ch06

Student: ___________________________________________________________________________

1.

The global environment is a set of forces and conditions in the world outside an organizations boundary
that affect how it operates and shape its behavior.
True False

2.

The quality of managers understanding of forces in the global environment and their ability to respond
appropriately to those forces are critical factors affecting organizational performance.
True False

3.

Opportunities and threats that result from changes in the task environment are easier to identify and
respond to than events in the general environment.
True False

4.

Forces in the task environment have little impact on short-term decision making.
True False

5.

Distributors are the individuals and companies that provide an organization with the input resources it
needs to produce goods and services.
True False

6.

Global outsourcing has grown enormously to take advantage of differences in the cost and quality of
resources available in different countries.
True False

7.

Competitors are organizations that produce goods and services that are similar and comparable to a
particular organizations goods and services.
True False

8.

A high level of rivalry typically results in price competition that increases existing prices.
True False

9.

Potential competitors are organizations that are not presently in a task environment but have the resources
to enter if they so choose.
True False

10. Cost advantages associated with large operations are called economies of scale.
True False
11. The greater the economies of scale of an existing organization, the lower are the barriers to entry for new
competitors.
True False
12. Low rivalry results in a task environment where competitive pressures are intense and managers have few
opportunities to acquire the resources they need to make their organizations effective.
True False
13. Economic, technological, sociocultural, demographic, political, and legal forces in the general
environment often have important effects on forces in the task environment that determine an
organizations ability to obtain resources.
True False
14. Forces in the general environment do not require continuous monitoring because they do not affect
ongoing decision-making and planning.
True False

15. Economic forces affect the general health and well-being of a country or world region.
True False
16. Managers today have fewer ways to supervise and coordinate geographically dispersed employees.
True False
17. National culture is the traditional system of relationships established between people and groups in a
society.
True False
18. Economic forces are outcomes of changes in, or changing attitudes toward, the characteristics of a
population, such as age, gender, ethnic origin, race, sexual orientation, and social class.
True False
19. The aging of the population of a country is an example of a demographic force that affects organizations
in the country.
True False
20. Nations forming political unions that allow free exchange of resources and capital is an example of the
political and legal forces in the environment.
True False
21. Falling trade barriers pose a serious threat to the nation's domestic market because they increase
competition in the task environment.
True False
22. The flow of capital around the world has helped establish an open global environment.
True False
23. Globalization has increased the levels of interdependence between people and nations.
True False
24. Political capital is the flow of people around the world through immigration, migration, and
emigration.
True False
25. The flow of natural resources, parts, and components between companies and countries is called human
capital.
True False
26. Tariffs are taxes that governments impose on goods in the domestic market that are only circulated within
the nation.
True False
27. The aim of import tariffs is to encourage the entry of foreign goods into a country's market.
True False
28. 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.
True False
29. The establishment of free-trade areas is disadvantageous for manufacturing organizations since
it increases their costs.
True False
30. Superstitions are unwritten, informal codes of conduct that prescribe appropriate behavior in particular
situations and are considered important by most members of a group or organization.
True False

