Openness is one of the most important qualities of a managerial philosophy that fosters internationalization of a business's activities. The diversity and complexity of the international business environment require that a company's managers look upon the organization as an open, organic system that is in continuous communication with its external environment. It is the exchange of information with the external environment that guarantees the survival and prosperity of the organization. Thus, it follows that successful international managers use a systems approach.
Developing a systems viewpoint of an organization is primarily a matter of adopting a new philosophy of the world, of management's role within the organization, and of the organization's role in the world. The manager's philosophy advocated here is, of course, systems thinking. 1
As Figure 2.3 illustrates, there are three main inputs to any organization: people, money, and physical resources. These three inputs are processed in accordance with certain economic principles (such as the least-cost combination). The results of this processing are three outputs: products, waste, and pollution. Input, processing, and output are coordinated by management through such functions as goal setting, decision making, and controlling. Management, in carrying out this combination of input, processing, and output functions, receives input from the external environment regarding scientific and technological development, governmental policies, and public attitudes.
The dotted line around the system in Figure 2.3 represents its boundary. The boundary separates the system from its external environment. The environment represents the totality of factors that have a marked impact on the organization's function but that are beyond its immediate control.
In order to survive, the open system depicted in the figure must maintain an internal order that is in tune with the order exhibited by the external environment. Not only must the management of the system have a very good knowledge of the internal workings of the organization; more importantly, it must learn as much as possible about the characteristics of the external environment. It thus appears that the ultimate task of management is to secure a harmony between the organizational objectives and the external environment's capacities.
The implications for management of these demands for environmental and internal congruence are twofold. First, since the environment is multifaceted and changes continuously, the firm's management must remain intimately acquainted with it, consider as large a portion of it as possible, and make neither a conceptual nor an operational distinction between the home/domestic base and the foreign/international environment. Thus, management's thinking and acting must be truly global. Second, since the parts of the environment will at any given moment be at different levels of economic development, the company's management must always keep all alternative modes of entry alive. A company must be ready to switch, for example, from exports to direct foreign investment if the host country moves up the industrial development process. Thus, the company's management must be well-informed, interested observers of both a country's intentions/interests and the global competition's intentions/interests.
Indeed, the purpose of strategic management is to guarantee the long-term survival and prosperity of the enterprise by managing the relationship between the company and its external environment. Managers must have a clear vision of the domain and a clear strategy for penetrating it profitably. Thus, strategic management may be defined as the process of anticipating the future consequences of present decisions on the relationship between the company and its external environment.
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