ibm unit 2-detail

7/28/2019 Ibm Unit 2-Detail

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IBM UNIT 2 -Technological Environment

Technological Environment J K Galbraith defines technology as a systematic application of scientific or other

organised knowledge to practical tasks.# Technology is the usage and knowledge oftools, techniques, crafts, systems or methods

of organization in order to solve a problem or serve some purpose.

Classification of TechnologyTechnology can be classified according to any of the

following categories :-

State-of-the-art-technologies : Technologies that equal or surpass the competitors.

Proprietary technologies : Technologies protected by patents or secrecy agreements that

provide a measurable competitive advantage. Known technologies : Technologies that may be common to many organisations but are

used in unique ways.

Core technologies : Technologies that are essential to maintain a competitive position.

Leveraging technologies : Technologies that support several products, product lines, or

classes of products.

Supporting technologies : Technologies that support the core technologies.

Pacing technologies : Technologies whose rate of development controls the rate of

product process development.

Emerging(influence) technologies : Technologies that are currently under consideration

for future products or processes. Scouting (jasoos) technologies : Formal tracking of potential product & process

technologies for future study or application.

Idealized unknown basic technologies : Technologies that, if available, would provide a

significant benefit in some aspect of life.

The Technology CycleFollowing classification, technology management

involves carefully implementing five stages :-

1. Awareness phase

2. Acquisition Phase3. Adaptation Phase4. Advancement Phase5. Abandonment Phase

(See Fig. Below)
http://en.wikipedia.org/wiki/Toolhttp://en.wikipedia.org/wiki/Crafthttp://en.wikipedia.org/wiki/Systemhttp://en.wikipedia.org/wiki/Toolhttp://en.wikipedia.org/wiki/Crafthttp://en.wikipedia.org/wiki/System


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Technology Awareness

of marketable invention

Technology

Acquisition

by self-generation

or transfer

Technology

Adaptation

Minor modifications

of acquired technologyfor specific needs

Technology

Advancement

Innovation involving

major modifications

of acquired technology

Technological

Abandonment

obsolescencing

External & internal

Environment

Factors affecting

the technology user

Promotion

Need

driven

expect

ations

Justificatio

n

Installation

1

2

3

4

5

6Demolition

Time

The Technology Cycle, showing the five basic elements of technologymanagement at any given level (product,service, function, work centre,

plant/division, corporation, industry, national or international) applicable todeal with an existing or new technology.

The dashed lines represent analysis.1. Awareness phase

This is the first phase of the technology cycle in which a company has a formalmechanism to become aware of emerging technologies

Some companies from think tank with engineers & scientists, who research from

around the world & put in short internal report form for the benefit ofcorporate strategic planners & technology policy markers.2. Acquisition Phase

To go from the awareness phase from acquisition phase, the companys technology

group, in collaboration with the industrial engineering group,would conduct technical feasibility, & economic feasibility studies before justifying &

acquiring a new technology.

3. Adaptation Phase

Virtually every enterprise ends up adapting an acquired technology for its particular

needs

If the homework done correctly, the transition from acquisition to adaptation becomes

much smoother & less expensive

Conversely, this not only frustrates the people acquiring the technology but also slows

down the assimilation rate, causes major productivity losses, & results in severe qualityproblems.

4. Advancement Phase

When capital is limited one cannot indiscriminately purchase & abandon technologieswith scarce money

It becomes imperative to improvise the acquired technologies for ones home needs.

5. Abandonment Phase

This last phase of the technology is the most critical

Bad timing in prematurely abandoning a product could result in lost revenues, & on the

other hand,waiting too long to abandon might also result in lost revenues because acustomer may find a better alternative in competition.

Impact of Technology We propose to discuss the impact of technology in general, under three heads :-

a) Technology & social change


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b) Economic effects of technology, &c) Technology & plant level changes

(See Fig. Below)

Technology

A. Social implications C. Plant level changesB. Economics implications

High expectation

of consumers

Systems complexity

Social systems

Social changes

Organisation structure

Resistance to change

Increased regulation &stiff opposition

Problems of techno-

structure

Jobs become intellectual

Need to spend on R&D

Increased productivity

Fear of risk

e-Commerce

Telecommuting

Rise & decline of

products & organisations

Boundaries redefined

Transportation

Markets

Technology transfers

Impact of Technology

A. Social Implications

Perhaps the most striking influence of technology is found on society as every area of

social life & the life of every individual has been, in some sense or the other,changed by the developments in technology.

A1. High Expectations of Consumers

Technology has contributed to the emergence of affluent societies, who want more of

many things than more of same things, like varieties of products, superior in quality, freefrom pollution, more safe, & more comfortable.

This calls for substantial investment in R&D.

One important compulsion for investing in technological advances in Japan is its

customers high expectations regarding design sophistication, quality, delivery,

schedules, & prices Industry owners in Japan swear by the dictum the customer is a god who is always

right.

High expectations of consumers pose a challenge & an opportunity to the owners of

business institutions.A2. System Complexity

Technology has resulted in complexity

Modern machines work better & faster no doubt

But if they fail, they need the services of experts for repairs

They fail often because of their complexity

A machine or a system is composed of several hundred components

All parts must work in tandem to accomplish a desired task

Reliable performance of each part, therefore, assumes greater significance because of

interdependence of systems.

Management is, therefore, under pressure to keep the whole system working all the time.

A3. Social Change

The role of technology on social change may be

observed in more than one way :-First, there is the change in social life, which results from a change in a technological

process. Thus, an invention may displace thousand of workers, yet the same inventionmay result in the creation of a new city some- where else & create even more jobs than it

originally destroyed. Technological, this way create a turmoil in society.


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Secondly, besides uprooting population, technology directly changes the patterns oftheir social life. An invention may open new employment opportunities to women,radically change hours

spent at work & in the family, increase available leisure time, open jobs to youth, & denythem to middle-aged or old workers. Technological advancement tends to smoothen

out differences, as it creates a more freer & egalitarian society.Thirdly, though social differences tend to be ironed out, status differences are likely to becreated by technological advancement in developing countries as technology flows to lessdeveloped countries mainly through multinational companies. In India, the employees inforeign collaborations are paid much more than are paid in other local Indian companies,though they do the same job in the same field.Fourth, the way we cook, communicate, use media & work are affected by technology. Eventhe language we use is changing, terms that until recently were not even part of our lexiconhave become common place. Social changes are also reflected in our vocabularies like,house-husband, surrogate mother, & domestic partner, etc. It is therefore, rightly said that thewords are the bugles of social change. When our language changes, behavior will not be far

behind.Fifth, technology has its impact on religion in at least two ways, first, religiosity has declinedin importance as consumers have come to rely on technology rather than on benevolentdeities for their well-being. Secondly, (on the negative side), modernisation pressuresagainst genetically modified foods to wholesale rejection of western technologies bycertain religious fundamentalists.