31. Norms that are considered to be central to the functioning of society and to social life are called
folkways.
True False
32. Folkways are those norms which include proscriptions against murder, theft, adultery, and incest.
True False
33. The violation of folkways is a serious matter and is punishable by law.
True False
34. According to Hofstede's model of national culture, individualist societies adhere to the principle that
people should be judged by their contribution to the group.
True False
35. According to Hofstede, the gap between the rich and poor in low-power-distance societies is very
wide.
True False
36. According to Hofstede, in low-power-distance countries, the government uses taxation and social welfare
programs to reduce inequality and improve the welfare of the least fortunate.
True False
37. Societies that have a nurturing orientation, according to Hofstede, value personal relationships highly.
True False
38. Societies high on uncertainty avoidance, according to Hofstede, value diversity and tolerate differences in
personal beliefs and actions.
True False
39. According to Hofstede, a national culture with a long-term orientation rests on values such as thrift and
persistence in achieving goals.
True False
40. Organizations with culturally homogeneous management teams are best equipped to tailor their
management systems to meet the requirements of different cultures.
True False
41. What benefits does the global environment offer organizations?
A. The global environment provides organizations with several opportunities to increase efficacy and
efficiency.
B. The global environment is easy to operate within and is constant, straightforward, and predictable.
C. Fluctuating sociocultural factors never affect the performance of organizations which function at a
global level.
D. Organizations are faced with fewer challenges and risks when they grow to prominence
internationally.
E. Organizations that operate internationally seldom compete for scarce and valuable resources.
42. Which of the following is true of the task environment?
A. It includes the wide-ranging global, technological, sociocultural, and political forces that affect
organizations.
B. It contains the forces that have the least immediate effect on managers and their decisions.
C. It contains opportunities and threats that are harder to identify than those in the general environment.
D. It is a framework of environmental policies that dictate the CSR policies of global organizations.
E. It is the set of forces that originate with global suppliers, distributors, customers, and competitors.

43. Which of the following is true of the general environment?

A. It contains opportunities and threats that are easier to identify and respond to than those in the task
environment.
B. It comprises the set of forces that originate with global suppliers, distributors, customers, and
competitors.
C. It includes the wide-ranging global, technological, sociocultural, and political forces that affect
organizations.
D. It contains the forces that have the most immediate effect on managers and their decisions.
E. It contains forces that have very little impact upon the performance of organizations.
44. In what way is the task environment similar to the general environment?
A. They are both a set of geopolitical forces that are predictable and unchanging.
B. They both present managers with few opportunities and risks when operating at a global level.
C. They are both a set of forces and conditions that operate beyond an organization's
boundaries.
D. They both contain challenges that are easily identified
and anticipated.
E. They are both forces that are easy to control and have little impact on organizational
performance.
45. In what way does the task environment differ from the general environment?
A. Threats in the general environment are easier to respond to than threats in the task environment.
B. Forces in the task environment have a more immediate and direct effect on managers than forces in the
general environment.
C. Opportunities in the task environment are less easy to identify than opportunities in the general
environment.
D Unlike the task environment, the general environment deals with conditions that effect an
. organization's ability to obtain inputs and dispose outputs.
E Unlike the general environment, the task environment includes the global, economic, sociocultural,
. political, and legal forces that affect an organization.
46. Companies that provide other organizations with input resources are known as _____.
A. suppliers
B. competitors
C. distributors
D. processors
E. consumers
47. Jay's Furniture Factory gets its raw material from the local timber yard. The timber yard acts as
Jay's _____.
A. competitor
B. distributor
C. retailer
D. supplier
E. consumer
48. A supplier's bargaining position is especially strong when:
A. the input supplied has multiple sources and channels of distribution.
B. the input supplied has inexpensive and easily available substitutes.
C. the input supplied is a fundamental component of the organization's product.
D. the input supplied is found freely and can be accessed by people with little effort.
E. the input supplied is not protected by any patent.

49. Apple Inc. contracts with companies in Taiwan to make inputs such as the chips, batteries, and LCD
displays that power its digital devices at lower costs. This strategy is an example of _____.
A. global exporting
B. global franchising
C. global importing
D. global networking
E. global outsourcing
50. _____ are organizations that help other organizations sell their goods or services directly to customers.
A. Producers
B. Suppliers
C. Distributors
D. Manufacturers
E. Processors
51. Amethyst, an Italian house of high fashion, designs and creates luxury items like jewelry and hair
accessories. It sells its merchandise only through Fiesta a multinational retail store. Fiesta acts as
Amethyst's _____.
A. producer
B. supplier
C. distributor
D. manufacturer
E. processor
52. Individuals and groups that buy the goods and services an organization produces are called _____.
A. customers
B. suppliers
C. distributors
D. competitors
E. processors
53. Jeremy has a personal library with over 5,000 novels of various genresmost of them bought
from Benison's Bookhouse. He is an example of Benison Bookhouse's _____.
A. customer
B. supplier
C. distributor
D. competitor
E. processor
54. As the only store to design and sell curtains in the suburb of Oakland, the merchandise sold by Plush
Parade is overpriced. Noticing this, Diana's Draperies sets up a showroom in the same suburb, reasoning
that with lower prices, they would be able to attract more customers. Diana's Draperies is Plush Parade's
_____.
A. partner
B. distributor
C. competitor
D. processor
E. franchiser
55. An organization that is not presently in a task environment but has the resources to enter if it so chooses
is called a potential:
A. supplier
B. competitor
C. distributor
D. processor
E. consumer

