international business management meaning and other topics

7/29/2019 international business management meaning and other topics

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International business environment -- Meaning

International

Integration and interrelation of different nations.

Business

Systematic effort of an organization to meet the needs of customers

with goods and services for profit.Environment

Environment is surroundings which we live in, the external forces

acting upon the business is business environment.

International business environment is the business operations indifferent countries with different external forces acting upon them.

Environment is further classified as domestic environment,

foreign environment, and international environment


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Nature of International Business Environment

The business operations performed without any barriers, with the

implementation of L.P.G (Liberalization, Privatization,Globalization) there is boom in the global business and the trade

barriers have been liberalized.

This has given rise to:--

Attracted F.D.I Foreign direct investment Encouraged flexible import and export policies

Import of jobs in the field of I.T enabled services (B.P.O)

Increase in foreign currency reserves

Improved standard of living

Increase in purchasing power

Improved quality of goods and services


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Economic Environment A company considers where in the world to build factories and sells

products, it must analyze the countries in which it may do business.

Country analysis requires, understanding national goals, priorities,

and policies.

It also involves understanding economic performance, as indicated

by economic growth, inflation, and budget and trade deficits.

Economic Systems are classified as capitalist, socialist, or mixed. No

country is purely market or purely command.

The economy moves to more balance, between market and

command or between public and private ownership, it is considered

mixed. Type of property ownership , Method of resource allocation and

control


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Market Economy (or) capitalism:

The individual and the company play important roles.

The market mechanism involves an interaction of price, quantity,

supply and demand for resources and products. The key factors that make the market economy work:

- consumer sovereignty

- freedom of the enterprise to operate in the market

-Freedom from government restrictions, and legal andInstitutions frameworks to safeguard economic freedoms.

Centrally Planned Economy or command or socialism:

The government coordinates the activities of the different

economic sectors. Goals are set for every enterprise in the country.

The government determines how much is produced, by whom,and for whom.


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Mixed Economy

Partly Free, Mostly Not Free

Largely followed in France, India, Italy, Sweden, mixed economies

admit existence of private sector along with government

ownership.

Government intervention can be classified in two ways:

- Government ownership of the means of production.

- Government influence in decision making.

Economic Trade Policies (Protectionism)

Protectionism refers to policies or doctrines which "protect"

businesses and living wages by restricting or regulating tradebetween foreign nations.

Subsidies - To protect existing businesses from risk associated

with change,such as costs of labour, materials, etc.


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Tariffs - to increase the price of a foreign competitor's goods.

( Including restrictive quotas, and anti-dumping measures.) on

par or higher than domestic prices.

Quotas - to prevent dumping of cheaper foreign goods thatwould overwhelm the market.

Tax cuts-Alleviation of the burdens of social and business costs.

Traditional Protectionism

In its historic sense, protectionism is the economic policy of

relying on revenue tariffs for government funding in order to

reduce or eliminate taxation on domestic industries and labour

(e.g., corporate and personal income taxes).

In protectionist theory, emphasis is placed on reducing taxationon domestic labour and savings at a cost of higher tariffs on

foreign products.


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Income wise classification of countries GNI ( gross national income)

LIC-Low income countries- GNI $735 or less LMCLower middle income countries-GNI $ 736-$ 2995

UMC- Upper middle income GNI $2996-$9265

High income countries GNI $9266 or more

LIC, LMC, and UMC are developing countries. Rest aredeveloped countries


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Characteristics of Low income countries:--

Limited industrialization and excessive dependency of population

on agriculture.

High birth rates

Low literacy rates

Heavy reliance on foreign aid

Political instability and unrest Excessive unemployment

Technological backwardness

Excessive dependency on imports


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Lower Middle income countries:--

Early stages of industrialization

Expansion of consumer market

Availability of cheap HRs

Domestic market are dominated with products like clothing,

batteries, tires, building materials, etc.

Location for production of standardized products like clothing forexports.

Have competitive advantage in mature and labour intensive

products.


