The most obvious opportunity associated with expanding into the global envi- ronment is the prospect of selling goods and services to millions or billions of new customers, as Amazon.com’s CEO Jeff Bezos discovered when he expanded his company’s operations in many countries. Similarly, Accenture and Cap Gemini, two large consulting companies, established regional operating centers around the globe, and they recruit and train thousands of overseas consultants to serve the needs of customers in their respective world regions. Today many products have gained global customer acceptance. This consoli- dation is occurring both for consumer goods and for business products and has created enormous opportunities for managers. The worldwide acceptance of Coca- Cola, Apple iPads, McDonald’s hamburgers, and Samsung smartphones is a sign that the tastes and preferences of customers in different countries may not be so different after all. Likewise, large global markets exist for business products such as telecommunications equipment, electronic components, and computer and finan- cial services. Thus Cisco and Siemens sell their telecommunications equipment; Intel, its microprocessors; and Oracle and SAP, their business systems management software, to customers all over the world. Competitors One of the most important forces an organization confronts in its task environ- ment is competitors. Competitors are organizations that produce goods and services that are similar and comparable to a particular organization’s goods and services.
Managing in the Global Environment 133 potential competitors Organizations that presently are not in a task environment but could enter if they so choose. barriers to entry Factors that make it difficult and costly for an organization to enter a particular task environment or industry. economies of scale Cost advantages associated with large operations. In other words, competitors are organizations trying to attract the same customers. Dell’s competitors include other domestic PC makers (such as Apple and HP) as well as overseas competitors (such as Sony and Toshiba in Japan; Lenovo, the Chinese company that bought IBM’s PC division; and Acer, the Taiwanese company that bought Gateway). Similarly, online stockbroker E*Trade has other competitors such as TD Ameritrade, Scottrade, and Charles Schwab. 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. In the early 2000s competition in the PC industry became intense because Dell was aggressively cutting costs and prices to increase its global market share. IBM had to exit the PC business after it lost billions in its battle against low-cost rivals, and Gateway and HP also suffered losses while Dell’s profits soared. By 2006, however, HP’s fortunes had recovered because it had found ways to lower its costs and offer stylish new PCs, and Apple was growing rapidly, so Dell’s profit margins shrunk. In 2009, HP overtook Dell to become the largest
- Summer '17
- Mary Kovach