56. The more difficult it is to enter the task environment:

A. the easier it is to keep prices high.
B. the lower is the barrier to entry.
C. the harder it is to obtain customers.
D. the more competitors an organization faces.
E. the less expensive it is to enter the industry.
57. Which of the following statements supports the fact that Toy Track operates in a task environment with a
low barrier to entry?
A. Toy Track has few competitors and faces no challenges from other organizations.
B. Toy Track is able to sell its products easily, even though they are overpriced.
C. The task environment within which Toy Track operates is expensive to enter.
D. The task environment within which Toy Truck operates is easy to enter.
E. Toy Track is unable to obtain customers, even though it has no rivals or competitors.
58. Which of the following statements supports the fact that Candlewick Inc. operates in a task environment
with a high barrier to entry?
A. The task environment within which Candlewick Inc. operates is inexpensive to enter.
B. Candlewick Inc. is able to sell its products easily, even though they are overpriced.
C. Candlewick Inc. has many competitors and faces challenges from them frequently.
D. The task environment within which Candlewick Inc. operates is easy to enter.
E. Candlewick Inc. is unable to obtain customers, despite the excellent quality of its products.
59. _____ result(s) 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.
A. Brand loyalty
B. Demographic forces
C. Political forces
D. Brand positioning
E. Economies of scale
60. _____ refers to customers' preference for the products of organizations currently in the task environment.
A. Brand recognition
B. Brand positioning
C. Brand loyalty
D. Brand saturation
E. Brand awareness
61. Dolphin's Diner, a famous seafood chain, has opened its newest restaurant in a small town. It soon finds
that the only customers it attracts are tourists, because the locals prefer to go to The Clam Cafan older
but more expensive restaurant. The Clam Caf enjoys significant _____.
A. brand saturation
B. brand emersion
C. brand loyalty
D. brand dilution
E. brand acceleration
62. _____ is the traditional system of relationships established between people and groups in a society.
A. Cultural imperialism
B. Cultural pluralism
C. National culture
D. Social structure
E. Social relativism

63. Which of the following can be defined as the set of values and the norms of behavior which are approved
or sanctioned by a particular society?
A. National culture
B. Social stratification
C. Cultural pluralism
D. Organizational culture
E. Social structure
64. Inflation is an example of a(n) _____ force in an organization's environment.
A. social
B. economic
C. demographic
D. ergonomic
E. legal
65. _____ are outcomes of changes in the skills and equipment managers use to design, produce, or distribute
goods and services.
A. Cultural forces
B. Political forces
C. Demographic forces
D. Technological forces
E. Sociocultural forces
66. Unlike previous generations, salespeople today can work from home offices, communicate with
colleagues in different parts of the world almost instantly, and commute electronically to work. This
flexibility is due to changes in_____.
A. economic forces
B. political forces
C. demographic forces
D. technological forces
E. sociocultural forces
67. Nadine belongs to an egalitarian society, one in which few distinctions are made between individuals and
groups. Her society is low on _____.
A. cultural diversity.
B. gender equality
C. national culture
D. social stratification
E. cultural pluralism
68. Jean is the CEO of Creative Tribune, an advertising firm in Winchester. Many distinctions exist
between the different classes of people in her society. Most of the top managers in her organization, for
example, come from the upper classes.This implies that society in Winchester has a high degree of _____.
A. social stratification
B. gender inequality
C. cultural imperialism
D. cultural pluralism
E. economic equality
69. Greg belongs to a society which makes very few distinctions between people and groups. This is reflected
in his company, Sonata DCM, the managers of which represent several different classes and cultures. The
society to which he belongs is _____.
A. low on cultural diversity
B. low on social stratification
C. high on economic inequality
D. high on race-discrimination
E. low on cultural pluralism