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Upper Middle Income Countries:--

Less Dependence on Agriculture

Occupational mobility of the people from agriculture to industry.

People move from rural to urban area which results in increasedurbanization

Increase in literacy, formal education and increased wage rates.

Low wage costs compared to advanced countries.

High exports and rapid economic development


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High income countries characteristics:--

Oil reach countries are excluded in this category

Service sectors contributes more than 50% to GNP Development of information sector.

Domination of scientists and professions over engineers and

semi skilled works.

Emphasis on future plan. Japans work culture.


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Business and economy Development:--

Business identifies peoples need and satisfy them by producing

products.

Developing countries increasing production and productivity to

meet the growing needs of population.

International business contributes to economic development.

Macro economic factors affecting business

Economic growth

Inflation

Balance of payment

Economic transition Opportunities to MNCs

Liberalization and globalization helped MNCs.

Transition (change, conversion) process

Economic Vs Social issues in transition


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CULTURAL ENVIRONMENT

What is culture

Culture is the thought and behavior patterns that member of asociety earns through language and other forms of symbolic

interaction- their customs, habits, beliefs and values, the common

view points which bind them together as a social entity.

Cultural factors in various countries affect the international business. Social and cultural factors include

Attitude of people to work

Attitude to wealth

Family

Marriage Religion

Education

Ethics

Human relation

Social responsibilities


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Characteristics of culture:

Derived mostly from the climatic conditions of the geographical

region and economic condition of the country

A set of traditional values and beliefs which are transmitted and

shared in a given society

Total way of thinking patterns that are passed from generation to

generation.

Prescriptive :- (narrow, rigid) Kind of behavior acceptable inthe society.

Consumption of alcohol in the west, it is not socially acceptable inIndia and it is socially and legally unacceptable in Saudi Arabia

Learned :- Culture is acquired through learning. Subjective :- People of different culture have different ideas about

same object.

Cumulative :- Culture of saving for the next year

Dynamic :- It goes on changing.


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Culture attitude and IB

Depressing (discouraging, sad) habits, living styles and otherconsumption patterns, priority of needs are influenced by culture.

Eating habits.

Malaysia dosa and Hyderabad briyani - popular in USA.

PizzaPopular in India.

Dressing habits.

The international businessmen should eliminate the social ,religionand cultural affects in order understand the foreign culture as theyhave to carry on business under existing culture.

Cross cultural communication process and negotiation:-

USA, Canada, Germany and Switzerland - Messages are clear and

explicit.- Low context culture. India, Japan, Saudi Arabia- convey messages indirectly and

expressive manner.- high context culture

Cultures which handle information in a direct and linear fashion-

Monochromic. Eg Americans


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People work on several forms simultaneously instead of pursuing a

single task. -- Polychromic culture. Eg Japanese and Indians

Cultural Universals

:-

Cultural universals enable the businessmen to market the products

in many countries with minor modification.

Communication through Languages

Language is the basic medium of communication The same words in the same language may mean different things

in the different.

Safe rules in international communication are

Over punctuate, when you are in doubt

Keep ideas separate make only on point clear

Confirm discussion in writing


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SOCIAL ENVIRONMENT

Social environment Consists of religious aspects, language,

customs, traditions, beliefs, and preferences, social institutions,living habits, eating, depressing habits.

Religion:- Religion is one of the important social institution influencing

business. Family system( women) Islamic countries -- play less significant

role in the economy and also family limited right.

Behavioral factors affecting business Cultural differences in various countries result in variation in

human behavior. Human behavior that affects business includes employee behavior,

consumer behavior and behavior with other stake holders.

Business should consider the behavioral patterns of social group.


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Behavior based on group membership

USA reward the peoplePerformance

Malaysia reward the people- ethnic ( national, tribal) group inaddition to performance

Motivation And Achievement

Hard work

Materialistic needs and salvation (recovery, escape)


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Hofstedes Dimensions of Culture Geert Hofstedes cultural typology is the most often used.