Sixth, technology has revolutionalised the education system. The internet makes vastknowledge bases available to a large number of people electronically.

It has virtually democratised education by enabling in the very poor & remote countries toaccess the worlds best libraries, instructors, & courses available through the Internet.

A4. Social Systems

Of particular interest is the knowledge of technology

At this level, technology creates a distinct type of social system,

namely, the knowledge society

In the knowledge society, use & transfer of

knowledge & information, rather than manualskill, dominates work & employs the largestportion of labour force

The knowledge-worker will have to show why

he should be retained, what benefit he canoffer to the organisation, & how he can add

value to whatever the organisation does

He will have to create new jobs in consultation with

his employer

A job will then become a joint venture

When this happens, the worker can forget pension

plans.

B. Economic Implications

Developments in technology also have

significant economic implications :-

B1. Increased productivity

the most fundamental effect of technology is

greater productivity in terms of both quality& quantity

This is the main reason why technology at all

levels is adopted

As a result of productivity improvements, real

wages of employees tend to rise & prices ofsome products decline.


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B2. Need to Spend on R&D

Research & Development (R&D) assumes

considerable relevance in organisations astechnology advances

Firms are required to consider, decide & take

action on at least six issues.

First, the allocation of resources to R&D.It enables business improve corporateperformance by enabling the firm to betterdevelop synergies among product lines &business units.

Secondly, technology transfer, the process of taking

new technology from the laboratory to the marketplace is equally important when the company fails todevelop much in the way of major innovations.

Thirdly, time factor is important in R&D.Companies can no longer assume that competition

will allow them the time needed to recover theirinvestment.

Fourthly, as new technology comes in, the old

technology needs to be abandoned. The process ofold replaced by new is called technologicaldiscontinuity. Such discontinuity occurs when a newtechnology cannot be used simply to enhance thecurrent technology but actually substitutes for thattechnology to yield better performance. The R&D

manager must determine when to abandon presenttechnology & when to develop or adapt newtechnology.

Fifthly, the firm must also decide on its own R&D or

to outsource technology. As a rule, it may be statedthat a company should buy technologies that arecommonly available but make (& protect) those atare rare, valuable, hard to imitate, & have no closesubstitutes. In addition, outsourcing technology maybe appropriate when :-

The technology is of little significance to com-

petitive advantage

The supplier has proprietary technology

The suppliers technology is better &/or

cheaper & reasonable easy to integrate intothe current system

The technology development process requires

special expertise, &

the technology development process requires

new people & new resources.

Thesixth & the final issue relates to the decision on

product innovation or process innovation. In theearly stages, product innovations are most importantbecause the products physical attributes &capabilities affect financial performanceconsiderably. Later, process innovations such as

improved manufacturing facilities, increasingproduct quality, & faster distribution becomeimportant in maintaining the products economicreturns.

B3. Jobs Become Intellectual


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With the advent of technology, jobs tend to

become more intellectual or upgraded

A job hitherto handled by an illiterate & un-

skilled worker now requires the services of aneducated & component worker

Introduction of new technology dislocates

some workers

This makes it obligatory on the part of

business houses to retrain its employees & torehabilitate those displaced & untrainable

Equal is the responsibility of the government

to provide training & educational facilities to itscitizens - those who pick up & acquaint themselveswith the new technology, the job will be rewarding

as they stand to gain through increased productivity,reduced prices, & increased real wages

Along with upgrading jobs, technology has its

impact on human relations

Since interaction & activity affect sentiments, & they

begin to feel & think about one another & abouttheir work situation.

B4. Problem of Technostructure

Not only jobs become more intellectual &

knowledge-oriented, even the incumbents tendto become highly professional &knowledgeable

Such an enterprise has to face on this account

serious problems :-

First, motivation of such employees is a

difficult task because incentives as attractiveremuneration, job security, & just treatment,hardly inspire the enlightened employees towork more. They are instead motivatedby opportunities which offer challenges or growth

or achievement.Secondly, retraining such employees for long is a

difficult job. Flighting & not sticking to onecompany is their culture. The company has to makeseveral exceptions to discourage rootless ness of itsprofessional employees :-

Regular attendance & punctuality have to be

relaxed

Dual promotion ladders have to be established

so that distinguished technical people can rise

in rank Profit-sharing to be provided to give creative

persons a financial stake in the ideas theycreate

Attendance at professional get-togethers has

to be sponsored

Writing professional articles has to be

encouraged & special assignments & part-time

teaching may be allowed.

Thirdly, scientific & professional workers constitute,

the technostructure. The technostructure tries to


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control the organisation through influencingmanagements decision-making. But they are moreaction oriented & are yet to learn social problems ofbusiness decisions. Management is, therefore, in a

in a tight position to balance the ruffled feelings oftechnocrats & the social consequences of businessdecisions.

B5. Increased Regulation & Stiff Opposition

A by-product of technological advancement is

the ever-increasing regulation imposed onbusiness by the government of the land & stiffopposition from the public as the host govern-ment has thepowers to investigate & ban products that are directly harmfulor hurt the sentiments of a section of society.

B6. Rise & Decline of Products & Organisations

Change of technology is a norm & not an exception

This poses another problem to business

A new technology may spawn a major

industry but it may also destroy an existingone

Transistors, for example, hurt the vacuum-

tube industry & xerography hurt the carbonpaper business

A typical product, today, is subject to a cycle :

introduction, growth, maturity, decline, &

abandonment

An organisation that is associated with particular

technology will go in sequence through the followingstages :-

(i) birth, (ii) growth, (iii) policy, (iv) procedure,

(v) theory, (vi) religion, (vii) ritual, & (viii) last rites.

B7. Boundaries Redefined

Technological changes have significant consequencesfor industries :-

Technological change is a potent force in the

reconfiguring of industry boundaries, it maybroaden or narrow generally exceptedindustry boundaries

As a consequence of its impact on whole

industries, technological change can have asignificant impact on the prevailing businessdefinition of individual companies. Companies

may find themselves in a different businessdue to technological changes that they or others haveeffected

Technological change is one of the important factors

giving rise to product substitution & productdifferentiation. Technological change is a dominantforce in shaping competitive dynamics in manyindustries. It influences industry boundaries &structure, product substitution & differentiation, &the price quality relationships between products

Technological change in the form of process (as

opposed to product) & materials innovations maycontribute to many of the impacts noted above


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Finally, for multi-product companies (preceding

discussion applies to single-business units),technological change may have multiple impacts.