70. Which of the following forces are outcomes of changes in or changing attitudes toward the characteristics
of a population?
A. Demographic
B. Terminal
C. Ethnographic
D. Geopolitical
E. Instrumental
71. A decline in the number of young people joining the workforce and an increase in the number of active
employees who are postponing retirement are examples of _____ forces in the general environment.
A. demographic
B. terminal
C. ethnographic
D. geopolitical
E. Instrumental
72. The outcomes of the changes in the laws and regulations of a society are known as _____.
A. technological forces
B. political forces
C. economic forces
D. demographic forces
E. sociocultural forces
73. Deregulation, privatization, and the removal of legal barriers to trade are examples of changing _____
forces
A. sociocultural
B. political
C. technological
D. ethnographic
E. demographic
74. Which of the following is the result of globalization?
A. Globalization weakens cultural barriers and reduces dissimilarities between nations.
B. Globalization prevents the economic systems of different countries from merging with each other.
C. Globalization decreases the interconnectedness of the world's markets and businesses.
D. Globalization decreases organizational efficiency and effectiveness.
E. Globalization hinders the flow of financial and resource capital between countries.
75. All of the following are principal forms of capital that flow between countries except:
A. human capital.
B. virtual capital.
C. political capital.
D. resource capital.
E. financial capital.
76. _____ capital flows through the processes of overseas investment, credit, lending, and aid.
A. Human
B. Technological
C. Political
D. Resource
E. Financial
77. The Republic of Karibo has been losing capital steadily over the last five years. As a result of this:
A. its rate of unemployment has decreased.
B. the standard of living has fallen.
C. the impact of the recession has lessened.
D. the gap between the rich and poor has narrowed.
E. its economy has stabilized.

78. Which of the following is true of political capital?

A. It is the flow of people around the world through immigration, migration, and emigration.
B. It is the flow of natural resources, parts, and components between companies and countries.
C. It is the flow of information and data across the world through the social media.
D. It is the flow of money capital across world markets through overseas investment, credit, lending, and
aid.
E. It is the flow of power and influence around the world using diplomacy, persuasion, aggression, and
force of arms.
79. Which of the following factors played an important role in speeding up globalization?
A. The imposition of government-enforced import-tariffs that protected the domestic economy
B. The export-restrictions which ensured that the people of a country had access to their own products
C. Declining barriers to trade and investment that eased the flow of capital throughout the world
D. The rejection of the free-trade doctrine which increased global outsourcing
E. The fortification of trade and investment barriers between each country
80. Which of the following contributed to the lowering of barriers caused by distance and cultural
differences?
A. The imposition of government-enforced tariffs on imports
B. The development of communication and transportation technology
C. The rejection of the free-trade doctrine
D. The imposition of government-enforced tariffs on exports
E. The restrictions placed on the flow of capital between nations
81. Which of the following is true of regional trade agreements?
A. They enforce regional restrictions on the cross-border flow of resources and reinforce import-tariffs.
B. They expose companies based in one member country to increased competition from companies in
other member countries.
C. They hinder the spread of globalization by setting up trade barriers between different countries of the
same region.
D. They provide manufacturing organizations with fewer opportunities to reduce costs and provide
managers with fewer threats.
E.They are created to reduce overall tariffs on goods that flow within a country and increase tariffs on
goods that flow between regions.
82. Which of the following is an advantage of the establishment of free-trade agreements?
A. They protect domestic industries and jobs by taxing goods imported from outlying regions.
B. They protect the well-being of people by restricting the flow of goods being exported from
their country.
C. They reduce the impact of globalization by preventing the loss of capital from a country.
D. They provide managers with a threat-free environment to work within.
E. They provide manufacturing organizations with opportunities to reduce production costs.
83. The basic building blocks of national culture are:
A. values and norms.
B. political and legal forces.
C. ethnographic forces.
D. corporate values and organizational culture.
E. the task and general environment.
84. _____ are beliefs about what a society considers to be good, right, desirable, or beautiful.
A. Folkways
B. Values
C. Laws
D. Traditions
E. Mores