It is based upon a study of 100,000 IBM employees who work in

IBM divisions throughout the world.

Hofstedes survey revealed four underlying dimensions of culture:

Power Distance

Uncertainty Avoidance

Individualism/Collectivism

Masculinity/Femininity


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Power Distance (PD)

Power Distance is the extent to which hierarchical differences are

accepted in society and articulated (spoken, expressed) in term ofdeference to higher and lower social and decision levels in

organization.

artifact (work of art) of high PD:

Centralization

Organization Levels- Height

Supervisors

Wage Differentials

Values, White and Blue Collar Work


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Uncertainty Avoidance (UA)

Uncertainty Avoidance is the extent to which uncertainty and

ambiguity are tolerated. Artifacts (work of art) of high UA:

Standardization

Structured activities

Written rules

Specialists

No risk tolerance


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Individualism/Collectivism (I/C)

I/C is the extent to which the self or the group constitute the

center point of identification for the individual.

Individual self interest is pursued individually, or as a part of a

group.

Artifacts (work of art) of I/C

Firm as family

Useful decision making

Group performance


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Masculinity-Femininity (M/F)

1. Refers to the extent to which traditional masculine values,

like aggressiveness (forcefulness ) and assertiveness,

(boldness) are valued.

Artifacts (work of art) of M/F

More Women In Jobs

Interpersonal Skills Rewarded

Inmate (patient) Skills Rewarded feminine

Social Rewards Valued


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Political Environment

Political Environment refers to the influence of the system ofgovernment and judiciary.

The system of government in a nation has conceivable(possible, feasible) effect on business.

The type of and structure govt prevailing in a country,decides, promotes, encourages, shelters, directs and controlsthe business of that country.

The political system that are stable, honest, efficient anddynamicleads to economic development.


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Basic political system:--

Democracy:-- refers to a political arrangement in which the

supreme power is vested in the people.

Maintain stable business environments primarily through laws

protecting individual property right.

Business prospers when the private sector enjoys freedom to

decide, freedom to earn, and freedom to spend.

In practice free markets, property rights, and democracies do

not guarantee economic growth.

Totalitarianism:-- also called authoritarianism, individual

freedom is completely subordinated to the power of theauthority of state.

concentrated in the hands of one person or in small group, is

not constitutionally accountable to the people.


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Types of totalitarianism

Theocratic:- religious leader fame and enforce laws and

regulations that are based on religious beliefs. Example

Afghanistan.

Secular:- political leaders guided by military and bureaucratic

power. Example Pakistan, south Korea, Taiwan, Singapore,

Indonesia, etc.

Tribal :- occurs when a political party that represents theinterests of a particular tribe monopolises power. Example

African countries such as Zimbabwe, Tanzania, Uganda and

Kenya.

Right Wing totalitarianism;-- private ownership of propertyis endorsed by government, market forces are also allowed free

play, but political freedoms are rarely granted.

Argentina, Brazil, Chile were under right-wing totalitarianism


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Political risks:

Political risk is any governmental action or politically motivated

event that could adversely affect long term profitability and valueof the firm.

Macro Risks:

Expropriation corporate assets without prompt and adequate

compensation ---- loss of future profits Barriers to repatriation profits--- no motivation to improve

efficiency

Confiscation of properties --- loss of assets and future profits

Loss of technology and other IP --- loss of future profits

Mandatory Labour Legislations ---- increased operating cost

Civil wars --- loss of sales, increased security costs,

Currency devaluation --- reduced values of repatriated earning


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Micro level Political Risks:

Kidnapping, Terrorists, Threats --- disrupted production,higher security costs, reduced productivity

Increased taxation reduced after tax profits Officials Dishonesty --- loss of business, increased operating

costs

Political Risk assessment:

Managers in host country assess the potentially destabilizingissues evaluate their future impact on the firm.

Top Management guidelines to solve the problem.

Timely information from the people in the font line should not be

missed.

