88.
Explain briefly the role of a distributor. If distributors become powerful, what will be the
impact on an organization?
Distribution of products is essential for organizations to get their products to their
customers in a timely fashion. Distributors are organizations that help other organizations
sell their goods or services to customers. The decisions managers make about how to
distribute products to customers can have important effects on organizational
performance.
The changing nature of distributors and distribution methods can bring opportunities and
threats for managers. If distributors become so large and powerful that they can control
customers’ access to a particular organization’s goods and services, they can threaten the
organization by demanding that it reduce the prices of its goods and services.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Identify the main forces in the global task and general environments, and describe the
challenges that each force presents to managers.
Topic: Competitive Environment
89.
Customers are the most important group in the success of any company. Discuss the
various types of customers that exist for Dell Computer and discuss how Dell needs to
respond differently to the needs of its different customer groups if it is to be successful.
Dell’s customers can be segmented into several groups: (1) individuals for home use, (2)
small companies, (3) large companies, (4) government agencies, (5) educational
institutions.
Changes in the number and types of customers or in customers’ tastes and needs result in
opportunities and threats. An organization’s success depends on its response to
customers. For Dell Computer, which is a part of the PC industry, customers are
demanding thinner computers, better graphics and speed, and increased wireless and
Internet connections—and lower prices—and PC companies must respond to the changing
types and needs of customers.
AACSB: Reflective Thinking
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-03 Identify the main forces in the global task and general environments, and describe the
challenges that each force presents to managers.
Topic: Competitive Environment
90.
In the context of task environment, write a brief note on competitors.
One of the most important forces an organization confronts in its task environment is
competitors. Competitors are organizations that produce goods and services that are
similar and comparable to a particular organization’s goods and services. In other words,
competitors are organizations trying to attract the same customers. Rivalry between
competitors is potentially the most threatening force managers must deal with. A high
level of rivalry typically results in price competition, and falling prices reduce customer
revenues and profits. Although extensive rivalry between existing competitors is a major
threat to profitability, so is the potential for new competitors to enter the task
environment. Potential competitors are organizations that are not presently in a task
environment but have the resources to enter if they so choose. When new competitors
enter an industry, competition increases, and prices and profits decrease.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Identify the main forces in the global task and general environments, and describe the
challenges that each force presents to managers.
Topic: Competitive Environment
91.
The barriers to entry result from three sources. Explain in brief the three sources.
Barriers to entry result from three sources: economies of scale, brand loyalty, and
government regulations.
Economies of scale are the cost advantages associated with large operations. Economies
of scale result from factors such as manufacturing products in very large quantities,
buying inputs in bulk, or making more effective use of organizational resources than do
competitors by fully utilizing employees’ skills and knowledge. If organizations already in
the task environment are large and enjoy significant economies of scale, then their costs
are lower than the costs that potential entrants will face, and newcomers will find it very
expensive to enter the industry.
Brand loyalty is customers‘ preference for the products of organizations currently existing
in the task environment. If established organizations enjoy significant brand loyalty, then a
new entrant will find it extremely difficult and costly to obtain a share of the market.
Newcomers must bear huge advertising costs to build customer awareness of the goods or
services they intend to provide.
Government regulations function as a barrier to entry at both the industry and the country
levels. Many industries that were deregulated experienced a high level of new entry after
92.
What do economic forces include? How do they affect the general environment of the
organization? What are the challenges that they present to managers?
Economic forces include interest rates, inflation, unemployment, and economic growth.
Economic forces produce many opportunities and threats for managers. Low levels of
unemployment and falling interest rates give more people more money to spend, and as a
result organizations have an opportunity to sell more goods and services. Good economic
times affect the supply of resources that become easier or more inexpensive to acquire,
and organizations have an opportunity to flourish.
In contrast, worsening macroeconomic conditions pose a major threat because they limit
managers’ ability to gain access to the resources their organizations need. Profit-seeking
organizations have fewer customers for their goods and services during economic
downturns. Nonprofits receive fewer donations during economic downturns.
Poor economic conditions make the environment more complex and managers’ jobs more
difficult and demanding. Managers may need to reduce the number of individuals in their
departments and increase the motivation of remaining employees, and managers and
workers alike may need to identify ways to acquire and utilize resources more efficiently.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 04-03 Identify the main forces in the global task and general environments, and describe the
93.
What are technological forces? Explain their implications for managers and organizations.
Technological forces are outcomes of changes in the technology that managers use to
design, produce, or distribute goods and services.
Technological forces can have profound implications for managers and organizations.
Technological change can make established products obsolete, forcing managers to find
new ways to satisfy customer needs. Although technological change can threaten an
organization, it also can create a host of new opportunities for designing, making, or
distributing new and better kinds of goods and services.
AACSB: Analytical Thinking
AACSB: Technology
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Identify the main forces in the global task and general environments, and describe the
challenges that each force presents to managers.
Topic: Technology
94.
Discuss the results of globalization.
Globalization is the set of specific and general forces that work together to integrate and
connect economic, political, and social systems across countries, cultures, or geographic
regions. The result of globalization is that nations and peoples become increasingly
interdependent because the same forces affect them in similar ways. The fates of peoples
in different countries become interlinked as the world’s markets and businesses become
increasingly interconnected. As nations become more interdependent, they become more
similar to one another in their tastes and preferences.
Learning Objective: 04-04 Explain why the global environment is becoming more open and competitive, and identify the
forces behind the process of globalization that increase the opportunities, complexities, challenges, and threats managers
face.