85. Which of the following is true of values?

A. Values are static and are impervious to change.
B. Values are abstract concepts invested with emotional significance.
C. Values are universally held beliefs and are identical across all societies.
D. Values are easily changed and the changes are easily accepted.
E. Values play a superficial role in a society's belief system.
86. _____ are unwritten, informal codes of conduct that shape the behavior of people toward one another and
are held important by most members of society.
A. Laws
B. Policies
C. Norms
D. Values
E. Philosophies
87. _____ are norms that are considered to be of central importance to the functioning of society and to social
life, the violation of which brings serious retribution.
A. Mores
B. Folkways
C. Values
D. Ceremonies
E. Superstitions
88. Which of the following is true about mores?
A. They do not bring about serious retribution when violated.
B. They are often enacted into laws.
C. They are identical across all societies.
D. They concern routine social conventions of everyday life.
E. They comprise the body of folklore handed down over generations.
89. Which of the following is true of folkways?
A. They bring about serious retribution when violated.
B. They are the norms upon which fundamental laws are based.
C. They concern the routine social conventions of everyday life.
D. They do not differ between societies.
E. They are central to the functioning of society.
90. Which of the following is an example of a more?
A. Societal taboos which censure murder, theft, and incest
B. Social conventions that dictate the usage of different types of cutlery
C. Customs that govern social interaction between neighbors
D. Traditions that prescribe gender-appropriate clothing in social gatherings
E. Superstitions held important by different members of a society
91. Which of the following is an example of a folkway?
A. Laws in a country which make divorce
permissible
B. Societal taboos that prohibit murder, theft, and
incest
C. Religious doctrines which forbid the consumption of particular types of food
D. Laws which prescribe punishments for different types of offences
E. Societal conventions that concern gender-appropriate clothing