Risk assessment takes two forms:--

Experts or consultanthost country

Internal Staff


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Criteria for Evaluating political risk

Political Economic Environment:

Stability of the political system Internal conflicts

External threats and stability

Control of Economic system

Reliability of the country as a trading partner

Constitutional Guarantees

Effectiveness of public Administration

Labour relation and social peace


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Domestic Economic Conditions

Size of population

Per capita income

Economic growth over the last 5 yrs

Potential growth over the next 3 yrs

Inflation over the last 2 yrs

Accessibility of the domestic capital market to outsiders.

Availability of high quality labour force

Possibility of employing foreign nationals

Availability o f energy resources

Environment pollution

Infrastructure including transportation and communicationsystem.


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External Economic relations:

Import and Export restrictions

Restriction on foreign investment

Freedom to engage in partnership

Legal protection for brands and products

Restrictions on monetary transfer

Revaluation of currency during last five years.

Balanced of Payment Situation

International financial standing

Restriction on the exchange of local currency into foreign

currencies.


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Managing Political Risks:

Avoiding investmentavoid investing in a country ranked high

on such risks. Already invested plant may be wound up or transferred to other

country, considered to be relatively safe.

Adaptation

Local Equity and Debt :-- financing subsidiaries with the helpof local firms, trade unions, financial institutions, and

government.

As partners in local businesses, these groups ensure that

political developments do not disturb operations. Development Assistance :-- the firm and the nation become

partners, both stand to gain.


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Insurance

Overseas Private Investment Corporation (OPIC) state

owned/ sponsored.

Multilateral Investment Guarantee Agency (MIGA) asubsidiary of the world bank.

Threat :-- the firm may threaten the host country that the supply

of materials, products, or technology would be stopped if its

functioning is disrupted. Lobbying:-- is the policy of hiring people to represent a firms'

business interest as also its views on local political matters.

Terrorism Consultants :-- hire counterterrorism to train

employees to cope with the threat of terrorism.


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Legal environment

Legal environment refers to legal system in a country.

Legal system refers to the rules and laws that regulate behaviorof individuals and organizations.

A country laws regulate business practice, define in which

business transaction to be carried out and set down the rights

and obligations of those involved in business deals. Failure to comply with law penalties will levied by courts

depending on the seriousness of the offence.

Legal system in a country is also influenced by its political

system. Government of a country defines the legal framework.


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Systems of law: Common law:-- traditions, customs, culture, precedent and usage

are the bases for common law. Courts interpret (understand, take) the law according to the

situations and incidents.

These law are in force like USA, UK and Hong Kong.

Civil law:-- is based on how the law is applied to facts. (truth,reality)

Detailed set of laws which make-up a code is the basis for civil

laws.

Countries like France, Germany, and Japan follow civil law. Theocratic law:-- is based on religious precepts like the Islamic

law and Hindu law.

Islamic law is unchanged as it is based on the Holy Koran. Islamic

law is more a moral rather than commercial law.


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Property rights:-- refer to the bundle of legal rights to use the

resource or allowing others to make use of it mostly for a price.

Violated in different degrees in different countries, though the

law are enacted to protect them.

Method of violation of property rights include (a) private action

(b) public action and (c) corruption

private action :-- attempts and actions of private individuals or

groups relating to theft, blackmail and piracy.

Business people were forced to pay a fee to Russian Mafia

during the postcommunist era due to the latters blackmail.

Public action :-- collecting income by politicians and

government officials from the holder of the legal titles ofproperty rights.

Public action includes levying higher tax rates, higher licensing

fee, demanding bribes and corruption.


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Protection of intellectual property:

Output of intellectual activity like an invention, a screenplay,

computer software, chemical formula for a new drug and the like.

Patents, copyrights and trademarks establish ownership rights

over intellectual property rights.

A patent provides exclusive right to the inventor of a new

product or process for a particular period to produce and market

the product/ process.

Copyright provide exclusive right to the authors, publishers, and

the like to publish and market their works.

