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 in different countries with different external forces acting upon them.  Environment is further classified as domestic environment, foreign environment, and international environment

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

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

 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 and Institutions 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.

 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 trade between foreign nations.  Subsidies - To protect existing businesses from risk associated with change, such as costs of labour, materials, etc.

 In protectionist theory. Tariffs .  Quotas .  Tax cuts.Alleviation of the burdens of social and business costs. corporate and personal income taxes).) on par or higher than domestic prices.g. emphasis is placed on reducing taxation on domestic labour and savings at a cost of higher tariffs on foreign products.  Traditional Protectionism  In its historic sense. and anti-dumping measures. 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. ( Including restrictive quotas. .to prevent dumping of cheaper foreign goods that would overwhelm the increase the price of a foreign competitor's goods.

LMC.Upper middle income GNI $2996-$9265 High income countries GNI $9266 or more LIC. and UMC are developing countries.Income wise classification of countries       GNI ( gross national income) LIC-Low income countries. Rest are developed countries .GNI $735 or less LMC – Lower middle income countries-GNI $ 736-$ 2995 UMC.

 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 .

• Have competitive advantage in mature and labour intensive products. etc…. tires. . batteries. Lower Middle income countries:-• Early stages of industrialization • Expansion of consumer market • Availability of cheap HRs • Domestic market are dominated with products like clothing. building materials. • Location for production of standardized products like clothing for exports.

formal education and increased wage rates.  High exports and rapid economic development .  Low wage costs compared to advanced countries.  People move from rural to urban area which results in increased urbanization  Increase in literacy. Upper Middle Income Countries:- Less Dependence on Agriculture  Occupational mobility of the people from agriculture to industry.

 Emphasis on future plan. High income countries characteristics:- Oil reach countries are excluded in this category  Service sectors contributes more than 50% to GNP  Development of information sector.  Japan‟s work culture.  Domination of scientists and professions over engineers and semi skilled works. .

Macro economic factors affecting business      Economic growth Inflation Balance of payment Economic transition Opportunities to MNCs  Liberalization and globalization helped MNCs. Business and economy Development:- Business identifies people‟s need and satisfy them by producing products.  Transition (change.  Developing countries increasing production and productivity to meet the growing needs of population.  International business contributes to economic development. conversion) process  Economic Vs Social issues in transition .

 Cultural factors in various countries affect the international business. the common view points which bind them together as a social entity.CULTURAL ENVIRONMENT What is culture  Culture is the thought and behavior patterns that member of a society earns through language and other forms of symbolic interaction.  Social and cultural factors include  Attitude of people to work  Attitude to wealth  Family  Marriage  Religion  Education  Ethics  Human relation  Social responsibilities .their customs. habits. beliefs and values.

 Subjective :.Culture is acquired through learning. rigid) Kind of behavior acceptable in the society.Culture of saving for the next year  Dynamic :.People of different culture have different ideas about same object.It goes on changing. .  Consumption of alcohol in the west.  Cumulative :. it is not socially acceptable in India and it is socially and legally unacceptable in Saudi Arabia  Learned :.  Prescriptive :.(narrow.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.

 Culture attitude and IB  Depressing (discouraging.  Eating habits.  India. Saudi Arabia.religion and cultural affects in order understand the foreign culture as they have to carry on business under existing culture. living styles and other consumption patterns.Low context culture.  Malaysia dosa and Hyderabad briyani ..  The international businessmen should eliminate the social .  Pizza – Popular in India.convey messages indirectly and expressive manner.Messages are clear and explicit. Japan.  Cross cultural communication process and negotiation: USA.  Dressing habits.popular in USA. sad) habits. Eg Americans . Canada. Germany and Switzerland . priority of needs are influenced by culture..high context culture  Cultures which handle information in a direct and linear fashionMonochromic.

 People work on several forms simultaneously instead of pursuing a single task. -.  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 .  Communication through Languages  Language is the basic medium of communication  The same words in the same language may mean different things in the different. Eg Japanese and Indians Cultural Universals: Cultural universals enable the businessmen to market the products in many countries with minor modification.Polychromic culture.

language. and preferences. consumer behavior and behavior with other stake holders. . living habits.  Religion: Religion is one of the important social institution influencing business.  Family system( women) Islamic countries -.  Business should consider the behavioral patterns of social group.SOCIAL ENVIRONMENT  Social environment Consists of religious aspects.  Human behavior that affects business includes employee behavior. depressing habits. Behavioral factors affecting business  Cultural differences in various countries result in variation in human behavior. beliefs. social less significant role in the economy and also family limited right. eating. traditions. customs.

escape) .Behavior based on group membership • USA reward the people – Performance • Malaysia reward the people. tribal) group in addition to performance • Motivation And Achievement • Hard work • Materialistic needs and salvation (recovery.ethnic ( national.