92. According to Hofstede, individualist societies:

A. value societal welfare over that of individual members of society.
B. value personal freedom, personal success, and self-expression.
C. emphasize subordination of the individual to the goals of the group.
D. emphasize conformity to group norms and strong identification with the group.
E. require individuals to put the needs of the group before their own.
93. According to Hofstede, collectivist societies:
A. emphasize self-expression, personal freedom, and individual rights.
B. adhere to the principle that people should be judged by their contribution to the group.
C. discourage individuals from placing societal welfare above their own.
D. encourage the pursuit of individual goals and individual entrepreneurship.
E. adhere to the principle that people should be judged by their individual achievements.
94. Lobo belongs to a society which values the subordination of the individual to the group and discourages
individual expressions of thought. Inequality in the power and well-being of people is believed to be due
to differences in their physical and intellectual capabilities, and heritage. According to Hofstede's model
of national culture, his society is:
A. high on power distance and low on individualism.
B. low on power distance and low on collectivism.
C. high on individualism and low on achievement-orientation.
D. low on collectivism and low on achievement-orientation.
E. low on power distance and low on individualism.
95. Which of the following, according to Hofstede, is characteristic of societies with high power distance?
A. Inequalities between different classes in society are not allowed to develop.
B. The government uses taxation and social welfare programs to reduce inequality.
C. Inequalities in the well-being of individuals are due to their work-achievements.
D. The gap between the rich and poor is very large.
E. Resources are communal and accessible to all members of society.
96. Which of the following, according to Hofstede, is characteristic of societies with low power distance?
A. Large inequalities between different classes in society are allowed to develop.
B. The government uses taxation and social welfare programs to reduce inequality.
C. Inequalities in the well-being of individuals are due to their birth and heritage.
D. Inequalities in the power-system are put down to individuals' physical and mental capabilities.
E. The law reinforces the social and economic inequalities between different classes in society.
97. Clara belongs to a society which values assertiveness, performance, competition, and results. Her society
also encourages freedom of expression and personal success, but makes few provisions for the welfare
of the weak. According to Hofstede's model of national culture, which of the following is true of her
society?
A. Her society has an achievement orientation and is high on individualism.
B. Her society has an achievement orientation and is high on collectivism.
C. Her society has a nurturing orientation and is low on individualism.
D. Her society has a nurturing orientation and is low on performance orientation.
E. Her society has a performance orientation and is high on collectivism.
98. Max belongs to a society which is rigid and skeptical about people whose behaviors or beliefs differ from
the norm. His society also values warm, personal relationships over success and performance. According
to Hofstede's model of national culture, which of the following is true of his society?
A. His society is low on uncertainty avoidance and has an achievement orientation.
B. His society is high on uncertainty avoidance and has a nurturing orientation.
C. His society is low on uncertainty avoidance and has a performance orientation.
D. His society is high on uncertainty avoidance and has an achievement orientation.
E. His society is low on uncertainty avoidance and has a nurturing orientation.

99. Holly belongs to a culture which values the subordination of individuals to the group. The national
culture also values personal stability and living for the present. Which of the following, according to
Hofstede, is true of Holly's culture?
A. It is high on individualism and has a long-term orientation
B. It is low on collectivism and has a long-term orientation.
C. It is high on individualism and has a short-term orientation
D. It is high on collectivism and has a short-term orientation
E. It is low on collectivism and has a short-term orientation.
100.According to Hofstede, which of the following is true of countries with a long-term orientation?
A. They have a high rate of per capita savings.
B. Citizens prioritize happiness over achievement and perseverence.
C. Citizens live for the present and value personal stability.
D. Citizens tend to spend more and save less.
E. Organizations emphasize immediate results over year-end goals.
101.What is the global environment? Briefly explain its impact on managers and their organizations.

102.Briefly describe the task environment. How do forces in the task environment impact managers?

103.In what way can suppliers with a strong bargaining position threaten managers and their organizations?
What threat can an organization pose its suppliers?

104.What are barriers to entry? Describe in brief the three main sources from which barriers to entry
result.

105.Describe the five major forces of the general environment briefly.

106.Define globalization and explain why the global market is becoming more open.

107.Discuss the four principal forms of capital that flow between countries.

108.Define tariffs and discuss the consequences of both increasing and removing import-tariffs.

109.Briefly discuss the factors that led to the decline of distance and cultural barriers and the impact this had
upon companies operating in the global environment.

110.Describe the basic building blocks of national culture briefly.

111.List the five dimensions upon which Hofstede placed national culture. Discuss the necessity for managers
who work with different national cultures to acknowledge these dimensions.

112.Describe the dimensions of uncertainty avoidance and power distance developed by Hofstede.

ch06 Key
1. TRUE
2. TRUE
3. TRUE
4. FALSE
5. FALSE
6. TRUE
7. TRUE
8. FALSE
9. TRUE
10. TRUE
11. FALSE
12. FALSE
13. TRUE
14. FALSE
15. TRUE
16. FALSE
17. FALSE
18. FALSE
19. TRUE
20. TRUE
21. TRUE
22. TRUE
23. TRUE
24. FALSE
25. FALSE
26. FALSE
27. FALSE
28. TRUE
29. FALSE
30. FALSE
31. FALSE
32. FALSE
33. FALSE
34. FALSE
35. FALSE
36. (p. 201) TRUE

