Management “the successful global manger must understand many diverse cultural preferences and must be able to communicate this understanding in a positive way”. The manager of today must keep in mind the range of backgrounds of the people being managed, and adjust his or her actions accordingly. Thus, the leadership and communication style of the manager have changed to reflect and accommodate the multi-racial constitution of the work force.

To succeed in global environment, it is imperative that mangers posses a geocentric attitude- a world orientated view focusing on using the best approaches and people from around the globe. Understanding and awareness of an organizations external environment is extremely important to managers of today. Their external environment can be divided into two segments: mega environment and task environment. The mega environment includes three major elements: economic, legal-political, and socio-cultural. Being able to deal with these three different environments as well as using the analytical framework makes a competent manager of a foreign environment. Because socio-cultural aspect changes, mangers must monitor trends for new opportunities or threats. Socio-cultural trends mean demand can shift for some product type.

Some countries have a history of unstable governments. For example, some South American countries have had up to 6 new governments within one year, each one with their own set of rules and goals. Authors Robbins, Stag and Coulter contend that “ mangers need to recognize [the different legal-political environment] if they are to understand the constraints under which they operate and the opportunities that exist.” In order to succeed, managers must also make themselves aware of laws on issues such as trade restraints, working conditions, the right of privacy and the right of workers differ between nations.
A global manager faces some economic concerns such as fluctuating currency rates, inflation and diverse tax policies which single country mangers do not. Bergman et al states that “ a global firm’s profits can alter dramatically depending on the strength of its home currency and the currency of the country in which it operates”. For example, the weakening of the Australian dollar in comparison with the New Zealand dollar has affected the New Zealand companies exporting goods to Australia. Managers need to be aware that such a change in currency rates may affect pricing, sales volumes and makes predicting budgets and sales estimates very difficult. Inflation rates make the manager aware of prices needed to be charged for their goods whilst knowledge of the tax system helps mangers minimise their cooperation’s tax obligations.

A nation’s culture - their quality of life, their belief in collectivism has an impact on their work related values and attitudes. Having awareness of the national culture can create communication and increase the co-operations effectiveness. For example, Japan has a collectivistic culture, whereas the U.S. has an individualistic culture. The differences in national cultures may aid in explaining why organizations of these two nations are characterized as having different perspectives.

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