 It is based upon a study of 100.Hofstede‟s Dimensions of Culture  Geert Hofstede‟s cultural typology is the most often used.000 IBM employees who work in IBM divisions throughout the world.  Hofstede‟s survey revealed four underlying dimensions of culture:  Power Distance  Uncertainty Avoidance  Individualism/Collectivism  Masculinity/Femininity .

 artifact (work of art) of high PD:  Centralization  Organization Levels. expressed) in term of deference to higher and lower social and decision levels in organization.Height  Supervisors  Wage Differentials  Values.Power Distance (PD)  Power Distance is the extent to which hierarchical differences are accepted in society and articulated (spoken. White and Blue Collar Work .

 Artifacts (work of art) of high UA:  Standardization  Structured activities  Written rules  Specialists  No risk tolerance .Uncertainty Avoidance (UA)  Uncertainty Avoidance is the extent to which uncertainty and ambiguity are tolerated.

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 .

(boldness) are valued. like aggressiveness (forcefulness ) and assertiveness.Masculinity-Femininity (M/F) 1. Refers to the extent to which traditional masculine values.  Artifacts (work of art) of M/F  More Women In Jobs  Interpersonal Skills Rewarded  Inmate (patient) Skills Rewarded feminine  Social Rewards Valued .

Political Environment    Political Environment refers to the influence of the system of government and judiciary. directs and controls the business of that country. shelters. promotes. The political system that are stable. decides. The type of and structure govt prevailing in a country.  . encourages. honest. efficient and dynamic – leads to economic development. The system of government in a nation has conceivable (possible. feasible) effect on business.

Business prospers when the private sector enjoys freedom to decide. individual freedom is completely subordinated to the power of the authority of state. property rights. and freedom to spend. Basic political system:- Democracy:-. Totalitarianism:-.      . In practice free markets.also called authoritarianism. freedom to earn. concentrated in the hands of one person or in small group. and democracies do not guarantee economic growth. Maintain stable business environments primarily through laws protecting individual property right.refers to a political arrangement in which the supreme power is vested in the people. is not constitutionally accountable to the people.

political leaders guided by military and bureaucratic power.religious leader fame and enforce laws and regulations that are based on religious beliefs. Example African countries such as Zimbabwe. Example Afghanistan.private ownership of property is endorsed by government. Types of totalitarianism  Theocratic:.-. Taiwan. market forces are also allowed free play. Uganda and Kenya. Tanzania. Right – Wing totalitarianism. but political freedoms are rarely granted. Tribal :.occurs when a political party that represents the interests of a particular tribe monopolises power. Secular:. Indonesia. Example Pakistan. south Korea. etc. Argentina. Singapore. Brazil. Chile were under right-wing totalitarianism     .

 Currency devaluation --.loss of assets and future profits  Loss of technology and other IP motivation to improve efficiency  Confiscation of properties --.reduced values of repatriated earning . increased security costs.  Macro Risks:  Expropriation corporate assets without prompt and adequate compensation ---.increased operating cost  Civil wars --.loss of future profits  Barriers to repatriation profits--.loss of sales.loss of future profits  Mandatory Labour Legislations ---. Political risks: Political risk is any governmental action or politically motivated event that could adversely affect long term profitability and value of the firm.

higher security costs.  Micro level Political Risks: Kidnapping.  Top Management guidelines to solve the problem. reduced productivity  Increased taxation – reduced after tax profits  Officials Dishonesty --.loss of business.disrupted production. Threats --.  Timely information from the people in the font line should not be missed. increased operating costs  Political Risk assessment:  Managers in host country assess the potentially destabilizing issues evaluate their future impact on the firm. Terrorists.  Risk assessment takes two forms:- Experts or consultant – host country  Internal Staff .

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 .

 Availability of high quality labour force  Possibility of employing foreign nationals  Availability o f energy resources  Environment pollution  Infrastructure including transportation and communication system. 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. .

.          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.

