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How is environmental constraint affecting strategy?

An important factor affecting  strategy  is  the environment  in which  the organization oprates. An environmental constraint is any limitation on strategy brought about by external differences in culture, competitive market structures, fiscal policy (such as taxation structures), laws, or political situations. Because an organization’s management cannot directly control environmental constraints, these factors tend to be long-run rather  than short-run.
 
Wal-Mart provides an excellent example of the influence of environmental constraints on organizational  strategy. Wal-Mart  first entered Europe  in 1997 by purchasing a chain of German retail stores. Germany, unfortunately, is known for high labor costs, surly employees, and a variety of arcane restrictions about zoning, pricing, and operating hours. Wal-Mart had  to discontinue  its “Ten-Foot Rule” requiring employees  to  speak  to  customers within  ten  feet of  them  and encouraging employees to be customer friendly. 

Some stores do not bag purchases because the practice is unheard of in Germany. But the company cannot refund customers the price difference on an item sold elsewhere for less because it is illegal in Germany. Nor can the associates receive Wal-Mart stock options because they are difficult and expensive to grant under German law.
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