Potential cost of adopting free trade regime and government action to reduce such costs(International Business)

The paradox of free trade could not be declined, though world trade organization (WTO) has played a pivotal role to globalize the global trade by reducing the tariff and non-tariff barriers, sadly the benefits from the free trade regime has not been symmetrical.  While at one spectrum, the countries with an opulence of resources are bettering-off and those who lack resources and capabilities are losing significantly due to their inability to compete in global trade platform. Some of the cost that comes with free trade are: -

Over-dependence: Free trade conceptualized in the exporting the goods in which we have a comparative advantage and importing the goods in which we lack the same.  But this dependence could be detrimental whenever the situation between the countries worsen-offs. The country (Nepal) ran out of medicines, schools got closed (due to lack of diesel to run bus), national inventory for oil plunged resulting rationing (oils were imported from Indian border) (BBC, 2015) when the border between India and Nepal got closed.  Similarly, the tussle between the USA and China has gone way far beyond and is impacting S&P 500 and Dow Jones often. The free trade regime between the countries has gone so deep into their economies that any protectionist move from any country, literally could jeopardize the overall global trade scenario. The cost of raw material has spiked due to the import tariff levied by Trump administration which has ultimately made the cost of living higher in the USA.

Currency war and its implication: The free trade regimes settles with the final payment of the trade between the countries. Since most of the trade happens in the US dollar denomination, the exchange rate volatility could be detrimental to the importing economy as they have to pay more and also the goods become dearer to them. As per (Boz, Gopinath, & Palgborg-Moller, 2018) 1% appreciation in the US dollar against all other currencies in the world predicts a 0.6-0.8% decline within a year in the volume of the total trade between the countries in the rest of the world.

Closer of local firms:

Basically, the infant industries of the least developed and developing countries are not able to compete with the products and services from industrialized and developed countries.  The initiation of Wal-Mart in India led to the closure of existing local retail stores (Naidu-Ghelani, 2012), often the local firms are not able to compete with the economics of scales, technologies that the MNC’s have.

In general, when the government comes within the track of the free trade regime, they are supposed not to be biased with their industries. Indeed, they have to treat the import from other countries as they would have treated their own products. But in contrast, the government of the countries uses various tariff and non-tariff barriers to protect their local industries. To protect its agriculture industries, the Indian government has heavily subsidized it, it includes banquet tax exemption, subsidies on fertilizer, cheap corps insurance, high tariffs to block food imports (The Economist, 2018), similarly Japan has also protected its automobile industry will strict non-tariff barriers to the auto imports.

In reality, the global business has become a kind of suspense drama, it is intricate and it is not business alone, its political, economic, socio-cultural.  Countries use various trade and non-trade tactics to manure international businesses. And all these go to add up the stack of trade disputes on the table of WTO claiming various countervailing measures like anti-dumping laws to protect the negativism of free trade.

Bibliography

BBC. (2015, December 12). Nepal blockade: Six ways it affects the country. Retrieved from www.bbc.com: https://www.bbc.com/news/world-asia-35041366

Boz, E., Gopinath, G., & Palgborg-Moller, M. (2018, February 11). Global trade and the dollar. Retrieved from www.voxeu.org: https://voxeu.org/article/global-trade-and-dollar

Naidu-Ghelani, R. (2012, November 9). Why Are India's Retailers Afraid of Wal-Mart? Retrieved from www.cnbc.com: https://www.cnbc.com/id/49605760

The Economist. (2018, July 12). India’s government claims to subsidize farmers but actually hurts them. Retrieved from www.economist.com: https://www.economist.com/asia/2018/07/12/indias-government-claims-to-subsidise-farmers-but-actually-hurts-them

Understanding business practices in an Islamic country and Christian country.(International Business)

Definitely, the business practices in Islamic and Christian countries differ drastically. The divergences appear in every spectrum of the business deeds, i.e. from business settings, dress codes, business etiquettes, focus on business verse personal values, hospitality, time management. Though both religions are monotheistic, their values, traditions, religious practices, beliefs, and social and cultural sanctions differs a lot.  Indeed, whatever the difference be, both religions are against bribery, fraud, and cheating, discriminations, corruption and are strongly concerned about the rights of employees, customers, and stakeholders.  Since Islamic countries are theocrat and to take an example of US, it is ruled by the “common law”, the differences manifest.