Managing Political Risks: • Avoiding investment – avoid investing in a country ranked high on such risks. • Already invested plant may be wound up or transferred to other country. these groups ensure that political developments do not disturb operations. financial institutions. trade unions. considered to be relatively safe. both stand to gain. – Development Assistance :-. . – As partners in local businesses.financing subsidiaries with the help of local firms. • Adaptation – Local Equity and Debt :-. and government.the firm and the nation become partners.

is the policy of hiring people to represent a firms' business interest as also its views on local political matters.the firm may threaten the host country that the supply of materials. Insurance • Overseas Private Investment Corporation (OPIC) state owned/ sponsored. or technology would be stopped if its functioning is disrupted. • Multilateral Investment Guarantee Agency (MIGA) a subsidiary of the world bank. . products. • Terrorism Consultants :-.hire counterterrorism to train employees to cope with the threat of terrorism.  Lobbying:-.  Threat :-.

Legal environment  Legal environment refers to legal system in a country.  Government of a country defines the legal framework.  Legal system in a country is also influenced by its political system.  A country law‟s 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 refers to the rules and laws that regulate behavior of individuals and organizations. .

.  Theocratic law:-. and Japan follow civil law. precedent and usage are the bases for common law.  Civil based on how the law is applied to facts. reality)  Detailed set of laws which make-up a code is the basis for civil laws. Germany. Islamic law is more a moral rather than commercial law.Systems of law:  Common law:-. ( based on religious precepts like the Islamic law and Hindu law. customs.  Islamic law is unchanged as it is based on the Holy Koran. UK and Hong Kong. culture.  These law are in force like USA.  Courts interpret (understand.  Countries like France. take) the law according to the situations and incidents.traditions.

 Method of violation of property rights include (a) private action (b) public action and (c) corruption  private action :-. though the law are enacted to protect them. demanding bribes and corruption.refer to the bundle of legal rights to use the resource or allowing others to make use of it mostly for a price. Property rights:-.  Business people were forced to pay a fee to Russian Mafia during the post –communist era due to the latter‟s blackmail. higher licensing fee.attempts and actions of private individuals or groups relating to theft.collecting income by politicians and government officials from the holder of the legal titles of property rights.  Violated in different degrees in different countries.  Public action includes levying higher tax rates.  Public action :-. blackmail and piracy. .

and the like to publish and market their works.  Trademarks are design .  Copyright provide exclusive right to the authors.  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. chemical formula for a new drug and the like. computer software. .  Patents. publishers. copyrights and trademarks establish ownership rights over intellectual property rights. Protection of intellectual property:  Output of intellectual activity like an invention. icons and names used by the producers and marketers to differentiate their products/ services form those of others. a screenplay.

 Labour law:  Labour legislations are enacted in various countries. recruitment and employment practices. Product safety and product liability:  Products must adhere to certain safety standards as prescribed by product safety laws. employee benefits. trade union activities. employee-employer relations. collective negotiations.  Firms and its executives hold responsibility under product liability when injury. .  These laws and standards are more in USA as compared to other countries. regulations and modalities of prevention and settlement of industrial disputes. mostly based on the resolutions of the international labour organization. death or damage is caused by usage or consumption of a product.  Stipulations regarding working conditions.  These legislations prescribe the minimum wages.

nerve gas. some others are horrors (shock. remind) mixed reaction. and birth control pills are wonders. substitute mental work with computers.  Technological inventions man feels.Technological Environment  According to J. .K.  Open heart surgery. Galbraith “ systematic application of scientific or other organized knowledge to practical tasks”. provide himself with lot of leisure and comfort.  Automobiles and television have evoked (inducing. are wonders.  Technology is the most dramatic force shaping the destiny(future) of people all over the world. terror) and yet others have mixed blessing. probe deep into the seas and space in search of new treasures. submarine guns have proved to be horror.  Introduce machines to do the work of human beings.  Hydrogen bomb.

 Companies form „think tanks‟ with engineers and scientists.  Acquisition phase:  The company‟s technology group in collaboration with the industrial engineering group. who research from around world and gather information through computer service. conference. books.  This information is synthesized and put in short internal report form for the benefit of corporate strategic planners and technology policy makers. and international exhibitions. . would conduct technical feasibility study as well as an economic feasibility study before justifying and acquiring a new technology. Technology cycle: Awareness phase:  Company aware of emerging technologies relevant to the company‟s needs. magazines. journals.

