Management challenge: social obligations

Managers in the 21st century are being challenged to operate in an increasingly complex, interdependent and dynamic global environment. Those involved in global business have to adjust their strategies and management styles to those regions of the world in which they want to operate, whether directly or through some form of alliance.

Typical challenges that managers must face involve politics, culture, global competition, terrorism and technology. In addition, the opportunities and risks of the global marketplace increasingly bring with them social and moral obligations associated with operations in a global community.

One such responsibility is to provide opportunities for people from developing economies to share the benefits of internationalization. One example of doing so is through immigration. Leading business bodies, such as the Business Council of Australia and the Australian Industries Group, have issued public calls for a higher immigration intake.

White cited the example of Rod Eddington, who lived in Asia for years as manager of Cathay Pacific, and served as CEO of British Airways between 2000 and 2005. Eddington sees Asian migrants and their descendants 'helping to build the cultural (and economic) bridges with Asia that Australia so desperately needs', if she is 'truly to capture the benefits of Asia's economic growth (although he also sees no reason why Australians of non-Asian background cannot also be accepted in Asia if they make the effort). Leigh Clifford, CEO of resources giant Rio Tinto, also stresses the need for a more vigorous migration program.'

Managers are being challenged to operate in an increasingly complex, interdependent and dynamic global environment. They need to adapt their strategies and styles to suit the particular situations and conditions under which they operate, directly or through some form of alliance. An extreme example is the threat of terrorism, as illustrated in the opening profile. Less critical challenges are from political and cultural differences, and the use, transfer and protection of technology.

Other social issues

It should never be forgotten that the opportunities and risks of the global marketplace increasingly involve social obligations. For example, international drug manufacturers, like all public companies, need to protect shareholder interests and this includes defense of patent rights. However, an extreme stance on such rights should be modified for humanitarian reasons in the face of serious health needs in developing countries. If not, national governments may take matters into their own hands.

In 2005 the Taiwanese government responded to bird flu fears by starting work on its own version of the anti-viral drug, Tamiflu, patented by Swiss pharmaceutical giant Roche. Officials said they could make their version of the drug more quickly – and at a lower cost. The government hopes eventually to get permission from Roche to copy their drug.

Bird flu killed at least 60 people in Asia between December 2003 and October 2005, and scientists fear the lethal H5N1 strain of the virus could combine with human flu or mutate into a form that is easily transmissible between humans, triggering a flu pandemic. Several other countries have asked Roche for the right to make generic copies of Tamiflu, with agreements not to market the drug commercially.

To compete successfully in the international arena, firms must make considerable investments overseas – not only capital investment but also investment in well-trained managers with the skills to handle dynamic and fast-changing factors, including the variable of culture that affects every facet of daily management. Moreover, technological software and the Internet have altered the dynamics of competition and operations.

Global management, then, is the process of developing strategies, designing and operating systems, and working with people around the world to ensure sustained competitive advantage and social responsibility. These management functions are shaped in part by the prevailing conditions and ongoing developments in the world.