The Idea behind Patent Protection In product markets, the problem of imitation poses a great problem for innovators who are deprived of enjoying economic profits fully. If imitators are able to move in rapidly and capture a substantial share of the market, the initial profits earned by innovators may not be sufficient to cover their costs and risks in the long run. However, a substantial delay between the time of innovation and successive entry by competitors may provide the pioneers with decent profits and make invention and innovation a more attractive activity. The patent system, by establishing a period of time during which the firm faces reduced competition, increases the expected return for innovative effort.     Product and Process Innovations: A nation by stimulating research and development can increase the prospects of product and process innovations. Governments can encourage such innovations by granting patents. Three criteria must be satisfied to obtain a patent: The invention must be new It must not have been known to the public before the inventor completed it for more than one year prior to a patent application It must be useful and must be non-obvious     Picture Courtesy: Basics What are Patents? Patents confer the exclusive right to the use of an idea for a long period (which varies between nations,say,in countries like India, it is seven to fourteen years, depending on the nature of the product) within which the innovator might be able to recover his initial investment. Another reason to grant patents is to provide for widespread disclosure of new ideas and techniques. The main objective of patent protection is to encourage research and development. Patents: Encourage research and invention Induce an inventor to disclose his discoveries instead of keeping them as a secret. Offer a reward for the expenses of developing inventions to the state at which they are commercially practicable; and Provide an inducement to invest capital in new lines of production Granting of Patents: The idea behind granting of patents thus is to benefit the society. Developing countries have to offer patent protection, the lack of which has made many foreign firms shy away from investing in core sectors like pharmaceuticals and biotechnology in these nations. As a result, people of these countries are forced to buy life saving drugs like those for cancer and have to pay ruinous prices. Once patent protection is available, there is a possibility for manufacturing most of the drugs that are being imported, eventually leading to a fall in the price levels.     One of the difficult aspects of patent law is the principle that, whether a patent is to be issued to the person who conceives the idea or who first files for a patent. Another international issue involving patents is that, countries allow firms to steal and copy protected ideas, due to lack of severe legal enforcements or lack of interest. Either way it proves detrimental to the interest of the patent holders and such violations have to be strictly prohibited. Note: THE PATENTS ACT, 1970: An Act to amend and consolidate the law relating to patents The Patent Amendment Act,2005 The Patent Rules,2003 and Amendment Rules,2006 are some of the laws that protect patents in...

Transfer of Technology- Commercialisation Vs.Benefit The total influx of technology in underdeveloped countries is from the advanced capitalist countries for obvious reasons, which will be the highlight of this discussion. Multinational corporations play a vital part in technology transfer, the motive being profit maximization for the parent company through their subsidiaries. These corporations act as the principal instrument of technology transfer, either through their subsidiaries or through contractual agreements made with developing countries. The idea is to bring mechanized processes and equipments that are not locally available. Dominance of Technology Supplier: The technology supplier usually takes the upper hand owing to his monopolistic strength that arises from the patent protection for differentiated products and processes. Very often, the terms and conditions of transfer are arbitrarily settled under highly imperfect market conditions by the technology supplying multinationals. Advanced nations have the advantages of reduced population density, even distribution of national wealth, high standard of living, more infusion of capital into research and development, availability of skilled personnel inclined towards research etc. Dependency of Developing Nations: Developing nations on the other hand are subject to the pressures of high population density, uneven distribution of economic wealth (poor people become more poor and the rich even richer), moderate or low living standards etc. Capital drain occurs due to heavy borrowings from the World Bank which leads to increase in the social overheads. In such a situation, it is next to impossible for a developing nation to pump capital into activities concerning research. Bargaining Power of Developing Nations: The bargaining power of developing nations is weak, as they have no access to information about alternate technologies and their sources nor the necessary infrastructure to evaluate the appropriateness of equipments, intermediates and processes. Moreover, the large part of the influx of technology in developing countries is in response to the policy of industrialization through import substitution. Transfer of technology from the developed to the underdeveloped countries is made in a number of ways. They are classified into two broad categories, viz., direct mechanism and indirect mechanism. The direct mechanism includes transfer of technology through banks, journals, industrial fairs, technical co-operation, movement of skilled people etc. Here there is a choice for the developing nation to select the appropriate technology that best suits their requirement. However, this is not the principal form of technology transfer that advanced nations would prefer. Price of Technology: The indirect mechanism implies technology transfer in a “package” or a “bundle” containing technology-embodying equipments, industrial properties like patents and trademark, skill, equity capital, etc. In this system, a local enterprise negotiates with multinational corporations for transport of the required elements of technology, and the terms and conditions are settled through a process of commercial transaction. Since the trading partners are unequal, the terms of contract are invariably restrictive and the price extended for the technology unreasonably high. All the underdeveloped countries, which have opted for growth along the classical path of capitalist development, are in a position to invite multinational corporations, if for no other reason than at least for the diffusion of...