C. Plant Level Changes

The impact of technology at the plant level is also

significant.

C1. Technology & Organisation Structure

Technology has considerable influence on

organisation structure, length of the line ofcommand, & span of control of the chiefexecutive

Where companies use technology, which is fast changing,

matrix structures are more common Some companies use a matrix even though the

rate of technological change is not fast

Besides technology, other factors that have

their influence on organisation structure arehistory & background of a company & the

personalities of the people who founded the firm &managed it subsequently, but the impact of techno-logy is considerable

Line of command tend to be lengthy where the

production is routine & process based

Decision-making is highly centralised

It tends to be short if the production activities are

customised

The use of specialists will be more & hence decision-

making gets delegated

In mass production technologies, the number of

people whom an executive controls tends to be largerthan when the production is unit based

Any technological advancement will result in :-a) the expanded availability of a range of

products & services

b)substitution of capital for labour, leading to

higher productivity & lower costs

c) increases in sales or power for the innovating

organisation relative to its competitors

d)initiation of changes in behaviour among

customers, suppliers, employees, or society, &

e) side-effects on the quality of physical

environment.

C2. Resistance to Change

The manager of a given business unit shall

face resistance to change as new technologyposes new problems

The resistance to change is often psychological

A typical businessman himself is opposed to

adopting new technology as it is expensive &risky

When he is making enough money with


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obsolete technology why must he worry aboutnew technology?

Specifically, resistance to change stems from the

following reasons :-1. Psychological or social commitments to existing

products, process & organisation,

2. Sizable capital investments in long-life single-usefacilities,

3. Low profits & reduced rate of growth,4. Small size or fragmented activities,5. Complacent top management,6. Industry norms & associations or cartels that

perpetuate industry-bound thinking,

7. Lack of successful entrepreneurial models to emulate, &

8. Powerful labour resistance to changes in methods.

C3. Fear of Risk

There is always the fear of risk.

A research oriented-company like DuPont

an intended substitute for the fore-

casted shortage of shoe leather, after an invest-

ment of $3000 million, abandoned the project

in 1971 because of quality & cost problems.

C4. E-commerce

The phenomenal growth of the internet & the

associated World Wide Web has made e-commerce possible

E-commerce is contributing to a growing per-

centage of cross-border transactions

It rolls back some of the constraints of

location, distance, scale, & time zones

The Web allows, both small & large, to expand

their global presence at a lower cost than everbefore, wherever they may be located, & whatever their size

Modern factories are now able to produce

goods in a shorter period of time (to produce one carit takes less than 10 seconds) & with fewer defects -thanks to the introduction of Six Sigma qualityprogrammes

Six Sigma is a statistical term that means 3.5 errors

per million, effectively eliminating performanceproblems & ensuring that products conform tostandards

While e-commerce focuses on marketing & sales

process, E-business emphasises integration ofsystems, processes, organisations, value chains, &markets

Integration operate through Internet & helps build

new relationships between businesses & customers

The internet & e-business provide a number of benefits

in global business, including the following :-


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1. Convenience in conducting business worldwide;facilitating communication across borders whichbrings markets closer

2. An electronic meeting & trading place, which addsefficiency in the conduct of business

3. Power to consumers as they gain access to limitlessoptions & price differential

4. Efficiency in distribution

C5. Telecommunications

The obvious dimension of the technological

environment facing international business istelecommunications

This growth is welcome as business, domestic

or global, cannot prosper without an efficient

telephone system, such as, 3G, MMS ofNOKIA.C6. Transportation

In addition to developments in computers &

telecommunications, several major innovations

in transportation have occurred since World

War II

While the advent of commercial jet has

reduced the travel time of businessmen,containerisation has lowered the costs ofshipping goods over long distances.

C7. Gobalisation of Production

Technological breakthroughs have facilitated

globalisation of production

A satellite based communications system

allows Texas Instruments (TI) to co-ordinate

on a global scale, its production planning, cost

accounting, financial planning, marketing,

customer service, & human resource.

C8. Markets

Along with the globalisation of production,

technological innovations have facilitated theinternationalisation of markets

As stated earlier, containerisation has made it

more economical to transport goods over longdistances, thereby creating global market

Low-cost global communications networks

such as the World Wide Web are helping toelectronic global market places

In additions, low-cost jet travel has resulted inthe mass movement of people around theworld

This has reduced the cultural distance between the

countries & is bringing about convergence ofconsumer tastes & preferences

At the same time, global communications networks

& global media are creating a worldwide culture

Worldwide culture is creating a world market for

consumer goods.

C9. Technology Transfers


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Technology transfers includes :-

i) Internal transfer of technology from the R&D

or engineering department to themanufacturing department of a firm based in

a country

ii) The same transfer of technology from a

laboratory or operations of an MNC in onecountry to its laboratory or operations inanother country

iii) The transfer of technology from a research

consortium supported by many firms to one of

its members

Simply told, technology transfer is a process thatpermits the flow of technology from a source to areceiver through published material

Purchase & sale of machinery, equipment & inter-

mediate goods, transfer of data & personnel; &interpersonal communication

Enhancing Technological Capabilities

1. Severe Compitition

2. To gain competitive edge3. Huge funds for R & D only with developed countries4. Developing countries depend on adaptation & assimilation of existing technologies5. India developing quality IT & bio-technology6. Developing countries prefer hard aspect of technology(plant, equipment, patents NOT softaspect(knowledge, know-how, mgt.practices)7. Import of technology is a short term measure

Technology Generation

1. TNC play major role2. Economies of scale, ability to finance R&D

3. Govt. depts. Some private firms, individual scientists, with the help of govt. / Big corporationsdo R&D4. FDI brings technology to the host country5. Developing countries mainly depend on hard aspect of technology, also onadapting/improving existing technologies6. MNC / TNC coming to developing countries for R&D due to abundant and economicalscientists here.

Technology transfer 1. Internalised by TNC To affiliates for development, production, economies of scale, secrecyintact, economical & faster, repeated upgradation, new skills to host country, new avenues to

parent co.BUT, new technology can be expensive to affiliate, difficult to absorb and adopt new tech. inhost country2. Externalised transfer Tech. transfer through, franchising, licencing, sub-contracting, jointventures etc.Steps to falicitate tech. trfr.

Attract new MNC,

Provide incentives,

Attract investment,

Liberalize tax / trade regime

Improve infrastructure,

Improve skills of employees,


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Help local firms in getting right

technology from right sources

Technology transfer comprise six categories :-

1. International Technology Transfer is acrossnational boundaries. Generally, such transfers takeplace between developed & developing countries.