The point to be noted is, except religion, other moderating variables also come in action to impact the business environment. Hasty generation could not be made alone on the basis of religion, therefore following testaments are just general inference made.

Life prioritization.

Islamic countries are group oriented whereas the Christians are individualistic. Running the Hofstede cultural test, Unites States scored 91, the UAE 25, Pakistan 14 and Nepal 30 in individualism (“Country Comparision”, n.d.). We can also induce, more the country is economically less equipped it favors groups as it fosters security. Pakistan ranks lower in individualism in comparison to the UAE. The businessperson in the individualist countries is more objective, result oriented, direct whereas Islamist focuses on the longterm relationships and often carries subtle meanings in their actions and business deeds.  As per (Cukur, Guzman, & Carlo, 2004), collectives are more conservatives in values and more religious than the individualistic countries, moreover they are lower on the openness to change.

Gender consciousness:

Islam focuses on core caring and protection of feminism in their own way which could be reprehensible for Christians. The code of dress also differs, the Islamic traditions have long body hiding apparels which in fact is good enough to get protected from the direct sunlight in the extreme heat. Though it is often seen, feminism is suppressed, the educated Islamic countries are coming up with more profound liberalization and also are being equally sensitive to their theocratic culture.

Financial dealings:

Whereas the financial deals in context of Christians are entitled to have interest in their investment, in contrast, the Islamic business or banks are not allowed to charge interest in their investment (Lagace, 2002) but another way around the return on investments are made as a profit sharing.

Contracts and business deals:

You have a good business track record, high cognitive skills, and enough resources, than its more than enough to have a business deal in capitalist Christian country but in Islam, they believe themselves to be the agent of the Allah, so protecting Allah’s property might not have any contractual and business dealing with other if another party are self-centered, over-aggressive and focuses more on self than for group.

Hence the cultural differences between a Muslim country and the Christians will cause business practices to differ dramatically since the “Message of Islam” and “The Gospel of Jesus” priorities and practices are different. But except these religious and cultural independents variables, other mediating variables like level of education, openness to FDI, level of economic development, the vision of the country, the level of poverty, the existence of sectarian strife, the chance of civil war should also be taken into consideration while having the business approach.

Bibliography

Country Comparision. (n.d.). Country Comparision. Retrieved from https://www.hofstede-insights.com/country-comparison/nepal,pakistan,the-united-arab-emirates,the-usa/: https://www.hofstede-insights.com/country-comparison/nepal,pakistan,the-united-arab-emirates,the-usa/

Cukur, C. S., Guzman, M. R., & Carlo, G. (2004). Religiosity, Values, and Horizontal and Vertical Individualism-Collectivism: A Study of Turkey, the United States, and the Philippines. The Journal of Social Psychology,144(6), 613-634.

Lagace, M. (2002, February 04). How To Do Business in Islamic Countries. Retrieved from www.hbswk.hbs.edu: https://hbswk.hbs.edu/item/how-to-do-business-in-islamic-countries

A democratic political system is an essential condition for sustained economic progress.(International Business)

The democratic political system emphasizes in the free market operation where the market operates as per the demand and supply that exhibits in the economy.  There is no governmental intervention and it supports capitalism. There is no risk of business nationalization and business persons are allowed to enjoy the return of their hard work. The democracy fosters freedom and assures free movement of factors of production whereas, in the context of the communist system, the factors of productions are controlled by the state, the risk of nationalization prevails.