Factors That Influence Global Economy The industrial and business environment of developing countries has been subjected to a sea of changes owing to the economic reforms and policies in the light of globalization, privatization and liberalization. A long term economic vision is necessary for these countries to establish themselves in the global market which facilitates the process of becoming self sufficient in due course of time. Let me present you with a synopsis of how this change can happen and how countries are adapting themselves in lieu of the global economic boom. Multi Brand Retail Markets: Many multinational companies have acquired and are trying to acquire a major part of equity in multibrand retail markets of the host country and sometimes they opt for Joint ventures to factorize the economy of scale which also proves to be a win-win situation for both the parties. Developing countries have altered their economic views on foreign direct investment and are very liberal in their attitude in providing with the necessary licenses. The entry of multinational companies and their potential investment has even altered core sectors like power, oil and telecommunications. Moreover, the benefit of cheap labor, economic subsidies for the start of operations in economically backward regions lures foreign investors. Rush of Entrepreneurship: There is a rush of entrepreneurship in the developing countries, in the form of setting up of small scale industries, cottage industries for which liberal subsidies are provided by the governments to encourage the act of entrepreneurialism. Also people want to go for diversification, mergers and acquisitions in the wake of global competition. Capital Markets’ Role: Capital markets have gained new buoyancy. The rapid growth of stock market and its influence over the international economic scenario have made foreign brokers to keenly follow the market changes for potential investment. The one striking feature of the economy of developing countries is that, it is a self made economy and withstands the pressures of the business cycle, such as recession and inflation, unlike foreign markets that have failed to stabilize their markets owing to what is called sub prime lending, a plan that has failed to achieve the desired economic growth. Instead of making the capital market alive with fresh infusions of funds, it has left many banks and financial institutions bankrupt. Banking Sector: Banking sector has scaled to greater heights and has come under a competitive environment. Deregulation of interest rates to attract potential investors, new technology, products and aggressive marketing usher in new competition; disinvestment of government equity in nationalized banks have made banks to operate as commercial institutions and their services get marketed as branded consumer products. Financial services have emerged as a new business and funding options are aplenty increasing the chances of raising capital. This has evolved as a separate and major source of business fetching revenue to the service providers. Private Sector: Private sector is gaining importance in countries like India, where they have entered all the core industries like oil, mining, telecommunications, road building, railways, ports, civil aviation etc. This serves as a revenue source for the government and this kind of economic restructuring has brought a wave of enthusiasm amongst the potential investors. Imports have become an entrepreneurial activity and are out of the government domain and this has been facilitated by relaxation of licensing hassles. These are some of the recent trends in the developing countries that have captured the interest of multinational...