2. Regional Technology Transfer is transferredfrom one region of a country to another.

3. Cross-industry or Cross-sector TechnologyTransfer is transferred from one industrial sector

to another.

4. Interfirm Technology Transfer is transferredfrom one company to another.

5. Intra-firm Technology Transfer is transferredwithin a firm, from one location to another. Intra-firm transfers can also be made from onedepartment to another within the same facility.

6. Pirating or Reverse-Engineering wherebyaccess to technology is obtained as the expense of theproprietary rights of the owners of technology.

International Technology TransferParties in the Transfer Processi) Home country,ii) Host Country, &iii) The Transaction

i) Home country

Argue that the establishment of production facilitiesBy MNCs in subsidiaries abroad decrease theirExport potential

Some of the MNCs imports stem from theirSubsidiaries, the volume of imports of the home

Country tends to increase

Besides, technology transfer tends to effect adversely

Competitive advantage of the home country

Labour unions in the home country too oppose

Technology transfer on the ground that the jobs

Generated from the new technology will benefit the

Host country citizens.

ii)Host Country

a) Economic Implicationsb) Social Implications

Economic Implications Economic implications include payment of fee,

royalty, dividends, interest, & salaries to foreigntechnicians & tax concessions resulting in loss to thenational exchequer

All these are payable to the transferring country &


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might prove very expensive to the host country

Many times, the type of technology transferred by

international business is not appropriate todeveloping countries, is designed to produce thetypes of goods that a rich country needs

& to do so by methods, which are appropriate to

resources endowment of developed nations.

b) Social Implications

Along with the transfer of technology, there is the

transmission of culture from the exporting countries

The upper & middle class Indians are a case in point

Majority of these neo-rich people are totally Wester-

nised & Americanised in their attitudes, behaviours,food habits, & dress accustomedness

This is because, we import technology from theUnited States & European countries.

iii)Transaction

This element focuses on the nitty-grities of the transfer.

Stages in the Transfer Process

The transfer of technology between countries,

particularly from rich to developing nations, proceedsin five different, but coordinated stages :-

1.Assignments, including sale & licensing agreementscovering all forms of industrial property includingpatents, inventors certificates, utility models,industrial designs, trademarks, service names, &trade names.

2.Arrangements, covering the provision of know-how& technical expertise in the form of feasibility

studies, plans, diagrams, models, instructions,guides, formulations, service contracts &specifications, &/or involving technical, advising,& managerial personnel, personnel training, &equipments for training.

3.Arrangements, covering the provision of basic ordetailed engineering designs, & the installation &operations of plant & equipment.

4.Purchases, including leases & other forms ofacquisition of machinery, equipment, intermediategoods, &/or raw materials insofar as they are part of

transactions involving technology transfers

5.Industrial & technical cooperation agreements ofany kind, including turnkey agreements,international subcontracting, as well as provision formanagements of & marketing servicesTechnology is not a homogeneous phenomenon. There

are different types of technology, each posing fundamentally

different problems & demanding

different solutions in the international transfer process.

International Technology Issues -


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Foreign Technology Acquisition

One of the major issues in technology relates to the

mode of acquisition

Developing new technology may conjure up visions

of scientists & product developers working in R&D

laboratories In reality, new technology comes from many

different sources, including suppliers, manufacturersusers, other industries, universities, government & MNCs

While every source needs to be explored, each firm

has specific sources for most of the new technologies.

Broadly the acquisition routes are three :-A. Internal Technology AcquisitionB. External AcquisitionC. Combined Sources

Internal Technology Acquisition Internal technology acquisition option have the

advantage that any innovation becomes the exclusiveproperty of the firm

In addition, the resulting technology will be tailored

to meet the firms needs

However, internal development has risks

The development take longer time than acquiring

already developed technology from external sources In addition, internally generated technology is more

expensive than the one acquired from outsidesources.

B. External Acquisition

External technology acquisition is the process of

acquiring technology developed by other for use inthe company

External technology acquisition generally has the

advantage of reduced cost & time to implement &lower risks

However, technology available from outside sources

was generally developed for different applications

Therefore, external acquisition should contain an

aspect of adaptation to the acquiring co. application.

C. Combined Sources

Many forms of technology acquisition are

combinations of external & internal activities

Combined acquisition seek to overcome thelimitations of internal & external sources, takingadvantages of both the actions at the same time

Technology acquisition RoutesPURELY INTERNAL PURELY EXTERNAL

Technology transfer X

& Absorption

Contract R&D X

R&D Strategic

Partnership X X


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Licensing X

Purchasing X

Joint Venture X

Acquisition of Co.With Technology X

Choice of Technology

Terms & Conditions of Technology Transfer

Globalisation The world economy is passing through structural

changes

These changes are driven by globalisation of

business as well as by the revolution in information,communication, & transportation technology

Nations now have powerful technology in their

hands, fundamentally transforming the way inwhich business is conducted around the globe

The World Trade Organisation (WTO) iscontributing to globalisation by removing tradebarriers between countries & involving mechanismfor smooth conduct of trade among nations

The WTO has also evolved a mechanism to manage

technology better

The main provision of the WTO that influence

technology transfer are included under the followingsections :-1. Trade Related Aspects of Intellectual Property

Rights (TRIPs)

2. Trade Related Investment Measures (TRIMs)3. Subsidies & Countervailing Measures (SCMs)4. The Information Technology Agreements

(ITA)

Barriers to Technology TransferThe final international technology issue relates tobarriers. The problems encountered in transfer oftechnology are :-

A limited general understanding of the concept of

technology, & the lack of consistent framework for

its study Lack of systematic planning for technology in

developing countries or misunderstanding of itsunderlying philosophy

Lack of bilateral scientific/ technology advantage in

the process of technology transfer (mutual benefits)

Lack of systematic & integrated engineering & socio-

economic approach to the technology transferprocess

Lack of a relevant quantitative framework/

approach to the analysis & evaluation of technology


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transfer to developing countries

Failure to include ergonomic aspects in technology

transfer or to accord sufficient value to the humanmachine interface variable of the transferredtechnology, or the failure to adjust the technology to

the existing socio-cultural system Lack of attention to environmental consideration &

assessment of technological impact

Failure to determine whether a national consensus

& orientation exist for a transfer

Failure to recognise the local potential (cultural &

economic) for adoption of technology (that is, failureto determine the availability of social & economicinfrastructures)

Failure to determine if the existing national

productive capacity is adequate to support theapplication of the transferred technology

Restricting the feasibility study of technology

transfer to financial assessments (mostly cost benefitanalysis)

Absence of any substantial effort to review & utilise

the potential of technological interchange & socio-technical collaboration for technology transferbetween developing countries

Presence of ethnical problems within the technology

transfer

failure to evaluate or consider conflict causing

factors pertaining to the transferred technology.

