Organizations Changing Environment

The environment of all organization is changing at unprecedented rate. The growth of micro- financing
and rise of social entrepreneurship represent only two perspectives on environmental change. Indeed,
in some industries, such as consumer electronics, popular entertainment, and information technology,
the speed and magnitude of change are truly breathtaking. Even industries characterized by what have
been staid and predictable environments, such as traditional retailing and heavy manufacturing, also
face sweeping environmental changes today.

The most significant source of change impacting many organizations today is the increasing globalization
of organizations and management. In 2010, the volume of international trade in current dollars was
every fifty times greater than the amount in 1960.

Improved Communication and Transportation Facilities Larger potential Market Lower Costs of
Production and Distribution Response to International Activity of Compositions Domestic Business
International Business Fig. Forces that have Increased International Business Movement along the
continuum from domestic to international business is due to four forces. Businesses subject to these
forces are becoming more international

Communication and transportation have advanced dramatically over the past several decades.
Telephone service has improved, communication networks span the globe and can interact via satellite,
and once-remote areas have become routinely accessible. Telephone service in some developing
countries is now almost entirely by cellular phone technology rather than land-based wired telephone
service. Fax machines and electronic mail allow managers to send documents around the world in
seconds as opposed to the days it took just a few years ago. Text messaging and Skype have made global
communication even easier.

Business have expanded internationally to increase their markets. Companies in smaller counties, such
as Nestle in Switzerland and Henineken in the Netherlands, recognized long ago that their domestic
markets were too small to sustain much growth and therefore moved into the international arena. Most
mid-size and even many small firms routinely buy and/or sell products and services in other countries.

More and more firms are moving into international markets to control costs, especially to reduce labor
costs. Plans to cut costs in this way do not always work out as planned, but many firms are successfully
using inexpensive labor in Asia and Mexico.

Many organizations have become international in response to competition. If an organization starts

gaining strength in international markets, its competitors often must follow suit to avoid falling too far
behind in sales and profitability.