Key Strategies of Global Marketing Globalization means many things to many people. For some it is a new paradigm – a set of fresh beliefs, working methods and economic, political and socio-cultural realities in which the previous assumptions are no longer valid. For developing countries, it means integration with the world economy. It can be better understood if we look it at this perspective- “the world integrated into one huge market”. It calls for the removal of all trade barriers among countries and a perfect competitive market prevails and the stress can lead to many positive and possible outcomes in terms of QualityQuantityUniquenessForeign exchangeBenefits to the host countryIncreased productivity leading toEconomic growth Well, it does not end there. An MNC (multi national company), by operating in more than one country gains r and d, production, marketing and financial advantages in terms ofcost and labor that other competitors may not enjoy. The global company views the world as one market, minimize the importance of national boundaries, sources, and raise capital and markets wherever it can do the job best. Why do companies go global? One reason could be the rapid shrinking of time and distance across the globe thanks to faster communication, speedier transportation, growing financial flows and rapid technological changes. It is being realized that the domestic markets are no longer adequate and rich. Japanese have flooded the U. S. Market with automobiles and electronic goods because the home market was not big enough to absorb whatever was produced. Companies at the first stage of globalization have only passive dealings with foreign individuals and organizations. By the second stage, companies deal directly with their overseas counterparts, though they might continue to use third parties also. The company might decide to set up an import or export department. Next comes the shedding of domestic capacity and floating an international organization and have a direct hand in exporting, importing, and perhaps producing goods and services abroad. Seldom companies reach this stage, even if they do, they recede later. The company can have a strong foothold in the countries it is organizing its activity only by way of * Superior product quality* Demand* Customer preference for that particular product range that the company offer* A dynamic CEO projecting and boosting company’s image,* Brand image* Availability of skilled labor* Licenses* Access to necessary infrastructure* Feasible financial structure* Viability in the long run* Marketing mix Chennai in India has become a hub for so many corporate as well as global companies since the business climate is very favorable and enterprising. Some of the strategies in globalization would be * Deciding whether to go global* Deciding which markets to enter* Deciding how to enter the market* Learning to handle differences* Adjusting the managing process* Deciding organization structure* Selecting a managerial approach. Developing countries like India have adopted new economic policies that are expected to encourage the international companies setting their foot in India, by which it compels many Indian companies to pursue internationalization vigorously. True globalization marks the beginning of a new economic era of growth and...

What is Trade? Trade is the exchange of commodity and services. International trade represents business transactions taking place at the global level, and it is fundamentally different from domestic trade. Trade at international level demands huge investments, network of franchisees and proficient people to run the show. Many corporate giants are trying to capture Asian markets, especially Indian market, which has become the industrial hub for such economic activities. Economic liberalization has been the focus of many developing countries for the past two decades and this has allowed multinational companies with huge investment potential to enrich the weaker economies. What is International Trade? International trade tries to generate more foreign exchange, which is always good for the economy. Say, if a country has rich resources of petroleum, naturally it will try to sell the surplus to countries not endowed with such natural resources. That is why Middle East nations are prosperous and economically independent. The diversity in productive possibilities in different countries is due to the presence of limited natural resources. When a country gets a head start in a particular product, it can become the high volume, low cost producer. The economies of scale give it a significant advantage over other countries, which find it cheaper to buy from the leading producers than to manufacture the product themselves. Barriers for Effective Trade Every nation must try to specialize in the production and export of those commodities, which are available in plenty and must import such products in the production of which they have a resource deficiency. It should be remembered that there are severe man made barriers in international trade such as, export duties, quotas, exchange restrictions etc.,that hinder the free movement of products. International Trade and Finance Nevertheless, it is not also possible for a country to produce domestically every kind of product. In spite of all these restraining factors, global trade is thriving, thanks to the advanced technological aspects introduced in communication and faster means of transportation. Distance is no more a constraint and the world has become one small global village. Foreign Exchange Issues All domestic transactions, say in a country like India take place in rupees, which is the legal tender in the country. However, in its trade with other countries like USA, Germany, Japan, France and Britain, the payments have to be made in terms of dollars, marks, yens, francs and pound sterling respectively. The mechanism through which payments are effected between two countries having different currency systems is called foreign exchange. It may be also defined as the exchange of money or credit in one country for money or credit in another. Foreign exchange rates can affect relative prices and net exports. A rise in the a nation’s foreign exchange will depress that nation’s net exports and output, while a fall in the foreign exchange rate will increase net exports and output. Because of the significant impact of exchange rates on national economies, countries have entered into agreements on international monetary...