These factors can be categories into :-1. sector conflict factors conflicts that can arise

within the techno-economic systems

2. rural urban conflict factors arising because ofspatial (that is, regional) imbalance in thedistribution of physical resources needed for specificindustry in the long-term (for instance, sacrificing

the existing production institutions in an area inorder to initiate to new, imported, mostly large scaletechnology), leading to

3. Factors disturbing the socio-cultural balance thatoperate with in the social system :due to the nonconformity of the transferredtechnology with the available potential, & with theinherent objective of development policies &national techno-economic plans in developingcountries ; & due to the lack of specific software &any other sophisticated supportive tools for

technological planning & technology assessmentwithin the technology transfer framework.

Technology Diffusion (adoption)

Diffuse means spread out, scatter, pour inDifferent directions, Diffusion of technology is the process by which technologyis communicated among and adopted by the members of a social system.

Technology is transfered & shared by suppliers, buyers and affiliates

R&D institutions

Competitors


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Technology Dissemination (Spread widely) -

Ex : Worldwide expansion of mobile networks has put mobile technology into the hands

of millions of people who do not have access to desktop computers or reliable landlineconnections to the Internet. Innovative programs have been put in place to disseminatecrucial health, social and political data over mobile devices and to use them to collecteyewitness reports and personal health information.

Technology Spill over (overflow)

Positive and negative, TNC can poach R&D staff of local firms offering better incentives

thus hindering the local firms prospectives.

Technology Diffusion

Diffuse means spread out, scatter, pour indifferent directions, Diffusion of technology is the process by

which technology is communicated among and adopted by the

members of a social system. People naturally resist change

Technology Spill over (overflow)

INTERNATIONAL BUSINES THEORIES :-

1. MERCANTILE THEORY OF 17TH CENTURY

17th century ofmercantilism which emphasized that a country should export as manygoods as possible and minimize the import of goods. Mercantilism emphasized tradesurplus and zero sum game - where only one participant would reap the benefits,while absolute advantage theory proposed a positive sum game - where allparticipants in the free trade would benefit from international commerce.Mercantilism also advocated use of government to achieve trade surplus while AdamSmiths theory emphasized free trade, where supply and demand of goods would bedictated by the invisible market forces, with no government involvement - laissez-faire.

2. The absolute advantage theoryThe absolute advantage theory was given by Adam Smith in 1776; according to the absoluteadvantage theory each country always finds some absolute advantage over another country in theproduction of a particular good or service. Simply because some countries have naturaladvantage of cheap labour, skilled labour, mineral resources, fertile land etc. these countries areable to produce some specific type of commodities at cheaperprices as compared to others. So,each country specializes in the production of a particular commodity. For example, India findsabsolute advantage in the production of the silk saris due to the availability of skilled workers inthe field, so India can easily export silk saris to the other nations and import those goods inwhich other countries find absolute advantages.

But this theory is not able to justify all aspects of international business. This theory leaves noscope of international business for those countries that are having absolute advantage in all fieldsor for those countries that are having no absolute advantage in any field.
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3. The comparative ADVANTAGE theory

After 40 years of absolute advantage theory, in order to provide the full justification ofinternational business David Richardo presented the Richardian modelcomparative costtheory. According to the comparative cost theory, two countries should do business with eachother if one country is having an advantage in the ability of producing one good relative to

another good as compared to some other countrys relative ability of producing same goods. Itcan be well understood by taking an illustration-

If USA could produce 25 bottles of wine and 50 pounds of beef by using all of its productionresources and France could yield 150 bottles of wine and 60 pounds of beef by using the sameresources, then according to absolute advantage theory France finds clear advantage over USA inthe production of both beef and wine. So, there should not be any business activity between thetwo countries. But this is not the case according to the comparative cost theory. Comparativecost theory suggests relative comparing of the beef and wine production. In relative comparingwe can find that France sacrifices 2.5 bottles of wine for producing each pound of beef (150/60)and USA sacrifices 0.5 bottles of wine for producing each pound of beef (25/50). So, we can see

that production of beef is more expensive in France as compared to USA. Comparative costtheory suggests USA to import wine from France instead of producing it and in similar mannertheory suggests France to import beef from USA instead of producing it.

In this way, comparative cost theory well explains the driving forces behind internationalbusiness.

4. Opportunity cost theoryThe opportunity cost theory was proposed by Gottfried Haberler in 1959. The opportunity cost isthe value of alternatives which have to be forgone in order to obtain a particular thing. Forexample, Rs. 1,000 is invested in the equity of Rama News Limited and earned a dividend of six

per cent in 1999, the opportunity cost of this investment is 10 per cent interest had this amountbeen deposited in a commercial bank for one year term.

Another example is that, India produces textile garments by utilizing its human resources worthof Rs. 1 billion and exports to the US in 1999. The opportunity cost of this project is, had Indiadeveloped software packages by utilizing the same human resources and exported the same toUSA in 1999, the worth of the exports would have been Rs. 10 billion. Opportunity costapproach specifies the cost in terms of the value of the alternatives which have to be foregone inorder to fulfil a specific art.

Thus, this theory provides the basis for international business in terms of exporting a particular

product rather than other products. The previous example suggests that it would be profitable forIndia to develop and export software packages rather than textile garments to the USA.

RATIONALE (Advantages) FOR GLOBALISATION :- (fundamental reason, logical basis)

-

1. Cost reduction

2. Global learning

3. Arbitrage advantage

4. Rapid industrialisation

5. Better allocation of resources

6. Reduction in poverty

7. Employment generation


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8. Balanced development

9. Better quality of life

10. Human development

11. Dissemination of knowledge

12. Integration of economies

13. Flow of men, money, material

14. Advancement in transportation, communication & technology

15. Creation ofTrading blocs, such as the

North American Free Trade Agreement (NAFTA)-Members U.S, canada, Mexico

the European Union (EU) Britain, France, Germany, Italy, Spain etc.

the Asia-Pacific Economic Co-operation (APEC) Australia, Canada, Indonesia, Japan,

Korea, malaysia, New Zealand, Singapore, Thailand, etc.

the Association of South East Asian Nations (ASEAN) Brunei, Myanmar, Combodia,

malaysia, Philipines, Singapore, Thailand, Vietnam.

and the East Africa Community (EAC) Brundi, kenya, Rawanda, Tanzania, Uganda

support regional cooperation between geographical neighbours.