The top ten countries globally favorable for doing business as ranked by the World Bank in 2018 are democratic. New Zealand holds the first position followed by Singapore, Denmark, South Korea, Hong Kong, and the US in the 6^th which is followed by the UK (World Bank, 2018). Further, China holds 78^th and Venezuela is 188^th, my country is 105^th.  In general, democratic countries have transparency, strong political base, are less corrupted and also public budget are well utilized fostering social infrastructures, a requirement for the success of the business. The sound economic condition creates social justice and social innovation.  The democracy builds up trust and assures sound legal and political environment which leads to sustainable economic progress.

Democracy certain promotes the growth through the inclusion of institutions, governance, rule of law and confidence to the investor.  But, often it has paralyzed the economy when the parties and people miss-utilized their power. Nepal was ruled by a monarch(king) for more than 100 years, we had multi-party democracy. Later on, after the people’s revolution, the monarch was dethroned and now its “Federal Democratic Republic of Nepal”.  Indeed, in the context of my country, democracy alone has not assured sustainable economic growth.  Rampant corruption, budget deficits, negative balance of payments, unstable government and negative net exports has reduced the confidence of domestic as well as international investors.  The pace of foreign direct investment(FDI) has been decreasing and economic stability is not maintained.

But when we see the countries like Sweden, Holland, Denmark, New Zealand, though are geographically small, their democratic policies along with rules and code on conduct base governance has maintained their economic domain.  As per the Transparency International, (2017), New Zealand in the least corrupt country of the globe followed by Denmark and Finland. Nepal ranks 122th and Venezuela is at 169^th.   

In contrast, communism which focuses on socialism is not a fault ideology at all, depending upon the circumstances and situation, socialism has also uplifted the social innovation and lead economic development.  China’s economic development is led by one-party nondemocracy (Acemoglu, 2014) which was led by a reasonably enlightened group of peoples but the ramification of the socialist dictator in Venezuela jeopardize the nation, eroding the life of citizens and reducing the business confidence.

So, as far I am concerned, definitely I incline with the democratic political system for sustainable economic growth rather than the totalitarianism. But equal importance should be given to the right conduct of political philosophies through politicians which should encapsulate good governance through strong legislation, execution, and independent judiciary.

Bibliography

Acemoglu, D. (2014, May 20). Does democracy boost economic growth? Retrieved from www.weforum.org: https://www.weforum.org/agenda/2014/05/democracy-boost-economic-growth/

World Bank. (2018). Doing Business 2018, Reforming to Create Jobs. World Bank.

"The study of international business is fine if you are going to work in a large multinational enterprise, but it has no relevance for individuals who are going to work in small firms.” Evaluate this statement.(International Business)

  This could have been a matter to be noted if we were in the closed economy where each firm (big or small) were self-sufficient, i.e. their home countries have enough factors of productions to maintain sufficiency in the demand and supply. But currently except some exceptions (like North Korea, Iran, Venezuela) almost most of the countries are into the global mainstream of international trading based on the doctrine of comparative advantage as postulated by Sir David Ricardo and SME’s (Small and Medium Enterprises) plays significantly important role in the global business. SME’s passivity could not be ignored rather each government has persuaded SME’s to come into the international trading stream. 

      The small business firms have become an integral component of the global business chain rather be it in the least developed(Nepal), emerging nations(India) or developed countries(USA), it has equal importance. Due to the low level of investment required for initiation, supportive government regulation and technological and internet boom small firms have ease to come into the mainstream of international trading either through providing the raw material to the big firms or by directing trading in the international market. 

          In the context of Nepal, WTO provides specialized preference to least developed countries and thorough multi-fiber trade agreement, Nepal was allowed to export the textile to the USA market. During 2001-2002, Nepal exported approximately US 9 million of readymade garments generating four hundred thousand jobs which were mostly in the small industries (Nepuane, 2016) which also high lights the immensity of the small business involvement in the international business. But for that, the involved business has to maintain the tight protocol of international trade mechanism, i.e. from the country of origin requirement, labor code, quality assurance, letter of credit (LC’s) et cetera. 

