The technological environment

The effects of technology around the world are pervasive – both in business and in private lives. Advances in information technology are bringing about increased productivity – for employees, for companies, and for countries. The Internet, the submarine fiber-optic cable and the communications satellite are now cast in the role once played by ocean-going steamships.

Investment-led globalization is leading to global production networks, a global diffusion of technology to link parts of the value-added chain in different countries. That chain may comprise parts of the same firm, or it may comprise suppliers and customers, or technology-partnering alliances among two or more firms. Either way, technological developments result in network structures within organizations that allow flexibility and rapid response to local needs.

New technology' represents a key competitive advantage to firms. International managers oversee the transfer and diffusion of proprietary' technology', with its attendant risks. Whether it is a product, a process or a management technology, its owners’ major concern is to profit from it while protecting it from competitors.

The most common forms of protecting proprietary technology are patents, trademarks, trade names, copyrights and trade secrets. Various international conventions do afford some protection in participating countries; more than 80 countries adhere to the International Convention for the Protection of Industrial Property, often referred to as the Paris Union, for the protection of patents. However, restrictions and differences in the rules in some countries not signatory to the Paris Union, as well as industrial espionage, pose continuing problems for firms trying to protect their technology.

One risk to a firm’s intellectual property is the inappropriate use of the technology by joint-venture partners, franchisees, licensees and employees. Some countries rigorously enforce employee secrecy agreements.

Another major consideration for global managers is the need to evaluate the appropriateness of technology for the local environment – especially in less developed countries. Studying the possible cultural consequences of the transfer of technology managers must assess whether the local people are ready and willing to change their values, expectations and behaviors on the job to use new technological methods.

Informed choice may be for capital-intensive, labor-intensive or intermediate technology, but in every case it should suit the level of development in the area, and the needs and expectations of the people who will use it.

Global e-business

In spite of global trade’s slower than expected pace of advancement over the Internet, without doubt the Internet has had a considerable impact on how companies buy and sell goods around the world – mostly raw materials and services going to manufacturers. Internet-based electronic trading and data exchange are changing the way companies do business, while breaking down global barriers of time, space, logistics and culture.

Internet-based electronic trading and data exchange involve new concepts and integration of systems, processes, organizations, value chains and entire markets. However, the Internet is not totally open; governments still make sure that their laws are obeyed in cyberspace. This became clear when France forced Yahoo! to stop displaying Nazi trinkets for sale where French people could view them. The reality is:

Different nations, and different peoples, may want a different kind of Internet – one whose language, content and norms conform more closely to their own?

E-commerce refers directly to the marketing and sales process via the Internet. Firms use e-business to help build new relationships between businesses and customers. The Internet and e-business provide a number of uses and advantages in global business, including the following:

· Convenience in conducting business worldwide – facilitating communication across borders contributes to the shift toward globalization and a global market

· An electronic meeting and trading place, which adds efficiency in conducting business sales

· A corporate intranet service, merging internal and external information for enterprises worldwide

· Power to consumers as they gain access to limitless options and price differentials

· A link and efficiency in distribution.

Although most early attention was on e-commerce, experts now believe the real opportunities are in business-to-business (B2B) transactions. It is noteworthy that a large proportion of current and projected B2B use is by small and medium-sized firms.

Barriers to (lie adoption and progression of e-business around the world include lack of readiness of partners in the value chain, such as suppliers. If companies want to have an effective marketplace, they usually must invest in increasing their trading partners' readiness and their customers’ capabilities.

Other barriers to creating global e-businesses include differences in physical, information and payment infrastructure systems. In such situations, innovation is required to use local systems for implementing a Web strategy. In Japan, for example, very few transactions are conducted using credit cards. Typically, bank transfers and COD are used to pay for purchases. Also, many Japanese use convenience stores, such as 7-Eleven Japan, to pay for their online purchases by choosing that option online.

In spite of various problems, uses of the Internet continue to be discovered. For example, the European Commission advertises tender invitations online in order to transform the way public sector contracts are awarded.

In Australia, Steven Deare reported in June 2006 that Coles Supermarkets was creating an EANnet electronic product catalogue, a supply chain network expected to end the industry’s reliance on paper-based ordering. Those in charge hope to end administration costs associated with the paper-based form of purchase orders. One of the benefits of their B2B model is its ability' to track and trace all documents throughout the whole process of purchase order-settlement.

A major problem always with introduction of new technology is resistance to change. For example, at Coles some employees remain stubborn, dedicated users of the paper-based universal buying form (UBF). Many have been buying roles for decades 'and they really love that UBF. They love it!'