37. TRUE
38. FALSE
39. TRUE
40. FALSE
41. A
42. E
43. C
44. C
45. B
46. A
47. D
48. C
49. E
50. C
51. C
52. A
53. A
54. C
55. B
56. A
57. D
58. B
59. E
60. C
61. C
62. D
63. A
64. B
65. D
66. D
67. D
68. A
69. B
70. A
71. A
72. B
73. B
74. A

75. B
76. E
77. B
78. E
79. C
80. B
81. B
82. E
83. A
84. B
85. B
86. C
87. A
88. B
89. C
90. A
91. E
92. B
93. B
94. A
95. D
96. B
97. A
98. B
99. D
100. A
101. The global environment is a set of forces and conditions in the world outside an organization's boundary that affect how it operates and shape
its behavior. These forces change over time and thus present managers with opportunities and threats. Some changes in the global environment,
such as the development of efficient new production technology, the availability of lower-cost components, or the opening of new global markets,
create opportunities for managers to make and sell more products, obtain more resources and capital, and thereby strengthen their organization.
In contrast, the rise of new global competitors, a global economic recession, or an oil shortage poses threats that can devastate an organization
if managers are unable to sell its products so that revenues and profits plunge. The quality of managers' understanding of forces in the global
environment and their ability to respond appropriately to those forces are critical factors affecting organizational performance.
102. The task environment is the set of forces and conditions that originate with global suppliers, distributors, customers, and competitors; these
forces and conditions affect an organizations ability to obtain inputs and dispose of its outputs. The task environment contains the forces that have
the most immediate and direct effect on managers because they pressure and influence managers daily. Forces in the task environment result from
the actions of suppliers, distributors, customers, and competitors both at home and abroad. These four groups affect a managers ability to obtain
resources and dispose of outputs daily, weekly, and monthly and thus have a significant impact on short-term decision making.
103. A major supplier-related threat that confronts managers arises when suppliers' bargaining position is so strong that they can raise the prices of
the inputs they supply to the organization. A supplier's bargaining position is especially strong when (1) the supplier is the sole source of an input
and (2) the input is vital to the organization. In contrast, when an organization has many suppliers for a particular input, it is in a relatively strong
bargaining position with those suppliers and can demand low-cost, high-quality inputs from them. Often an organization can use its power with
suppliers to force them to reduce their prices.

104. Barriers to entry are factors that make it difficult and costly for a company to enter a particular task environment or industry. Barriers to
entry result from three main sources: economies of scale, brand loyalty, and government regulations that impede entry. Economies of scale are
the cost advantages associated with large operations. Brand loyalty is customers preference for the products of organizations currently in the task
environment. Government regulations function as a barrier to entry at both the industry and the country levels when they deregulate industries or
impose import-tariffs upon goods.
v) Political forces are outcomes of changes in laws and regulations.
iv) Demographic forces are outcomes of changes in, or changing attitudes toward, the characteristics of a population, such as age, gender, ethnic
origin, race, sexual orientation, and social class.
iii) Sociocultural forces are pressures emanating from the social structure of a country or society or from the national culture.
ii) Technology is the combination of tools, machines, computers, skills, information, and knowledge that managers use to design, produce, and
distribute goods and services; technological forces are outcomes of changes in that technology.
i) Economic forces are the interest rates, inflation, unemployment, economic growth, and other factors that affect the general health and well-being
of a nation or the regional economy of an organization.
105. The five major forces in the general environment are economic, technological, sociocultural, demographic, and political and legal forces.:

106. The most important reason why the global environment has become more open and competitive is the increase in 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. As a result of falling trade barriers, managers view the global environment as openthat is, as an environment in
which companies are free to buy goods and services from, and sell goods and services to, whichever companies and countries they choose. They
also are free to compete against each other to attract customers around the world. All large companies must establish an international network of
operations and subsidiaries to build global competitive advantage.
iv) Political capital: the flow of power and influence around the world using diplomacy, persuasion, aggression, and force of arms to protect the
right or access of a country, world region, or political bloc to the other forms of capital.
iii) Resource capital: the flow of natural resources, parts, and components between companies and countries, such as metals, minerals, lumber,
energy, food products, microprocessors, and auto parts.
ii) Financial capital: the flow of money capital across world markets through overseas investment, credit, lending, and aid.
107. i) Human capital: the flow of people around the world through immigration, migration, and emigration.