        My friend operated an industry back in my country Nepal which was into the manufacturing of the agriculture tools. The investment was huge and since the agriculture sector has a significant contribution to the GDP, the business seemed promising. But soon after its market penetration in the national level, it had to go through cut-throat competitions from Chinese and Indian products which it could not sustain. Sadly, the managements lack global business scenario jeopardize and bankrupt his company. Had he taken care of Nepal’s accession to WTO since 2004 which allows international companies to trade with Nepal, the management could have diversified the investment before it was too late. 

             The major portion of international trading, either be in the goods or in services industries are also backed by small businesses. There are constant flow and interaction of resources in the economy between small and big firms. As the per the statistics of the USA government in 2009, small business accounted for 96.4% of all manufacturing exports, which was 17.2 percent of the sectors $562 billion in exports. Similarly, SME’s accounted for 95% of firms and 60-70% of employment generation in the OECD economies (“Small and Medium-sized Enterprises”, 2012). 

         Further, an invent of liberalization, industrialization and disruptive tech innovations have made SME globally active. The SME’s contribute between 25-35% of world exports of manufacture (“Small and Medium-sized Enterprises”, 2012). Essa (2019) has voiced the importance of small firms in building the global ecosystem of international business and the learning of international business helps the small firms to co-evolve and innovate along with the global pace. 

       If it is the case of closed economy and self-sufficiency than international trade might not be a case for small and big firms and people working there but it would not be wrong to say that in the globalized economy the understanding of international trade is unequivocally important to the big as well as small economy in local, regional as well as national level. 

Bibliography 

Essa, T. S. (2019, January 08). SMEs are the most valuable partners. Here's why. Retrieved from www.weforum.org: https://www.weforum.org/agenda/2019/01/smes-make-the-most-valuable-partners-heres-why/ Nepuane, S. (2016, April 11). Seize the opportunity. Retrieved from thehimalayantimes.com: https://thehimalayantimes.com/opinion/seize-the-opportunity/ Small and Medium-sized Enterprises: Local Strength, G. R. (2012). Small and Medium-sized Enterprises: Local Strength, Global Reach. OECD.

Why the innovative projects fail to generate economic returns?(Management of Technological Innovations)

There are plethora of reasons for the economic demise of an innovative project. Some are systemic whereas some unsystematic. Some emerge from within the organization whereas some are generated from the outside of the organization. Some of the reason for the failure of the innovative projects are briefed below.

Death of the project in infancy

Some of the project though being captivating is not able to go a long way, they die in the introduction stage of its life cycle.  Due to incorrect timing and level of cut-throat competition in the market, it cannot sustain. Virgin Cola, the drink initiated by the Virgin group, though was liked by the customers could not sustain the pressure from the Coke Cola (Clifford, 2017) and has to give up.

The lengthy product development period

Some project trajectory is a real financial and regulatory cumbersome and before the product is commercially launched, it consumes lots of investments capping the project’s ability to generate revenues and return.  Elon Musk’s electric car Tesla and SpaceX has still not been able to generate return due to its which development cost.

Lack of dominant design

The projects start to gain the profit whenever it settles with its dominant design, the dominant design comes with positive learning and networking effect (Schilling, 2017), it comes with productivity, lower cost, and higher market acceptance.  But due to tough competition and rivalry often the company cannot settle with dominant design and has to frequently work on competing for the resources against the competitor leading to increasing the expenses.

Lack of project diffusion

The diffusion of the product into the markets infers the products are well accepted by the market.  The well-diffused product comes with dominant design and along with standardization and economies of scale. But sometimes due to the cut-throat competition, the project could not penetrate well or diffuse into the market and cannot generate enough revenues.  Nokia mobile was not able to diffuse itself to the market as it was not able to compete with iPhones and androids at that time.