Disadvantages of Globalisation

1. Threat to domestic industry

2. Unemployment

3. Exploitation of labour

4. Overuse of natural resources

5. Widening gap between rich & poor

6. Threat to national sovereignty

INTERNATIONAL BUSINESS THEORIES


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1. Mercantile theory-17th century England Trade for Gold & Silver, maintain trade

surplus - Export more import less, Govt. should impose tariff on Imports, based on zero

sum game gain for 1 country loss for other country. Critisised for this, there should

be positive sum game where all countries gain by trade.

2.Absolute Cost Advantage theory- BY Adam Smith in 1776, states that countries

should produce and export that product which they can produce at a lesser cost than

others. Ex- Britain cloth, France wine. Critisised for unrealistic assumptions

homogeneity of products, tastes, two country, two commodity, labour cost of

production.

3. Comparative Cost Advantage theory-David Recardo-1817, states that countries

should produce and export that product which they can produce at a lesser Comparative

cost than others. Assumptions

Labour only, homogenous, fixed supply, full employment, same tech. in both countries,

no transport cost, no barriers of trade.

4. Factor Endowment theoryby Eli Hecksher-1919 & Bertil Ohlin -1933 What

factor a country has more ? Labour OR capital . Ex. India & China have ample cheap

labour so should engage and export of labour oriented products cloth / leatherproducts, and import Capital oriented products from U.S / Japan etc.

Risk in international trade - Buyer insolvency

Non-acceptance

Credit risk

Regulatory risk

Intervention

Political risk

War and other uncontrollable events

unfavorable exchange rate movements

TRADE BARRIERS

Tariffs (taxes and duties imposed on goods and services that are imported and

exported)ex. Import duty,Customs duty

Non-tariff barriers to trade - Import licenses , Export licenses , Import quotas

Top trading nations

Main articles: List of countries by exports and List of countries by imports

Rank Country Exports + Imports Date of

information

- European Union (Extra-EU27) $3,197,000,000,000 2009 [26]

1 United States $2,439,700,000,000 2009 est.

2 Peoples Republic of China $2,208,000,000,000 2009 est.
http://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Import_licensehttp://en.wikipedia.org/wiki/Import_quotahttp://en.wikipedia.org/wiki/List_of_countries_by_exportshttp://en.wikipedia.org/wiki/List_of_countries_by_importshttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/International_trade#cite_note-25%23cite_note-25http://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/People's_Republic_of_Chinahttp://en.wikipedia.org/wiki/People's_Republic_of_Chinahttp://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Import_licensehttp://en.wikipedia.org/wiki/Import_quotahttp://en.wikipedia.org/wiki/List_of_countries_by_exportshttp://en.wikipedia.org/wiki/List_of_countries_by_importshttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/International_trade#cite_note-25%23cite_note-25http://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/People's_Republic_of_China


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3 Germany $2,052,000,000,000 2009 est.

4 Japan $1,006,900,000,000 2009 est.

5 France $989,000,000,000 2009 est.

6 United Kingdom $824,900,000,000 2009 est.

7 Netherlands $756,500,000,000 2009 est.

8 Italy $727,700,000,000 2009 est.

- Hong Kong $672,600,000,000 2009 est.

9 South Korea $668,500,000,000 2009 est.

10 Belgium $611,100,000,000 2009 est.

11 Canada $603,700,000,000 2009 est.

12 Spain $508,900,000,000 2009 est.

13 Russia $492,400,000,000 2009 est.

14 Mexico $458,200,000,000 2009 est.

15 Singapore $454,800,000,000 2009 est.

16 India $387,300,000,000 2009 est.

17 Taiwan (Republic of China) $371,400,000,000 2009 est.

18 Switzerland $367,300,000,000 2009 est.

19 Australia $322,400,000,000 2009 est.

20 United Arab Emirates $315,000,000,000 2009 est.

Source : Exports. Imports.The World Factbook.

Top traded commodities (exports)

Rank Commodity Value in US$(000) Date of

information

1 Mineral fuels, oils, distillation products, etc $1,658,851,456 20092 Electrical, electronic equipment $1,605,700,864 2009

3 Machinery, nuclear reactors, boilers, etc $1,520,199,680 2009

4 Vehicles other than railway, tramway $841,412,992 2009

5 Pharmaceutical products $416,039,840 2009

6 Optical, photo, technical, medical, etc apparatus $396,337,696 2009

7 Plastics and articles there of $386,628,064 2009

8 Pearls, precious stones, metals, coins, etc $320,174,080 2009

9 Organic chemicals $310,106,432 2009

10 Iron and steel $273,024,416 2009

Risk in international trade

Companies doing business across international borders face many of the same risks as wouldnormally be evident in strictly domestic transactions. For example,

Buyer insolvency (purchaser cannot pay);

Non-acceptance (buyer rejects goods as different from the agreed upon specifications);

Credit risk (allowing the buyer to take possession of goods prior to payment);

Regulatory risk (e.g., a change in rules that prevents the transaction);

Intervention (governmental action to prevent a transaction being completed); Political risk (change in leadership interfering with transactions or prices); and

War and other uncontrollable events.

In addition, international trade also faces the risk of unfavorable exchange rate movements (and,the potential benefit of favorable movements).[

TRADE BARRIERS

Trade barriers are a general term that describes any government policy or regulation thatrestricts international trade. The barriers can take many forms, including the following terms that
http://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Italyhttp://en.wikipedia.org/wiki/Italyhttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/South_Koreahttp://en.wikipedia.org/wiki/South_Koreahttp://en.wikipedia.org/wiki/Belgiumhttp://en.wikipedia.org/wiki/Belgiumhttp://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Mexicohttp://en.wikipedia.org/wiki/Mexicohttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Republic_of_Chinahttp://en.wikipedia.org/wiki/Republic_of_Chinahttp://en.wikipedia.org/wiki/Republic_of_Chinahttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/United_Arab_Emirateshttp://en.wikipedia.org/wiki/United_Arab_Emirateshttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2078rank.htmlhttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2087rank.htmlhttp://en.wikipedia.org/wiki/The_World_Factbookhttp://en.wikipedia.org/wiki/The_World_Factbookhttp://en.wikipedia.org/wiki/International_trade#cite_note-27%23cite_note-27http://en.wikipedia.org/wiki/International_trade#cite_note-27%23cite_note-27http://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Italyhttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/South_Koreahttp://en.wikipedia.org/wiki/Belgiumhttp://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Mexicohttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Republic_of_Chinahttp://en.wikipedia.org/wiki/Republic_of_Chinahttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/United_Arab_Emirateshttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2078rank.htmlhttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2087rank.htmlhttp://en.wikipedia.org/wiki/The_World_Factbookhttp://en.wikipedia.org/wiki/International_trade#cite_note-27%23cite_note-27http://en.wikipedia.org/wiki/International_trade


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include many restrictions in international trade within multiple countries that import and exportany items of trade:

Tariffs

Non-tariff barriers to trade

Import licenses Export licenses

Import quotas

Subsidies

Voluntary Export Restraints

Local content requirements

Embargo

Most trade barriers work on the same principle: the imposition of some sort ofcost on trade thatraises the price of the traded products. If two or more nations repeatedly use trade barriers

against each other, then a trade warresults.