Trademarks are design , icons and names used by the producers

and marketers to differentiate their products/ services form those

of others.


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Product safety and product liability:

Products must adhere to certain safety standards as prescribed by

product safety laws.

Firms and its executives hold responsibility under product liabilitywhen injury, death or damage is caused by usage or consumption of a

product.

These laws and standards are more in USA as compared to other

countries.

Labour law:

Labour legislations are enacted in various countries, mostly based on

the resolutions of the international labour organization.

These legislations prescribe the minimum wages, trade union

activities, employee-employer relations, collective negotiations,

recruitment and employment practices.

Stipulations regarding working conditions, employee benefits,

regulations and modalities of prevention and settlement of industrial

disputes.


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Technological Environment According to J.K. Galbraith systematic application of scientific

or other organized knowledge to practical tasks.

Technology is the most dramatic force shaping the destiny(future)

of people all over the world.

Technological inventions man feels, are wonders, some others are

horrors (shock, terror) and yet others have mixed blessing.

Automobiles and television have evoked (inducing, remind)

mixed reaction.

Hydrogen bomb, nerve gas, submarine guns have proved to be

horror.

Open heart surgery, and birth control pills are wonders.

Introduce machines to do the work of human beings, substitute

mental work with computers, probe deep into the seas and space

in search of new treasures, provide himself with lot of leisure and

comfort.


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Technology cycle:-

Awareness phase:

Company aware of emerging technologies relevant to the

companys needs. Companies form thinktanks with engineers and scientists, who

research from around world and gather information through

computer service, journals, magazines, books, conference, and

international exhibitions. This information is synthesized and put in short internal report

form for the benefit of corporate strategic planners and

technology policy makers.

Acquisition phase: The companys technology group in collaboration with the

industrial engineering group, would conduct technical feasibility

study as well as an economic feasibility study before justifying

and acquiring a new technology.


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Adaptation phase:

Homework is done correctly the transition from acquisition to

adaptation becomes much smoother and less expensive.

Sufficient time and effort have not gone into studying therelevance of a particular technology to the companys present

needs, great deal of rework and adaptation result.

Not only frustrate (disturb, upset) the people acquiring the

technology also slows down the assimilation rate, causes majorproductivity losses, and result in severe quality problems.

Advancement phase:

Capital is limited one cannot indiscriminately (aimlessly,

random) purchase and abandon technologies with scarce money. It become imperative (very important, essential) to improvise

(get along, makeup) the acquired technologies for ones home

needs.


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Abandonment (leaving, rejection) phase:

Rapid discarding of existing technologies, timing for new

technologies is critical for survival, let alone for winning in the

business game.

Bad timing in prematurely abandoning a product could result in

lost revenues.

I t f t h l


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Impact of technology

Technology and social change:

High expectations of consumers:

Affluent citizens want more of many things than more of same

things.

New varieties of products, superior in quality, free from pollution,

more safe and more comfortable are produced and supplied to the

different sections.

High expectations of consumers pose (create, cause) a challenge

and an opportunity to the owners of business institutions.

System complexity:

Technology has resulted in complexity.

Modern machines work better and faster no doubt.

A machine or a system is composed of several hundred components

Reliable performance of each part assumes greater significance.


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Social change:

An invention may destroy the economic basis of a city, displace

thousands of workers, yet the same invention may result in the

creation of a new city somewhere else and create even more jobsthan it originally destroyed.

Invention may open new employment opportunities to women,

radically change hours spent at work and in the family, increase

available leisure time, open jobs to youth, and deny them tomiddle-age or old workers.

Though social differences tend to be ironed (level) out, status

differences are likely to be created by technological advancement

in developing countries. The way we cook, communicate, use media and work are affected

by technology.

Technology has revolutionalized the education system.

