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The internal and external environments Essay

“With the entire world as a market and national borders becoming increasingly meaningless, the potential for organizations to grow and expand is almost unlimited” (Robbins, 2003, p. 101), and business is increasingly international due to increasing sales and accessing resources(Wild, 1999). In such circumstance, organizations must learn how to survive and prosper in a global environment that is highly dynamic and unstable. Managers in this setting not only deal with a set of social , economic, legal and political factors in the home nation, but with entirely different set of these in each country of operation.

International management involves balancing a firm’s internal environment forces which is a system of shared meaning and beliefs within an organization that determines employees act with external environmental forces which is outside institutions or forces that potentially affect an organization’s performance (Baird, Post, Mahon, 1990). The internal environment such as human resource policies, organizational culture, and production methods affects the manager’s ability to achieve certain outcomes. However, it is not only the organizational culture that plays a significant role (Robbins, 2003). It interacts with the external environment such as social culture, technology, economic to affect the organization’s performance in the global environment. The focus on this essay is on the interaction between some of the factors in internal and external environment in the global environment and its impact on organizations and managers.

All organizations, even monopolies, have one or more competitors. In the global environment, the competitors which are one factor of the specific environment are even more and stronger. Managers cannot ignore the competition. They must monitor and prepare to respond, such as change the price, services, and develop new products (Robbins, 2003). Mercedes-Benz always is thought as serious, not youthful and extremely expensive in the U.S. market at the beginning. Research among American dealers also revealed that consumers felt so intimidated by Mercedes that they wouldn’t sit in the cars at the showroom. When Japanese carmakers entered the U.S. market in the 1980s, they reproduced their car-building philosophies, cultures, production practices and management styles in the United States.

But Mercedes started with the proverbial blank sheet of paper. In order to appeal to U.S. market,¬†Mercedes enters the M-Class, a sports utility vehicle (SUV) with a base price of $35000 and luxury lineage. At the same time, Mercedes abandon the rigid hierarchy of the typical Mercedes production line and create a more egalitarian shop floor in order to motivate workers. Thus administrative offices in the Vance plant run through the middle of the manufacturing area, and while it’s all glassed in, team members still have easy access to administrators.

The plant is also designed so workers can unilaterally stop the assembly line to correct manufacturing problems. So far, the system has been a catalyst to communication among the Alabama plant’s 1500 U.S. workers, German trainers, and diverse management team that includes executive form both Detroit and Japan. Even so, Mercedes has spent an enormous amount of time and effort to train its U.S. workforce. So far the Mercedes’ M-class is competing very well against the entrenched competition (Wild, 1999). This case describes how the competitors and the organizational internal culture interact to shape the managers decision in the global business environment.

In terms of the general environment which is one components of the external environment, the most rapid changes during the past quarter-century have occurred in technology (Robbins, 2003). Especially in the increasing globalization, the technology represents a key advantage and challenges to the organization. MTV, the channel beams its irreverent and brash mix of music, news, and entertainment to 281 million homes in over 64 countries, including Brazil, Singapore, India, and 36 countries in Europe. In 1987, MTV commanded an audience of 61 million in the United States. The company wanted to take the music revolution global by starting MTV Europe and MTV Australia. At first, it took a pan-European approach, marketing the same product to all European countries. The European network was a huge overnight success. Through its experiences in Europe, MTV refined its mix of programming to become a global national brand with local variations.

They had spent almost two decades building a global brand identity, MTV executives initially rejected that idea. Little by little, however, they changed their collective mind. They decided to move forward because a certain technological innovation made it possible for MTV to think globally and act locally at very little cost. The breakthrough was digital¬†compression technology, which allows suppliers to multiply the number of services offered on a single satellite feed. “Where there were three or four services,” explained one MTV official, “now we can broadcast six or eight.”(Hund, 1996).

MTV Europe, currently reaching 77 million homes, has adopted a European strategy; it offers local version of its satellite and cable TV network programming to compete in individual European countries. These more-focused offerings have gradually been replacing MTV Europe’s wider regional programming, and versions for the Netherlands, Spain, and Eastern European countries are now being considered. Today, not only teens in Europe but teens all over the world have their MTV cake and eat it, too (Wild, 1999). This is the typical example which represents how technology interacts with the organization internal innovation in the international economic.

Sociocultural which is the one of general environment also impact the manager’s actions. “Managers must adapt their practices to the changing expectations of the society in which they operate” (Robbins, 2003). April 1992, Disney’s new $4 billion theme park-Euro Disneyland opened at twenty miles east of Paris. Disney executives are banking on a love affair between Mickey and company and the Europeans as the principal engine of Disney’s growth in the 1990s. It is hoped that 11 million Europeans a year will rub elbows in a happy melting pot at the park. But a number of conflicts and a lower-than-expected attendance in the early months had Disney’s bosses worried. Glitzy American -style theme parks may not be Europe’s cup of tea. No one really expects the king of theme parks to flop in Europe.

Two million Europeans flock to Disney’s American parks every year. But for reasons ranging form culture backlash to France’s chilly winter weather, the reception has indeed been cool for the U.S. company. Europeans visit Disneyworld in Florida as part of an “American experience.” Many observers doubt, however, that they will seek Americana as eagerly in the Paris suburbs. Then there was the challenge of hiring and training 16000 “cast members,” representing 86 nationalities and 34 languages. About half of the cast members were French, and the dress code imposed by Disney was regarded as an assault on French and European social standards. The attempt to maintain the standardized, all-American Disney look-no long hair, no long¬†fingernails, very limited makeup, no jewelry. In addition to specific job training, Disney University, a feature of all company parks, gave the standard day-and-a half course in Disney culture. Now, Disneyworld is very successful in Paris (Deresky, 1994).

International trade has undergone explosive growth recently(Baird, Post, Mahon, 1990). The ACC survey indicates that since 1997, on average, non-US sales for US-based companies have risen slightly, from the 10 to 20 percent range to the 20 to 30 percent range. Products manufactured outside the US have increased in a similar manner (Talkington, 2001, p. 34). The internal and external environments interact to affect managers and organizations. It is important for the manager to be aware of the diversities and more flexible that they have been in the past. The economic globalization is the inevitable trend in coming years, the managers have to consider both the internal environment and external environment in order to be successful in such global environment.


l Baird, Lloyd S., Post, James E., and Mahon, John F.(1990). Management: Functions and Responsibilities. New York. Harper&Row.

l Deresky, Helen(1994). International Management: Managing Across Borders and Cultures. New York. HarperCollins College Publishers.

l Hund, Peter, “High Tech helps MTV evolve”, World Trade, June 1996. P:10.

l Robbins, Stephen P., Bergman, Rolf, Stagg, Ian and Coulter Mary(2003). Management. Australia.

l Talkington, Andy, “Global leadership: What chemical industry CEOs think about managing the global enterprise”, Chemical Market Reporter, July 2001.P:34.

l Wild, John J., Wild, Kenneth L. and Han, Jerry C.Y.(2000). International
Business: An integrated approach. United State.

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