Lack of synchronization between market requirement and organization offering.

It is not about offering the best product, it is about offering right products to the market at the right time, means the innovation has to be equally demand-pull as well as science-push, a product without the desire of the market could not sustain.  But due to the cognitive biases like “sunk-cost fallacy”, the company often goes on investing in the pessimistic project, thinking it will pay off but ultimately leads to cost overrun of the project.

            Except this the management often takes the wrong decision and crafts inappropriate strategies, have lack of market understanding and orientation which also leads to the economic demise of the projects (Hengsberger, 2018). So, there could be organizational structural fallacies or external environmental factors that may impact the project, hence it is of utmost importance to constantly revise and access the status of the project.

Bibliography

Clifford, C. (2017, February 7). What Richard Branson learned when Coke put Virgin Cola out of business. Retrieved from www.cnbc.com: https://www.cnbc.com/2017/02/07/what-richard-branson-learned-when-coke-put-virgin-cola-out-of-business.html

Hengsberger, A. (2018, October 4). 4 reasons why innovations fail. Retrieved from www.lead-innovation.com: https://www.lead-innovation.com/english-blog/why-innovations-fail

Schilling, M. A. (2017). Strategic Management of Technological Innovation, 5thed. New York: McGraw-Hill Education.

Advantages of technological innovation? Disadvantages?(Management of Technological Innovations)

Technological innovation for me is the way of bringing positive changes in the mode of consumption and production then it used to be before. So, what does it mean, let’s see, way back when I was at the immigration lobby of my country waiting for an hours-long line to get clearance from that almighty officer, I was often pissed off and irked, the opportunity cost was high as my prospective earnings from my meetings were enormous. Now its Eureka, we had a newly installed kiosk machine, where every data has been fed-in, as I reached there, I swapped my card and got clearance, indeed it was prompt and saved my time. You know, it was good for the immigration department also, their labor requirement should have gone done drastically.

These “C-Suits” terminologies like artificial intelligence, big data, block-chain and augmented reality are definitely bringing economic of scales but it is also risking the human current status. As per the World Economic Forum by 2022 due to the rise of technological innovation 75 million job will be outdated making people poorer (Cann, 2018), do you agree? But it will also add 133 million for new kind of jobs, but the question triggers who will invest in the transition of those 75 million losers into 133 million gainer club.

No doubt, tech innovation brings security, a peace in my mind, when I sleep, switching on by ADT laden CCTV camera, but it bothers me when it constantly gazes and stares at me. My Fitbit wrist watch gifted by my sister is a state of art, making me classy but I really feel bad when I read research published by Fitbit about the sleeping habit of its watch users, definitely, they might have pulled my data. You see, I didn’t know that, where is my privacy?

China is leading its way on AI, it has installed 20 million cameras (Lo, 2017), reading your each and every geometry and facial identification, it has a new system of “social credit” and I swear do not dare to bite against the government, your negative social credit will not let you even have good commutes. But the beauty is in the eye of the beholder, you are cutting trees, but the drone technology is replacing the human afforestation process in Pakistan, the camera attached with the drone first captures the project landscape the disperse seeds and can plant up to 100000 trees a day (Hutt, 2018), innovation to combat GHG.

But sadly, these innovations are also bringing a kind of social fraction whose ramification could be detrimental.  We are into the “review economy”, you review your uber driver, the hotel where you nested and the multiplex where you watched movie, and I am afraid a day, a general person like me, who always maintains the neutrality will be score on the basis of which I would get job, allowed to ride or even marry. Is not this more structured? I think the constant monitoring makes us artificial.

And often, the innovation is seen more polarized to developed countries, which are pulling all the resources back to them. The lag period of the innovation to travel from the innovator to markets far from the innovating country is huge, though those countries could be their market (I mean from rich innovating countries to 3^rd world) is huge. I feel the divergence and delegation of innovation are not homogenous which should have been.