T h l d


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Technology and economy:

Increased productivity:

Fundamental effect of technology is greater productivity in terms

of both quality and quantity. Result of productivity improvements, real wages of employees tend

to rise and prices of some products decline, which spreads the

beneficial economic effects of technology throughout the whole

social system. Need to spend on research and development:

Allocation of resources to research and development.

Technology transfer, process of taking new technology from the

laboratory to the market place is equally important. This transfertakes longer time as organizations grow in size.

Time factor is important in R&D . Companies can no longer

assume that competitors will allow them the time needed to recoup

their investment.

A h l i h ld h l d b


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A new technology comes in, the old technology needs to be

abandoned.

The process of old replaced by new is called technological

discontinuity. Such discontinuity occurs when a new technology cannot be used

simply to enhance the current technology but actually substitutes

for that technology to yield better performance.

The firm must also decide on its own R&D or to outsourcetechnology.

Jobstend to become more intellectual and knowledge-oriented:

Advent of technology, jobs tend to become more intellectual or

upgraded. A job handled by an illiterate and unskilled worker now requires

the services of an educated and competent worker.

A clerical post in an office now demands the services of an expert

in computers.


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Introduction of new technology dislocates some workers unless

they are well-equipped to work on new machines.

Problem of techno structure:

Not only jobs become more intellectual and knowledge-oriented,

even the incumbent (in office, present) tend (be apt, be likely) to

become highly professional and knowledgeable.

Organization has adopted the latest technology is flush with

scientists, engineers, MBAs, college graduates, and knowledgeworkers as teammates.

Increased regulation and stiff opposition:

By-product (side-effect, consequence) of technological

advancement is the ever increasing regulation imposed onbusiness by the government of the land and stiff opposition from

the public.


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Business boundaries redefined:

Technological change is a potent (powerful, compelling) force in

the reconfiguring of industry boundaries, it may broaden or

narrow generally accepted industry boundaries. Example, advances in formation technologies have rendered old

conceptions of the financial services industry obsolete: insurance

firms, bank and other financial institutions, can now all be

interconnected to provide new financial services. Technological change is one of the important factors giving rise to

product substitution and product differentiation.

Example, plastics have replaced many uses of steel, and

microwave ovens are now substituted for conventional ovens. Technological change in the form of process and material

innovations. Example process innovations such as automation,

robotics, and CAM/CAD.


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Technology and plant level changes:

Technology and organization structure:

Technology has considerable influence on organization structure,

length of the line of command, and span of control of the chiefexecutive.

Technological advancement will result in

(a) expanded availability of a range of products and services

(b) substitution of capital for labour, leading to higher

productivity and lower costs.

(c) increase in sales or power for the innovating organization

relative to its competitors.(d) initiation of changes in behaviour among customers, suppliers,

employees, or society.

Resistance to change:


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Resistance to change:

New technology poses new problems which may not be to the

liking of the organizational men.

Resistance to change is often psychological. A typical (classic, usual) businessman himself is opposed to new

technology.

E-commerce:

Growth of internet and the associated world wide web has made e-commerce possible.

E-commerce is contributing to a growing percentage of cross-

border transactions.

Internet and e-commerce provide benefits in global business are (a) convenience in conducting business worldwide: facilitating

communication across borders which brings market closer.

(b) power to consumers as they gain access to limitless options and

price differentials.(c) Efficiency in distribution.


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Telecommunications:

No longer necessary now to hand wire a city to provide residents

with telephone service. This can be done wirelessly.

Growth in the wireless technology business worldwide has been

rapid and the future promises even more.

A business, domestic or global, cannot prosper without an

efficient telephone system.

Transportation technology:

Probably (almost certainly, most likely) the development of

commercial jet aircraft and super freighters and introduction of

containerization, which simplifies trans-shipment from one mode

of transport to another.

Globalization of production:

A worldwide communication network has become essential for

any MNC.


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Example, Texas Instruments (TI), the US electronic firm has

nearly 50 plants in 19 countries.

Satellite based communication system allows (TI) to coordinate

on a global scale, its production planning, cost accounting,financial planning, marketing, customer service, and human

resources.