Economists generally agree that trade barriers are detrimental and decrease overall economicefficiency, this can be explained by the theory of comparative advantage. In theory, free tradeinvolves the removal of all such barriers, except perhaps those considered necessary for health ornational security. In practice, however, even those countries promoting free trade heavilysubsidize certain industries, such as agriculture and steel.

Trade barriers are often criticized for the effect they have on the developing world. Because rich-country players call most of the shots and set trade policies, goods such as crops that developingcountries are best at producing still face high barriers. Trade barriers such as taxes on food

imports or subsidies for farmers in developed economies lead to overproduction and dumping onworld markets, thus lowering prices and hurting poor-country farmers. Tariffs also tend to beanti-poor, with low rates for raw commodities and high rates for labor-intensive processedgoods. The Commitment to Development Index measures the effect that rich country tradepolicies actually have on the developing world.

Examples of free trade areas North American Free Trade Agreement (NAFTA)

South Asia Free Trade Agreement (SAFTA)

European Free Trade Association

European Union (EU) Union of South American Nations

New West Partnership (An internal free-trade zone in Canada between Alberta, British

Columbia, and Saskatchewan)

Other trade barriers include differences in culture, customs, traditions, laws, language andcurrency.

A tariffis a tax levied on imports orexports. The word is derived from the Arabic word tarif,meaning fees to be paid.

Tariffs are usually associated with protectionism, a governments policy of controlling tradebetween nations to support the interests of its own citizens. For economic reasons, tariffs areusually imposed on imported goods.

In the past, tariffs formed a much larger part of government revenue than they do today.

When shipments of goods arrive at a border crossing or port, customs officers inspect thecontents and charge a tax according to the tariff formula. Since the goods cannot continue ontheir way until the duty is paid, it is the easiest duty to collect, and the cost of collection is small.Traders seeking to evade tariffs are known as smugglers.

There are various types of tariffs:
http://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Import_licensehttp://en.wikipedia.org/wiki/Import_quotahttp://en.wikipedia.org/wiki/Subsidieshttp://en.wikipedia.org/wiki/Voluntary_Export_Restraintshttp://en.wikipedia.org/wiki/Embargohttp://en.wikipedia.org/wiki/Costhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Trade_warhttp://en.wikipedia.org/wiki/Efficiency_(economics)http://en.wikipedia.org/wiki/Efficiency_(economics)http://en.wikipedia.org/wiki/Comparative_advantagehttp://en.wikipedia.org/wiki/Free_tradehttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Steelhttp://en.wikipedia.org/wiki/Commitment_to_Development_Indexhttp://en.wikipedia.org/wiki/North_American_Free_Trade_Agreementhttp://en.wikipedia.org/wiki/South_Asia_Free_Trade_Agreementhttp://en.wikipedia.org/wiki/European_Free_Trade_Associationhttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/Union_of_South_American_Nationshttp://en.wikipedia.org/wiki/New_West_Partnershiphttp://en.wikipedia.org/wiki/Taxhttp://en.wikipedia.org/wiki/Importhttp://en.wikipedia.org/wiki/Importhttp://en.wikipedia.org/wiki/Importhttp://en.wikipedia.org/wiki/Exporthttp://en.wikipedia.org/wiki/Protectionismhttp://en.wikipedia.org/wiki/Protectionismhttp://en.wikipedia.org/wiki/Protectionismhttp://en.wikipedia.org/wiki/Smugglershttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Import_licensehttp://en.wikipedia.org/wiki/Import_quotahttp://en.wikipedia.org/wiki/Subsidieshttp://en.wikipedia.org/wiki/Voluntary_Export_Restraintshttp://en.wikipedia.org/wiki/Embargohttp://en.wikipedia.org/wiki/Costhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Trade_warhttp://en.wikipedia.org/wiki/Efficiency_(economics)http://en.wikipedia.org/wiki/Efficiency_(economics)http://en.wikipedia.org/wiki/Comparative_advantagehttp://en.wikipedia.org/wiki/Free_tradehttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Steelhttp://en.wikipedia.org/wiki/Commitment_to_Development_Indexhttp://en.wikipedia.org/wiki/North_American_Free_Trade_Agreementhttp://en.wikipedia.org/wiki/South_Asia_Free_Trade_Agreementhttp://en.wikipedia.org/wiki/European_Free_Trade_Associationhttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/Union_of_South_American_Nationshttp://en.wikipedia.org/wiki/New_West_Partnershiphttp://en.wikipedia.org/wiki/Taxhttp://en.wikipedia.org/wiki/Importhttp://en.wikipedia.org/wiki/Exporthttp://en.wikipedia.org/wiki/Protectionismhttp://en.wikipedia.org/wiki/Smugglers


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An ad valorem tariffs is a set percentage of the value of the good that is being imported.

Sometimes these are problematic, as when the international price of a good falls, so doesthe tariff, and domestic industries become more vulnerable to competition. Conversely,when the price of a good rises on the international market so does the tariff, but a countryis often less interested in protection when the price is high.

They also face the problem of inappropriate transfer pricing where a company declares a valuefor goods being traded which differs from the market price, aimed at reducing overall taxes due.

A SPECIFICtariff, is a tariff of a specific amount of money that does not vary with the

price of the good. These tariffs are vulnerable to changes in the market or inflation unlessupdated periodically.

AREVENUEtariff is a set of rates designed primarily to raise money for the government.

A tariff on coffee imports imposed by countries where coffee cannot be grown, forexample, raises a steady flow of revenue.

APROHIBITIVEtariff is one so high that nearly no one imports any of that item.

APROTECTIVEtariff is intended to artificially inflate prices of imports and protectdomestic industries from foreign competition (see also effective rate of protection,)especially from competitors whose host nations allow them to operate under conditionsthat are illegal in the protected nation, or who subsidize their exports.

An environmentaltariff, similar to a protective tariff, is also known as a greentariff or

eco-tariff, and is placed on products being imported from, and also being sent tocountries with substandard environmental pollution controls.