. makeup) the acquired technologies for one‟s home needs. great deal of rework and adaptation result. essential) to improvise (get along. causes major productivity losses. Adaptation phase:  Homework is done correctly the transition from acquisition to adaptation becomes much smoother and less expensive.  Advancement phase:  Capital is limited one cannot indiscriminately (aimlessly.  Sufficient time and effort have not gone into studying the relevance of a particular technology to the company‟s present needs. and result in severe quality problems.  It become imperative (very important. upset) the people acquiring the technology also slows down the assimilation rate. random) purchase and abandon technologies with scarce money.  Not only frustrate (disturb.

.  Bad timing in prematurely abandoning a product could result in lost revenues. rejection) phase:  Rapid discarding of existing technologies. Abandonment (leaving. let alone for winning in the business game. timing for new technologies is critical for survival.

free from pollution. superior in quality.  A machine or a system is composed of several hundred components  Reliable performance of each part assumes greater significance.  New varieties of products.  System complexity:  Technology has resulted in complexity.Impact of technology  Technology and social change:  High expectations of consumers:  Affluent citizens want more of many things than more of same things. more safe and more comfortable are produced and supplied to the different sections.  High expectations of consumers pose (create.  Modern machines work better and faster no doubt. . cause) a challenge and an opportunity to the owners of business institutions.

and deny them to middle-age or old workers. . use media and work are affected by technology. open jobs to youth.  Technology has revolutionalized the education system. status differences are likely to be created by technological advancement in developing countries. increase available leisure time. displace thousands of workers.  Invention may open new employment opportunities to women.  The way we cook. communicate. radically change hours spent at work and in the family. Social change:  An invention may destroy the economic basis of a city. yet the same invention may result in the creation of a new city somewhere else and create even more jobs than it originally destroyed.  Though social differences tend to be ironed (level) out.

 Technology transfer. This transfer takes longer time as organizations grow in size.  Result of productivity improvements. which spreads the beneficial economic effects of technology throughout the whole social system. process of taking new technology from the laboratory to the market place is equally important. real wages of employees tend to rise and prices of some products decline. . Companies can no longer assume that competitors will allow them the time needed to recoup their investment.  Time factor is important in R&D .  Need to spend on research and development:  Allocation of resources to research and development. Technology and economy:  Increased productivity:  Fundamental effect of technology is greater productivity in terms of both quality and quantity.

 A clerical post in an office now demands the services of an expert in computers.  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 old technology needs to be abandoned. .  A job handled by an illiterate and unskilled worker now requires the services of an educated and competent worker. A new technology comes in.  The firm must also decide on its own R&D or to outsource technology.  Jobstend to become more intellectual and knowledge-oriented:  Advent of technology. jobs tend to become more intellectual or upgraded.

MBA‟s. college graduates.  Organization has adopted the latest technology is flush with scientists. engineers. present) tend (be apt. Introduction of new technology dislocates some workers unless they are well-equipped to work on new machines. even the incumbent (in office. consequence) of technological advancement is the ever increasing regulation imposed on business by the government of the land and stiff opposition from the public. be likely) to become highly professional and knowledgeable. and knowledge workers as teammates.  Problem of techno structure:  Not only jobs become more intellectual and knowledge-oriented.  Increased regulation and stiff opposition:  By-product (side-effect. .

and CAM/CAD.  Technological change in the form of process and material innovations.  Example. Business boundaries redefined:  Technological change is a potent (powerful.  Technological change is one of the important factors giving rise to product substitution and product differentiation. advances in formation technologies have rendered old conceptions of the financial services industry obsolete: insurance firms. .  Example. can now all be interconnected to provide new financial services. Example process innovations such as automation. it may broaden or narrow generally accepted industry boundaries. and microwave ovens are now substituted for conventional ovens. robotics. bank and other financial institutions. compelling) force in the reconfiguring of industry boundaries. plastics have replaced many uses of steel.

employees. Technology and plant level changes:  Technology and organization structure:  Technology has considerable influence on organization structure. or society. and span of control of the chief executive. . (c) increase in sales or power for the innovating organization relative to its competitors. leading to higher productivity and lower costs. suppliers. length of the line of command. (d) initiation of changes in behaviour among customers.  Technological advancement will result in – (a) expanded availability of a range of products and services (b) substitution of capital for labour.