Lastly, as Moore's Law has stated, the cost of technological innovation half’s every 18 months and speeds its performance increases by doubles the same time, and the controlling mechanism often lags behind these innovations. Have you thought or were there any stern data protecting act before the data mining scandal from Facebook? 

Yes, no doubt, technology has changed how we used to consume, how we use to commute and how I used to converse but it certainly has a paradox, often I am traded in-between the market without my knowledge, I feel a new kind of capitalism has been brought by the tech-innovation, Google earns on what the user feed, its capital is not, what it manufactures but it is what ordinary users like us feed. So, is Google playing a fair game by making my Gmail account free for me? Perhaps the quest to this statement shall always remain unanswered as all innovation shall always be driven by profit and there will always be pro and cons, and the innovator is good until they are egalitarian and utilitarian. 

Bibliography

Cann, O. (2018, September 17). Machines Will Do More Tasks Than Humans by 2025 but Robot Revolution Will Still Create 58 Million Net New Jobs in Next Five Years. Retrieved from www.weforum.org: https://www.weforum.org/press/2018/09/machines-will-do-more-tasks-than-humans-by-2025-but-robot-revolution-will-still-create-58-million-net-new-jobs-in-next-five-years/

Hutt, R. (2018, July 02). Pakistan has planted over a billion trees. Retrieved from www.weforum.org: https://www.weforum.org/agenda/2018/07/pakistan-s-billion-tree-tsunami-is-astonishing/

Lo, T. (2017, September 25). Big brother is watching you! China installs 'the world's most advanced video surveillance system' with over 20 million AI-equipped street cameras. Retrieved from www.dailymail.co.uk: https://www.dailymail.co.uk/news/article-4918342/China-installs-20-million-AI-equipped-street-cameras.html

To what degree would you characterize Given's development of the camera pill as "science-push” versus "demand-pull”?(Management of Technological Innovations)

The science-push” innovation is fundamentally based on the scientific discoveries backed by research and development whereas the “demand-pull” is the innovation made on the basis of the market demand (Schilling, 2017). The development of the camera pill for me is the combination of the demand-pull and science-push. The desire to innovate a camera guide missile was the demand-push which latter inclined Iddan to focus on camera pill for endoscopy and the cross-industry scientific discoveries like charge-coupled device (CCD’s) and complementary metal oxide semiconductors (CMOS) was science push. And these two complemented each other in the discovery of camera pill.

Hoppmann (2014) concluded the balance between the demand-pull and technology-push has shifted to the demand-pull, the same could be reconciled with the case as demand for the missile ignited the development of camera pill. Peters, Schneider, Griesshaber, & Hoffmann (2012) added the demand-pull also facilitates going abroad as the demand from those collaborates innovation process, the independent team working in the United Kingdom came up with the expertise in their field of wireless endoscopy, indeed the innovation has been through the collaboration within the networks who shared the common objective or has possessed the tactics or knowledge to perform such (Schilling, 2017).

Indeed, these two innovative methodologies often support each other, any innovation of product and service is not deemed necessary unless there is a demand and collaboration often supports assimilation and improvisation to innovate the products and services.

References

Hoppmann, J. (2014). The Role of Deployment Policies in Fostering Innovation for Clean Energy Technologies: Insights From the Solar Photovoltaic Industry. Sage Journals, 54(4), 540-558. https://doi.org/10.1177/0007650314558042.

Hoppmann, J., Peters, M., Schneider, M., & Hoffmann, V. H. (2013). The two faces of market support—How deployment policies affect technological exploration and exploitation in the solar photovoltaic industry. Research Policy, 42(4), 989-1003. https://doi.org/10.1016/j.respol.2013.01.002. Retrieved from www.sciencedirect.com: https://www.sciencedirect.com/science/article/abs/pii/S0048733313000073

Schilling, M. A. (2017). Strategic Management of Technological Innovation, 5thed. New York: McGraw-Hill Education.