ARETALIATORYtariff is one placed against a country who already charges tariffs

against the country charging the retaliatory tariff (e.g. If the United States were to chargetariffs on Chinese goods, China would probably charge a tariff on American goods, also).These are usually used in an attempt to get other tariffs rescinded.

Non-tariff barriers to trade (NTBs) are trade barriers that restrict importsbut are not in theusual form of a tariff. Some common examples of NTBs are anti-dumping measures andcountervailing duties, which, although they are called non-tariff barriers, have the effect oftariffs once they are enacted.

Their use has risen sharply after the WTO rules led to a very significant reduction in tariff use.Some non-tariff trade barriers are expressly permitted in very limited circumstances, when theyare deemed necessary to protect health, safety, or sanitation, or to protect depletable naturalresources. In other forms, they are criticized as a means to evade free trade rules such as those ofthe World Trade Organization (WTO), the European Union (EU), orNorth American Free TradeAgreement (NAFTA) that restrict the use of tariffs.

Some of non-tariff barriers are not directly related to foreign economic regulations, butnevertheless they have a significant impact on foreign-economic activity and foreign tradebetween countries.

Trade between countries is referred to trade in goods, services and factors of production. Non-tariff barriers to trade include import quotas, special licenses, unreasonable standards for thequality of goods, bureaucratic delays at customs, export restrictions, limiting the activities ofstate trading, export subsidies, countervailing duties, technical barriers to trade, sanitary andphyto-sanitary measures, rules of origin, etc. Sometimes in this list they include macroeconomicmeasures affecting trade.

Six Types of Non-Tariff Barriers to Trade1. Specific Limitations on Trade:

1. Quotas2. Import Licensing requirements3. Proportion restrictions of foreign to domestic goods (local content requirements)4. Minimum import price limits

5. Embargoes2. Customs and Administrative Entry Procedures:
http://en.wikipedia.org/wiki/Ad_valorem_taxhttp://en.wikipedia.org/wiki/Transfer_pricinghttp://en.wikipedia.org/wiki/Effective_rate_of_protectionhttp://en.wikipedia.org/wiki/Environmental_tariffhttp://en.wikipedia.org/wiki/Environmental_tariffhttp://en.wikipedia.org/wiki/Environmental_tariffhttp://en.wikipedia.org/wiki/Trade_barrierhttp://en.wikipedia.org/wiki/Importhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Dumping_(pricing_policy)http://en.wikipedia.org/wiki/Countervailing_dutieshttp://en.wikipedia.org/wiki/Free_tradehttp://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/North_American_Free_Trade_Agreementhttp://en.wikipedia.org/wiki/North_American_Free_Trade_Agreementhttp://en.wikipedia.org/wiki/Quotahttp://en.wikipedia.org/wiki/Licensinghttp://en.wikipedia.org/wiki/Embargohttp://en.wikipedia.org/wiki/Ad_valorem_taxhttp://en.wikipedia.org/wiki/Transfer_pricinghttp://en.wikipedia.org/wiki/Effective_rate_of_protectionhttp://en.wikipedia.org/wiki/Environmental_tariffhttp://en.wikipedia.org/wiki/Trade_barrierhttp://en.wikipedia.org/wiki/Importhttp://en.wikipedia.org/wiki/Tariffhttp://en.wikipedia.org/wiki/Dumping_(pricing_policy)http://en.wikipedia.org/wiki/Countervailing_dutieshttp://en.wikipedia.org/wiki/Free_tradehttp://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/North_American_Free_Trade_Agreementhttp://en.wikipedia.org/wiki/North_American_Free_Trade_Agreementhttp://en.wikipedia.org/wiki/Quotahttp://en.wikipedia.org/wiki/Licensinghttp://en.wikipedia.org/wiki/Embargo


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1. Valuation systems2. Antidumping practices3. Tariff classifications4. Documentation requirements5. Fees

3. Standards:1. Standard disparities2. Intergovernmental acceptances of testing methods and standards3. Packaging, labeling, and marking

4. Government Participation in Trade:1. Government procurement policies2. Export subsidies3. Countervailing duties4. Domestic assistance programs

5. Charges on imports:1. Prior import deposit subsidies

2. Administrative fees3. Special supplementary duties4. Import credit discriminations5. Variable levies6. Border taxes

6. Others:1. Voluntary export restraints2. Orderly marketing agreements

Examples of Non-Tariff Barriers to Trade

Non-tariff barriers to trade can be:

Import bans

General or product-specific quotas

Rules of Origin

Quality conditions imposed by the importing country on the exporting countries

Sanitary and phyto-sanitary conditions

Packaging conditions

Labeling conditions

Product standards

Complex regulatory environment

Determination of eligibility of an exporting country by the importing country Determination of eligibility of an exporting establishment(firm, company) by the

importing country.

Additional trade documents like Certificate of Origin, Certificate of Authenticity etc.

Occupational safety and health regulation

Employment law

Import licenses

State subsidies, procurement, trading, state ownership

Export subsidies

Fixation of a minimum import price

Product classification

Quota shares

Foreign exchange market controls and multiplicity

Inadequate infrastructure

Buy national policy

Over-valued currency

Intellectual property laws (patents, copyrights)

Restrictive licenses

Seasonal import regimes

Corrupt and/or lengthy customs procedures
http://en.wikipedia.org/wiki/Dumpinghttp://en.wikipedia.org/wiki/Occupational_safety_and_healthhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Employment_lawhttp://en.wikipedia.org/wiki/Import_licensehttp://en.wikipedia.org/wiki/Subsidyhttp://en.wikipedia.org/wiki/State_ownershiphttp://en.wikipedia.org/wiki/Export_subsidyhttp://en.wikipedia.org/wiki/Product_classificationhttp://en.wikipedia.org/wiki/Quota_sharehttp://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Infrastructurehttp://en.wikipedia.org/wiki/Intellectual_propertyhttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/Copyrighthttp://en.wikipedia.org/wiki/Dumpinghttp://en.wikipedia.org/wiki/Occupational_safety_and_healthhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Employment_lawhttp://en.wikipedia.org/wiki/Import_licensehttp://en.wikipedia.org/wiki/Subsidyhttp://en.wikipedia.org/wiki/State_ownershiphttp://en.wikipedia.org/wiki/Export_subsidyhttp://en.wikipedia.org/wiki/Product_classificationhttp://en.wikipedia.org/wiki/Quota_sharehttp://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Infrastructurehttp://en.wikipedia.org/wiki/Intellectual_propertyhttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/Copyright

ibm unit 2-detail

Documents