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You are here: Step 1: Considering exporting > The various environments you will encounter abroad > The technological environment  
The technological environment

Technology can be defined as the method or technique for converting inputs to outputs in accomplishing a specific task. Thus, the terms 'method' and 'technique' refer not only to the knowledge but also to the skills and the means for accomplishing a task. Technological innovation, then, refers to the increase in knowledge, the improvement in skills, or the discovery of a new or improved means that extends people's ability to achieve a given task.

High technology has become like a force of nature. It transforms the economy, schools, consumer habits, the very character of modern life. Investors pour money into it; parents urge their children to study it; communities vie to attract its factories; decorators adopt it as a style; politicians push it as a panacea.
(Source : Science Digest Magazine)

Technology can be classified in several ways. For example, blueprints, machinery, equipment and other capital goods are sometimes referred to as hard technology while soft technology includes management know-how, finance, marketing and administrative techniques. When a relatively primitive technology is used in the production process, the technology is usually referred to as labour-intensive. A highly advanced technology, on the other hand, is generally termed capital-intensive.

Changes in the technological environment have had some of the most dramatic effects on business. A company may be thoroughly committed to a particular type of technology, and may have made major investments in equipment and training only to see a new, more innovative and cost-effective technology emerge.

Indeed, the managing director of a multinational organisation manufacturing heavy machinery once said that the hardest part of his job had nothing to do with unions, pay or products, but with whether or not to spend money on the latest technologically improved equipment.

Computer technology has had an enormous impact on education and health care, to name but two areas affected. The advancements in medical technology, for example, have contributed to longevity in many societies. In addition, the introduction of robots in many factories has reduced the need for labour, and the use of VCR's and microcomputers has become commonplace in many homes and businesses.

Unfortunately, there is a negative side to technological progress. The introduction of nuclear weapons, for example, has made the destruction of the human race a frightening possibility. In addition, factories using modern technologies have polluted both air and water and contributed to various environmental and health-related problems.

Technology is a critical factor in economic development. Because of the advances of international communication, the increasing economic interdependence of nations, and the serious scarcity of vital natural resources, the transfer of technology has become an important preoccupation of both industrialised and developing countries. For many industrialised countries, the changes in the technological environment over the last 30 years have been immense particularly in such areas as chemicals, drugs, and electronics. It is vital that organisations stay abreast of these changes - not only because this will allow them to incorporate new and innovative designs into their products, but also because it will give them a firmer base from which to anticipate and counteract competition from other organisations.

When the Gillette company developed a superior stainless steel razor blade, it feared that such a superior product might mean fewer replacements and sales. Thus, the company decided not to market it. Instead, Gillette sold the technology to Wilkinson, a British garden tool manufacturer, thinking that Wilkinson would use the technology only in the production of garden tools. When Wilkinson Sword Blades were introduced and sold quickly, Gillette understood the magnitude of its mistake.

The transfer of technology is essential for attaining a high level of industrial capability and competitiveness. Multinational corporations are playing an increasingly important role in technology transfer because they invest abroad to expand production, marketing and research activities. There is also a growing consciousness amongst governments of the need to increase technology transfer to the developing countries to help stabilise their economic and social conditions.

In spite of the many differences in social, political, cultural, geographic and economic conditions, there are some common characteristics in the technological environments of developing countries. The most common technology transfer from industrialised to developing countries has been in agriculture and health care. As a result of improved health care systems, infant mortality rates have been cut while the incidence of once common diseases such as malaria and typhoid has been reduced in Latin America, south-east Asia and Africa (although the incidents of the AIDS virus has increased alarmingly). Similarly, agricultural technology has increased agricultural productivity in Brazil, India and elsewhere. However, in most developing countries, technology has made little impact on the productive systems, income distribution and living conditions of the majority of the population.

Technology transfer is a complex, time-consuming and costly process, and the successful implementation of such a process demands continuous communication and co-operation between the parties involved. Furthermore, technology transfer cannot be effective if it experiences conflict with the economic and social needs of the recipient country. The agricultural development of north-eastern Brazil, for example, was largely financed by international banks and financial organisations in the 1960's. Much of this region had been inhabited by Brazilian aborigines but it was owned by a small number of wealthy landowners. The introduction of large-scale mechanical agricultural technology in areas of the tropical rain forest of the Amazon has caused serious environmental damage such as erosion of tropical topsoil and the destruction of the natural environment of numerous birds and animals, and has displaced a large number of the local inhabitants of the forests.

Technology transfer may become a serious source of conflict between donor and recipient countries. The recipient country may feel that the donor is trying to dominate it through technology, capital and production. Dependence on foreign technology can be viewed as a serious threat to economic independence. Countries that export technology may experience different problems. For the seller of technology, the technology transfer can result in unemployment in the home country and future loss of technological superiority. For example, Japan transferred modern steel production technology to South Korea in the early 1970's. As labour and production costs in Japan increased, the Korean steel industry began to take over a significant portion of the previously Japanese-controlled international market. Some Japanese executives are now complaining that the cost of technology transfer has been much greater than the income received through the sale of technology.

Technology can be transferred from person to person, industry to industry and government to government, although the government of any country generally plays the most important role in facilitating or impeding the transfer process. Contacts amongst students from different countries are also a means of technology transfer as are journals, books, technical and professional publications, trade magazines and product pamphlets. Furthermore, multinational corporations play an important role in technology transfer by transferring information and technology from the parent company to subsidiaries in other countries, training foreign employees, etc.

The future development of the international business environment depends on numerous factors, including the political en economic environment, the development of technology, population growth, energy availability and natural resource depletion. It can be expected that the gap between the rich and the poor countries will increase and that living conditions in many poor countries will deteriorate even more. The rich countries will be obliged to extend technology, food and financial assistance to the poor countries and people in the advanced countries will be engaged to an increasing extend
(Source: N F Matsuura, International Business)

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Learning to export... The export process in 21 easy steps
Step 1: Considering exporting
Step 2:Current business viability
Step 3:Export readiness
Step 4:Broad mission statement and initial budget
Step 5:Confirming management's commitment to exports
Step 6: Undertaking an initial SWOT analysis of the firm
Step 7:Selecting and researching potential countries abroad
Step 8: Preparing and implementing your export plan
Step 9: Obtaining financing for your exports
Step 10: Managing your export risk
Step 11: Promoting the firm and its products abroad
Step 12: Negotiating and quoting in exports
Step 13: Revising your export costings and price
Step 14: Obtaining the export order
Step 15: Producing the goods
Step 16: Handling the export logistics
Step 17: Export documentation
Step 18: Providing follow-up support
Step 19: Getting paid
Step 20: Reviewing and improving the export process
Step 21: Export Management
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