Technology Risk in Business – Challenges of Changing Technology in Business

The changing technology environment has and still become one of the biggest challenges in international business management. Technological changes can wreak havoc on industries. In making decisions regarding technological changes, companies err in two ways. They either commit themselves to a new technology too fast and burn their fingers or wait and watch while another company comes up with a new technology that puts them out of business. The issue of when and how to react to the emergence of a new technology is a matter of judgment. However, this judgment need not be based purely on intuition. By doing a systematic structured analysis of developments in the technological environment and putting in place the necessary organizational mechanisms, technology risk in business can be considerably reduced.

How can managers identify the emergence of a disruptive technology?  Clayton Christensen’s research reveals that disruptive technologies are often developed privately by engineers working for established firms. When such technologies are presented to customers, they get a lukewarm response. So, established companies do not give much importance to these technologies. The frustrated engineers consequently join start-ups, who are prepared to look for new customers. Companies must take note when talented scientists and researchers leave them to join start-ups. Often, they do so, to work in an environment where their innovative ideas are taken more seriously.

Companies must also learn to assess the impact of a new technology. The steam engine was developed for pumping water out of flooded mines. It was years before a range of applications was developed in industries and for transportation.… Read the rest

Trade Protectionism in International Business

Trade Protectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods, restrictive quotas, and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over or competition. This contrasts with free trade, where no artificial barriers to entry are instituted.

Trade Protectionism has frequently been associated with economic theories such as mercantilism, the belief that it is beneficial to maintain a positive trade balance, and import substitution. There are two main variants of trade protectionism, depending on whether the tariff is intended to be collected (traditional protectionism) or not (modern protectionism).

  1. Modern protectionism: In the modern trade arena many other initiatives besides tariffs have been called protectionist. For example some economists see developed countries’ efforts in imposing their own labor or environmental standards as protectionism. Also, the imposition of restrictive certification procedures on imports are seen in this light. Recent examples of protectionism are typically motivated by the desire to protect the livelihoods of individuals in politically important domestic industries. Whereas formerly blue-collar jobs were being lost to foreign competition, in recent years there has been a renewed discussion of protectionism due to offshore outsourcing and the loss of white-collar jobs. Most economists view this form of protectionism as a disguised transfer payment from consumers (who pay higher prices for food or other protected goods) to local high-cost producers.
  2. 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 labor (e.g., corporate and personal income taxes).
Read the rest

Quality Standards For Exports

In almost all the products, for which the pre-shipment inspection scheme has been introduced, great care has been taken to accept the buyer’s requirements, wherever known, as the basis of inspection. In many cases, where the buyer’s requirements are known through-an approved sample of, for example, footwear or handicrafts, inspection is carried out on the basis of the approved sample. However, for items involving safety, such as cables and conductors, only the national standards, either Indian or those of the importing country, have been adopted. In the case of commodities involving health hazard, such as fish and fishery products, statutory laws as applicable in the importing country for these products, are adhered to. This particular approach has been found to be extremely practical and has helped the exporters to maintain the quality of their products. For adopting or establishing technical specifications, detailed discussions are held with the trade and industry and other organizations, such as the Indian Standards Institution and the Directorate of Marketing and Inspection. In certain cases, minimum specifications are laid down for a specific purpose only, as for example, in the case of de-oiled rice bran, fumigation has been made compulsory for pre-shipment inspection.

The procedural details of the pre-shipment inspection schemes, which have been introduced, have been worked in close collaboration and in consultation with the representative of trade and industry. While preparing these detailed procedures, the existing trade practices are taken into consideration, and the relevant Government departments, including the customs authorities, are consulted. The general procedures for inspection are thereafter notified in the form of inspection rules under the Export (Quality Control and Inspection) Act for comments form the public.… Read the rest

Quality Control and Pre-shipment Inspection for Exports

In today’s sophisticated world market, a product can move with any measure of success only if it is competitive enough in price and quality. Our export can be sustained and improved only be raising the quality of our product as it would be very difficult to reduce the price in our present day high-cost economy, with a view to achieve this objective of raising the quality of our export products, the Government of India enacted the legislation entitled “The Export (Quality Control and Inspection) Act” in the year 1963, and the Export Inspection Council was also set up with effect from 1st January, 1964. The main function of the Export Inspection Council is to advise the government with regard to measures to be taken for quality control and pre-shipment inspection of exportable commodities.

No Consignment of any notified commodity can be exported unless it is accompanied by a certificate issued by a recognized inspection agency or the article carries a recognized mark indicting that it conforms to the standard specifications.

A number of existing agencies, both government as well as private have been recognized under the Act for carrying out pr-shipment inspection of various goods. To supplement the work of these agencies, the government also established five Export Inspection Agencies, one each at Bombay, Calcutta, Cochin, Madras and Delhi in 1966 exclusively for export inspection. These agencies work under the administrative and technical control of the Export Inspection Council.

Striking progress has been made in the field of compulsory pre-shipment inspection as about 85 per cent of exports from India have been covered under one or the other system of quality control.… Read the rest

What is CounterTrade?

Countertrade constitutes an estimated 5 to 30 percent of total world trade. Countertrade greatly proliferated in the 1980s. Perhaps, the single most important contributing factor is Least Developed Countries (LDC’s) decreasing ability to finance their import needs through bank loans.

Countertrade, one of the oldest forms of trade, is a government mandate to pay for goods and services with something other than cash. It is a practice, which requires a seller as a condition of sale, to commit contractually to reciprocate and undertake certain business initiatives that compensate and benefit the buyer. In short, a goods-for-goods deal is countertrade. Unlike monetary trade, suppliers are required to take customers products for their use or for resale. In most cases, there are multiple deals that are separate yet related, and a contract links these separable transactions. Countertrade may involve several products, and such products may move at different points in time while involving several countries. Monetary payments may or may not be part of the deal.

There are three primary reasons for countertrade: (1) countertrade provides a trade financing alternative to those countries that have international debt and liquidity problems, (2) countertrade relationships may provide LDCs and MNCs with access to new markets, and (3) countertrade fits well conceptually with the resurgence of bilateral trade agreements between governments. The advantages of countertrade cluster around three subjects: market access, foreign exchange, and pricing. Countertrade offers several advantages. It moves inventory for both a buyer and a seller. The seller gains other benefits, too.… Read the rest