In coflclusion, a skillful global manager cannot develop a suitable strategic plan or consider an investment abroad without first assessing the environment-political, legal, regulatory, and technological-in which the company will operate. This assessment should result not so much in a comparison of countries as in a comparison of (1. the relative risk and (2. the projected return on investments among these countries. Similarly, for ongoing operations, the subsidiary manager and headquarters management both must continually monitor the environment for potentially unsettling events or undesirable changes that may require the redirection of certain subsidiaries or the entire company. Some of the critical factors affecting the global manager's environment (and therefore requiring monitoring) are listed in Exhibit 1-6.
Environmental risk has become the new frontier in global business. The skills of companies and the measures taken to really manage their exposure to environmental risk on a world scale will soon largely replace their ability to develop, produce, and market global brands as the key element in global competitive advantage.
As we shall see, the managerial functions and the daily operations of a firm en are also affected by a subtle, but powerful, environmental factor in the host country-that of culture. The pervasive role of culture in international management will be discussed fully in Part 2.
In the next chapter we will assess some more subtle, but critical, factors in the global environment: social responsibility and ethical behavior. We will consider such questions as: What is the role of the firm in the future of other societies and their people? What stakeholders do managers need to consider in their strategic and operational decisions in other countries? How do the expectations of firm behavior vary around the world and should those expectations influence the inter- national manager's decisions? What role does long-term global economic interdependence play in the firm's actions in other countries?
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