Topic: Globalization
95.
List and explain the principal forms of capital flow between countries.
There are four principal forms of capital flow between countries:
• Human capital is the flow of people around the world through immigration, migration,
and emigration.
• Financial capital is the flow of money capital across world markets through overseas
investment, credit, lending, and aid.
• Resource capital is the flow of natural resources, parts, and components between
companies and countries such as metals, minerals, lumber, energy, food products,
microprocessors, and auto parts.
• Political capital is the flow of power and influence around the world using diplomacy,
persuasion, aggression, and force of arms to protect a country’s or world region’s or
political bloc’s access to the other forms of capital.
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Explain why the global environment is becoming more open and competitive, and identify the
forces behind the process of globalization that increase the opportunities, complexities, challenges, and threats managers
face.
96.
What is a tariff? Explain the reason for removing tariffs and the effects of governments
raising tariff barriers.
A tariff is a tax that a government imposes on goods imported into one country from
another. The aim of import tariffs is to protect domestic industries and jobs from overseas
competition by raising the price of these products from abroad.
The reason for removing tariffs is that, very often, when one country imposes an import
tariff, others follow suit and the result is a series of retaliatory moves as countries
progressively raise tariff barriers against each other. During the recent economic crisis,
the governments of most countries worked hard not to fall into the trap of raising tariffs to
protect jobs and industries in the short run because they knew the long-term
consequences of this would be the loss of even more jobs. Governments of countries that
resort to raising tariff barriers ultimately reduce employment and undermine the economic
growth of their countries because capital and resources will always move to their most
highly valued use wherever that is in the world.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Explain why the global environment is becoming more open and competitive, and identify the
forces behind the process of globalization that increase the opportunities, complexities, challenges, and threats managers
face.
Topic: Globalization
97.
What is meant by the free-trade doctrine? Explain with an example.
The free-trade doctrine predicts that if each country agrees to specialize in the production
of the goods and services that it can produce most efficiently, this will make the best use
of global capital resources and will result in lower prices.
In other words, if a U.S. company were the most efficient manufacturer of a certain
product, this product would be likely to be produced in the U.S. over time. Similarly, if
some other country were the most efficient producer of some other product, that product
would most likely, over time, come to be produced in that country.
AACSB: Analytical Thinking
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-04 Explain why the global environment is becoming more open and competitive, and identify the
forces behind the process of globalization that increase the opportunities, complexities, challenges, and threats managers
face.
Topic: Globalization
98.
List the objectives of NAFTA, CAFTA, and FTAA.
There has been a growth of regional trade agreements such as the North American Free
Trade Agreement (NAFTA), and more recently the Central American Free Trade
Agreement (CAFTA).
• NAFTA had the aim of abolishing the tariffs on 99 percent of the goods traded between
Mexico, Canada, and the United States by 2004.
• CAFTA was a regional trade agreement designed to eliminate tariffs on products
between the United States and all countries in Central America.
• The Free Trade Area of the Americas (FTAA) is an ambitious attempt to establish a free–
trade agreement that would increase economic prosperity throughout the Americas.
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-04 Explain why the global environment is becoming more open and competitive, and identify the
forces behind the process of globalization that increase the opportunities, complexities, challenges, and threats managers
face.
Topic: Globalization
99.
Hofstede’s model of national culture states five dimensions along which national cultures
can be placed. Select any two of these five dimensions and discuss how each of these
dimensions creates a different type of climate in which an organization can do business.
One model of national culture was developed by Geert Hofstede. Hofstede developed five
dimensions along which national cultures can be placed: individualism/collectivism, power
distance, achievement/nurturing orientation, uncertainty avoidance, and long-term/short–
term orientation.
Long-term versus short-term orientation: Orientation toward life and work affects
business climate in terms of the values that people place on thrift and persistence. A
national culture with a long-term orientation rests on values such as thrift (saving) and
persistence in achieving goals. A national culture with a short-term orientation is
concerned with maintaining personal stability or happiness and living for the present.
Uncertainty avoidance: Societies as well as individuals differ in their tolerance for
uncertainty and risk. Societies low on uncertainty avoidance are easygoing, value diversity,
and tolerate differences in personal beliefs and actions. Societies high on uncertainty
avoidance are more rigid and skeptical about people whose behaviors or beliefs differ from
the norm. In these societies, conformity to the values of the social and work groups to
which a person belongs is the norm, and structured situations are preferred because they
provide a sense of security.
100.
With reference to Hofstede’s model of national culture, explain power distance.
By power distance, Geert Hofstede meant the degree to which societies accept the idea
that inequalities in the power and well-being of their citizens are due to differences in
individuals’ physical and intellectual capabilities and heritage. This concept also
encompasses the degree to which societies accept the economic and social differences in
wealth, status, and well-being that result from differences in individual capabilities.
Societies in which inequalities are allowed to persist or grow over time have high power
distance. In high-power-distance societies, workers who are professionally successful
amass wealth and pass it on to their children, and, as a result, inequalities may grow over
time. In such societies, the gap between rich and poor, with all the attendant political and
social consequences, grows very large. In contrast, in societies with low power distance,
large inequalities between citizens are not allowed to develop. In low-power-distance
countries, the government uses taxation and social welfare programs to reduce inequality
and improve the welfare of the least fortunate. These societies are more attuned to
preventing a large gap between rich and poor and minimizing discord between different
classes of citizens.
AACSB: Analytical Thinking
Blooms: Understand