The Global Environment: Definition & Importance

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  • 0:03 What Is the Global…
  • 1:17 The Task Environment
  • 3:11 The General Environment
  • 5:43 Lesson Summary
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Lesson Transcript
Instructor: Allison Tanner
The global environment can have a major impact on how a company operates. This lesson defines the global business environment and describes the risks and benefits of operating within the global environment.

What Is the Global Environment?

Imagine that you are in charge of managing an internationally famous chocolate factory, Choco Talk. The ability of Choco Talk to import essential production items, make sweets, and sell to local and international buyers is dependent on the global environment, which consists of the international interactions out of a company's control that influence how a business operates. For example, the global environment includes trade laws that can influence Choco Talk's ability to import necessary ingredients, like coco from various countries.

Engaging in the global environment can be highly beneficial for a company, and it can also be extremely risky. Because changes that occur in the global environment can both assist and hinder a business's ability to operate, Choco Talk and all other companies must be prepared for these changes and willing to alter their approach in response.

The risks and benefits associated with the global environment can best be understood by breaking it down into two interconnected environments: the task environment and the general environment. Each aspect of the global environment presents Choco Talk with unique challenges that can influence its daily operations.

The Task Environment

Imagine that Choco Talk is trying to buy sugar, but the global supplier has undergone a management change and no longer wants to honor the previously agreed upon price. This interaction is occurring within the task environment, which includes Choco Talk's ability to obtain the items necessary to manufacture its products and its ability to deliver or export its goods. A task environment is the specific environment in which a company operates that affects how that company completes specific tasks essential to buying, selling, and delivering their products and services.

Your task environment is made up of suppliers, customers, distributors, and competitors:

  • A supplier is someone that provides Choco Talk with ingredients or packaging essential to making their treats. Suppliers affect Choco Talk's ability to obtain products necessary for manufacturing their chocolate.

  • Customers are the companies or persons who buy Choco Talk's products and can influence the sale and production of chocolate. Because what Americans like in their chocolate may be different than what Brazilians like, it is important for a company like Choco Talk to be aware of their customers' needs and interests.

  • Distributors are in charge of delivering Choco Talk's products to their customers, and thus influence Choco Talk's ability to get their goods out. Because a distributor is essential to getting the products where they need to be, changes to a distributor's business and differences between global distribution laws and processes may affect how Choco Talk operates.

  • Competitors are other companies selling products similar to Choco Talk who are interested in the same customers. More competitors can affect how much product Choco Talk sells. In the global environment, Choco Talk needs to be aware of both their local and international competitors.

As a whole, the task environment can greatly influence the success of a business.

The General Environment

The term general environment refers to the overarching environment in which a company operates. This concept includes a broad range of factors that can influence a business, including geographic location, politics, technology, culture, and the economic status of the global environment. The impacts of the general environment have a direct effect on the task environment. This means that the general environment greatly influences how a company operates.

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