 (b) power to consumers as they gain access to limitless options and price differentials.  E-commerce:  Growth of internet and the associated world wide web has made ecommerce possible.  E-commerce is contributing to a growing percentage of crossborder transactions.  Resistance to change is often psychological.(c) Efficiency in distribution.  Internet and e-commerce provide benefits in global business are – (a) convenience in conducting business worldwide: facilitating communication across borders which brings market closer.  A typical (classic. Resistance to change:  New technology poses new problems which may not be to the liking of the organizational men. usual) businessman himself is opposed to new technology. .

 A business. most likely) the development of commercial jet aircraft and super freighters and introduction of containerization. domestic or global.  Growth in the wireless technology business worldwide has been rapid and the future promises even more. cannot prosper without an efficient telephone system. This can be done wirelessly.  Globalization of production:  A worldwide communication network has become essential for any MNC. Telecommunications:  No longer necessary now to hand wire a city to provide residents with telephone service. which simplifies trans-shipment from one mode of transport to another.  Transportation technology:  Probably (almost certainly. .

the US electronic firm has nearly 50 plants in 19 countries. and human resources. marketing.  Satellite based communication system allows (TI) to coordinate on a global scale. its production planning. Example. . thereby creating global market.  Globalization of markets:  Containerization has made it more economical to transport goods over long distances.  Low-cost global communication networks such as the worldwide web are helping to create electronic global market place. financial planning. Texas Instruments (TI). customer service. cost accounting.  Low-cost jet travel has resulted in the mass movement of people around the world.

(d) arranging technological transfer to the companies of developing countries through technological alliance.  The source is the owner or holder of the knowledge and it can be individual. a company. (c) acquiring the host country‟s companies or by merging with the host countries firms.  The receiver is the beneficiary of the transferred technology. .Technology transfer  Technology transfer is a process that permits the flow of technology from a source to a receiver. 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 country‟s companies. or a country.  Technology and global business are interdependent.

 Example.transferred from one company to another.  Interfirm technology transfer:-.  Example .the transfer across national boundaries.  Transfer take place between developed and developing countries.  Cross-industry or cross sector technology transfer:-. the transfer of technology from the space programme to commercial application. 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 . Technology transfer categories:  International technology transfer:-.transferred from one region of a country to another.transferred from one industrial sector to another.  Regional technology transfer:-.

formulations.covering the provision of know-how and technical expertise in the form of feasibility studies. from tone location to another. Transfer can also be made from one department to another within the same facility. .  Arrangements:-.including sale and licensing agreements covering all forms of industrial property including patents. guides.access to technology is obtained at the expense of the proprietary rights of the owners of the technology. Intra-firm technology transfer:-. utility models. industrial designs. advising and managerial personnel. models. service names. diagrams. plans.  Stages in the transfer process:  Assignment:-.  Pirating or Reverse-Engineering:-. and trade names. personnel training and equipment for training. trade marks. inventor‟s certificates. service contracts and specifications. instructions.transferred within firm. and or involving technical.

and the transaction. . intermediate goods and or raw materials. including turnkey agreements. equipment.including leases and other forms of acquisition of machinery. insofar as they are part of transaction involving technology transfer. international subcontracting . Arrangement :-. and the installation and operations of plant and equipment.  Home country reactions to technology transfer:  Home countries express apprehension about the export of their technology.  Purchases:-.  Industrial and technical cooperation agreements of any kind. as well a provision for management and marketing services. the hast country.covering the provision of basic or detailed engineering designs.  Parties in the transfer process:  International technology transfer under horizontal perspective there are three basic elements namely the home country.

 Social implications:-.  Along with the transfer of technology.  Economic implication:-. interest.  Host country’s reactions to technology transfer:  Subject of technology transfer is highly sensitive often evoking strong reservations against it from the host country citizens.  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.include payment fee.more serious than the economic significance. there is the transmission of culture from the exporting countries. . Argue that the establishment of production facilitates by MNCs in subsidiaries abroad decreases their export potential. dividends. and salaries to foreign technicians and tax concessions resulting in loss to the national exchequer. royalty.  Criticisms against technology transfer are based on economic and social factor.

 The influence of alien culture on Indian soil is so visible. urbanization. practices. concepts.. congestion.  Indians who works in firms using such imported technologies get influenced and accustomed to the skills. .  Transaction:-. Imported technology from the United States and European countries. and beliefs.relate to the terms and conditions of technology transfer.  Social problems like pollution. policies. depleted natural resources. etc. thoughts.

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