108. A tariff is a tax that a government imposes on goods imported into one country from another. The aim of increasing import tariffs is to protect
domestic industries and jobs. 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. 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. 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.
109. Historically, barriers of distance and culture closed the global environment and kept managers focused on their domestic market. A
continuing stream of advances in communications and transportation technology worked to reduce the barriers of distance and culture that affected
global organizations. The lowering of barriers to trade and investment and the decline of distance and culture barriers has created enormous
opportunities for companies to expand the market for their goods and services through exports and investments in overseas countries. The shift
toward a more open global economy has created not only more opportunities to sell goods and services in markets abroad but also the opportunity
to buy more from other countries.
110. The basic building blocks of national culture are values and norms. Values are beliefs about what a society considers to be good, right,
desirable, or beautifulor their opposites. They provide the basic underpinnings for notions of individual freedom, democracy, truth, justice,
honesty, loyalty, social obligation, collective responsibility, the appropriate roles for men and women, love, sex, marriage, and so on. Values are
more than merely abstract concepts; they are invested with considerable emotional significance. People argue, fight, and even die over values such
as freedom or dignity. Although deeply embedded in society, values are not static and change over time; but change is often the result of a slow
and painful process. Norms are unwritten, informal codes of conduct that prescribe appropriate behavior in particular situations and are considered
important by most members of a group or organization. They shape the behavior of people toward one another.
111. The five dimensions include individualism versus collectivism, power distance, achievement versus nurturing orientation, uncertainty
avoidance, and long-term versus short-term orientation. Differences among national cultures have important implications for managers. Due
to cultural differences, management practices that are effective in one country might be troublesome in another. Often management practices must
be tailored to suit the cultural contexts within which an organization operates. Managers doing business with individuals from another country
must be sensitive to the value systems and norms of that country and behave accordingly.

112. Uncertainty avoidance is the degree to which societies are willing to tolerate uncertainty and risk. Societies low on uncertainty avoidance are
easygoing, value diversity, and tolerate differences in personal beliefs and actions while societies high on uncertainty avoidance are more rigid
and skeptical about people whose behaviors or beliefs differ from the norm. Power distance is 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.
Societies in which inequalities are allowed to persist or grow over time have high power distance. In societies with low power distance, large
inequalities between citizens are not allowed to develop with the help of government-run welfare programs.

ch06 Summary
Category
# of Questions
AACSB: Analytic
76
AACSB: Diversity
36
Blooms: Apply
6
Blooms: Remember
53
Blooms: Understand
53
Difficulty: 1 Easy
38
Difficulty: 2 Medium
68
Difficulty: 3 Hard
6
Jones - Chapter 06
112
Learning Objective: 062
01 Explain why the ability to perceive, interpret, and respond appropriately to the global environment is crucial for managerial suc
cess.
Learning Objective: 06-02 Differentiate between the global task and global general environments.
8
Learning Objective: 0648
03 Identify the main forces in the global task and general environments, and describe the challenges that each force presents to ma
nagers.
Learning Objective: 0622
04 Explain why the global environment is becoming more open and competitive, and identify the forces behind the process of glob
alization that increase the opportunities, complexities, challenges, and threats managers face.
Learning Objective: 0632
05 Discuss why national cultures differ and why it is important that managers be sensitive to the effects of falling trade barriers and
regional trade associations on the political and social systems of nations around the world.
Topic: Overview
2
Topic: The Changing Global Environment
22
Topic: The General Environment
20
Topic: The Role of National Culture
32
Topic: The Task Environment
28
Topic: What Is the Global Environment?
8