Globalization of markets:

Containerization has made it more economical to transport goodsover long distances, thereby creating global market.

Low-cost global communication networks such as the worldwide

web are helping to create electronic global market place.

Low-cost jet travel has resulted in the mass movement of peoplearound the world.

Technology transfer


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Technology transfer Technology transfer is a process that permits the flow of

technology from a source to a receiver.

The source is the owner or holder of the knowledge and it can be

individual, a company, or a country.

The receiver is the beneficiary of the transferred technology.

Technology and global business are interdependent. International

business spreads technology from advanced countries to

developing countries by

(a) establishing the subsidiaries in developing countries

(b) establishing joint ventures with the host countrys companies.

(c) acquiring the host countrys companies or by merging with the

host countries firms.

(d) arranging technological transfer to the companies of

developing countries through technological alliance.

Technology transfer categories:


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Technology transfer categories:

International technology transfer:-- the transfer across national

boundaries.

Transfer take place between developed and developing countries. Regional technology transfer:-- transferred from one region of a

country to another.

Cross-industry or cross sector technology transfer:-- transferred

from one industrial sector to another. Example , the transfer of technology from the space programme to

commercial application.

Interfirm technology transfer:-- transferred from one company to

another. Example, the transfer of computer-aided design(CAD) expertise

and computer-aided manufacturing (CAM) machines from a

machine tool manufacturing firm to a furniture making firm

Intra firm technology transfer: transferred within firm from


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Intra-firm technology transfer:-- transferred within firm, from

tone location to another. Transfer can also be made from one

department to another within the same facility.

Pirating or Reverse-Engineering:-- access to technology isobtained at the expense of the proprietary rights of the owners of

the technology.

Stages in the transfer process:

Assignment:-- including sale and licensing agreements coveringall forms of industrial property including patents, inventors

certificates, utility models, industrial designs, trade marks, service

names, and trade names.

Arrangements:-- covering the provision of know-how andtechnical expertise in the form of feasibility studies, plans,

diagrams, models, instructions, guides, formulations, service

contracts and specifications, and or involving technical, advising

and managerial personnel, personnel training and equipment for

training.

A t i th i i f b i d t il d


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Arrangement :-- covering the provision of basic or detailed

engineering designs, and the installation and operations of plant

and equipment.

Purchases:-- including leases and other forms of acquisition ofmachinery, equipment, intermediate goods and or raw materials,

insofar as they are part of transaction involving technology transfer.

Industrial and technical cooperation agreements of any kind,

including turnkey agreements, international subcontracting , as wella provision for management and marketing services.

Parties in the transfer process:

International technology transfer under horizontal perspective there

are three basic elements namely the home country, the hast country,and the transaction.

Home country reactions to technology transfer:

Home countries express apprehension about the export of their

technology.

Argue that the establishment of production facilitates by MNCs in


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Argue that the establishment of production facilitates by MNCs in

subsidiaries abroad decreases their export potential.

Labour unions in the home country too oppose technology transfer

on the ground that the jobs generated from the new technology willbenefit the host country citizens.

Host countrys reactions to technology transfer:

Subject of technology transfer is highly sensitive often evoking

strong reservations against it from the host country citizens. Criticisms against technology transfer are based on economic and

social factor.

Economic implication:-- include payment fee, royalty, dividends,

interest, and salaries to foreign technicians and tax concessionsresulting in loss to the national exchequer.

Social implications:-- more serious than the economic significance.

Along with the transfer of technology, there is the transmission of

culture from the exporting countries.


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Imported technology from the United States and European

countries.

Indians who works in firms using such imported technologies get

influenced and accustomed to the skills, concepts, policies,practices, thoughts, and beliefs.

The influence of alien culture on Indian soil is so visible.

Social problems like pollution, urbanization, congestion, depleted

natural resources, etc.,

Transaction:-- relate to the terms and conditions of technology

transfer.

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international business management meaning and other topics