Managing from a global perspective requires managers to pay close attention to factors in the external environment, which may affect an organisation’s success. It may be, however, that factors in the internal environment will also influence success in a global environment. It is important for global managers to be familiar with the factors of the external environment and pay close attention to the management of the internal environment because factors from both the internal and external environments will most certainly influence the success of an organisation. Most importantly, managers may need to strategically optimise the internal environment for the specific properties of the external environment in which they operate. The performance of an organisation may not be exceptional unless management of the internal environment, or the conditions existing within the organisation, is fully optimized for the external environment.
As a global manager, paying close attention to the external environment is a prerequisite. The external environment is the different forces outside the organisation able to impact on the success of the organisation. The external environment in new and different countries may have elusive properties such as technology, social systems, politics, currency, and tax which the global manager need to consider and analyse. External forces such as the social and political systems are of particular importance as they are the ones most likely to influence an organisation’s success. Therefore these are the main factors to which managers should pay close attention so as to “understand the constraints under which they operate and the opportunities that exist” (Robbins, Bergman, Stagg, Coulter, 2000, 141). By studying the specific political and social systems of a particular external environment managers can use their understanding of these systems to their advantage and develop exceptional strategies based on their understanding. For instance, in some countries such as the Peoples Republic of China, one must be willing to ‘open the back door if the front one is closed’, in other words, managers need to understand the “importance of guanxi (connections) in doing business in China”(Robbins et al).
Managers working from a global perspective not only need to know the different laws, traditions, and systems of the different countries in which they work but also the economics of the countries. Different countries have different rates of change of currency, inflation and tax policies which can affect pricing, labour, and revenues, making it difficult to predict budgets and sales estimates and minimising tax obligations. “Global organisations assume risks (and a potential for profit) not only in production and marketing but also from fluctuating currency rates” (Robbins et al).
The technological environment is a factor which can influence the performance of the organisation by enhancing the conditions under which organisations operate. With the aid of technology organisations can have more convenience and save time. Since time is money, organisations also save money through use of appropriate technology. Therefore managers need to pay close attention to the technological environment which is ever changing and improving. Organisations may need the most up to date technology to remain competitive. (Bartol, Martin, Tein, Matthews, 2001, 63)
Different nations have different national culture, something that is shared by the majority of inhabitants of a country, which shapes their behaviour and their opinions. This is another important external factor to which the global manager should pay close attention, as it influences not only the performance of the organisation and its profits but also the employees within the organisation. By understanding a nation’s national culture the global manager understands how the inhabitants of that country behave and form opinions and therefore can anticipate changes in sales and make important decisions based on these understandings. What is more, national culture may have a greater effect on employees than does their organisation’s culture, “This means that, as influential as organisational culture is on managerial practice, national culture is even more influential” (Robbins et al).
The term organisational culture is a system of shared values, assumptions, beliefs and norms uniting an organisation’s members (Smircich 1983; Kilmann, Saxton ; Serpa 1986). Organisational culture is often used for an organisation’s internal environment. (Bartol et al). Considering an organisation’s environment is crucial. Organisations must always be prepared to change and innovate (Bartol et al). According to the