Expatriate training, also known as international assignment training, is a crucial step in preparing employees for foreign assignments. Adapting and succeeding in a foreign environment can be challenging, and expatriate training can help individuals do just that. A number of types of expatriate training are available, each focusing on a specific aspect of international assignments.
Some of the types of expatriate training are as follows:
1. Cross-Cultural Training:
A successful international assignment requires cross-cultural training as a foundational part of expatriate training. As a result of this training, expatriates will be able to better understand and adapt to the customs, traditions, and social norms of their host country, which will enhance their cultural competence.
Training usually covers various aspects of culture, including communication styles, etiquette, body language, negotiation techniques, business protocols, and social interactions. This program enables expatriates to navigate cross-cultural challenges effectively by developing cultural awareness, sensitivity, and empathy.
In cross-cultural training, hands-on experiences of living in and working in the host country are often provided through interactive workshops, case studies, role-plays, and simulations. Through participating in activities that expose them to various cultural practices, participants can gain a better understanding of the host culture’s values and perspectives.
A cross-cultural training program facilitates the development of strong working relationships between expatriates and local colleagues, customers, and clients. This in turn makes international assignments more successful.
Export is the process of selling goods and services produced in one country to customers in another country. This is a crucial aspect of international trade that promotes economic growth, creates jobs, and facilitates global integration. Different types of export are available, each accommodating different market needs and business strategies. Here are some common types of exports:
1. Direct Export:
Direct export is the process of selling goods and services directly to foreign customers or end-users without the involvement of intermediaries. This type of export involves the exporting company taking full responsibility for marketing, sales, shipping, and customer service. With direct export, companies can control the branding, pricing, and customer relationships of their products.
Establishing a sales and distribution channel in foreign markets is one way companies can start direct exports. To promote and sell their products directly to customers, they can employ their existing sales teams or hire local representatives. In addition, companies can set up physical retail outlets or online stores to reach foreign consumers directly.
Direct export provides many advantages, including direct access to customer feedback, quick decision-making, and the ability to build strong brand recognition globally for businesses with a strong global presence, sufficient resources, and international trade expertise.
The term ‘contract manufacturing’ refers to an international business model in which a company contracts with a local manufacturer in another country to get certain components or goods produced according to its specifications. Contract manufacturing comes in three major forms:
Production of certain components, such as automobile components and shoe uppers. These components can be used to manufacture cars and shoes;
Assembly of components into final products, such as hard drives, motherboards, floppy disk drives, and modem chips in computers;
Complete manufacturing of products, such as garments.
Local manufacturers produce or assemble the goods according to the technology and management guidelines provided by the foreign company. Local producers make or assemble the goods, which are then delivered to international firms for use in their final products or are sold as finished goods by the international firms under their brand names in other countries, such as the home country and the host country. Today, all major international companies such as Nike, Reebok, Levis and Wrangler have their products or components manufactured in developing countries via contract manufacturing.
During the period 1990-2004, the number of people living in extreme poverty fell by more than a third. Despite wide variations among regions and countries, the results indicate that the world as a whole can reduce poverty by half.
However, poverty in Africa is expected to increase, and most of the 36 countries where 90% of the world’s undernourished children live are in Africa. Only a quarter of countries are on track to achieve the goal of halving undernutrition.
➦ In International economics, “The Heckscher-Ohlin theory” is considered to be one of the most influential theoretical concepts.
➦ Since the theory makes a few simplifying assumptions, it is preferred over Ricardo’s Theory by most economists.
➦ The theory has been subjected to many empirical tests because of its influence on the scenario of international trade.
➦ There are many tests that raised questions regarding the validity of the Heckscher-Ohlin theory(H-O Theory) during the famous study that was published in 1953 by a Noble Prize winner in economics (1973), “Wassily Leontief”.
➦ Leontief postulated that as compared to other countries in the world the United States does have a sufficient amount of capital.
➦ Then as per the H-O Theory, United States would labor-intensive goods and export capital-intensive goods.
➦ But looking at the trade data of import and export of the United States, the result seems to deviate from that the theory actually predicted.
➦ Wassily Leontief found out that the export seems to be less capital intensive than the imports.
➦ Since the result sounds variance with what the theory actually predicted, it is regarded popularly as Leontief Paradox.
➦ The economists were not sure why they observe the Leontief paradox.
➦ Maybe the United States uses innovative technologies for producing goods and services that might hold a special advantage for the country.
➦ These types of products tend to be less capital intensive than the products whose technology has still time to mature and become suitable for mass production.
➦ This might be the reason why the United States is exporting goods that use a high level of skilled labor and innovative entrepreneurship and importing high capital intensive products (manufacturing products that require huge capital).
➦ There are many empirical studies analyzing the data of many countries confirmed that in many countries there is actually the existence of Leontief Paradox.
➦ Economists used to rely on the theoretical grounds of H-O Theory which left them in a big confusion as the theoretical concepts looked poor for predicting the patterns of international trade in the real world.
➦ Many economists realized that Ricardo’s theory of comparative advantage seems to be more reliable as compared to H-O Theory in predicting the various trade patterns with accuracy.
➦ Therefore, economists feel the best solution to the confusion is following back the Ricardian model of comparative advantage.
➦ It believes that country should specialize in the production of those goods that it can produce more efficiently and should buy the goods that it produces less efficient as compared to other countries.
Example:
It is not because of the favorable and non-favorable factor endowments regarding the manufacturing of the aircraft and textiles, the United States is involved in exporting commercial aircraft and importing textiles. It is actually because the country is relatively more efficient to produce aircraft as compared to the textiles.
➦ H-O Theory of international trade holds a key assumption that every country has the same technology. Usage and integration of technologies across the countries are different.
➦ The differences in the level of technology integrated by the various nations may lead to productivity differences which in turn, drives patterns in international trade.
Example:
In the 1970s and 1980s, the success of Japan in exporting automobiles was based not just on the relative abundance of capital, but also on its development of innovative manufacturing technology.
➦ This enabled the country to achieve a high level of productivity in the production of automobiles than the countries having sufficient capital.
➦ The theoretical explanation may be correct as per the empirical study that been recently carried out.
➦ As per the new research, if the technology differences across the nations are controlled than the country will indeed export those goods that make intensive use of locally abundant factors while importing those goods that make intensive use of locally scarce factors.
➦ Heckscher-Ohlin (H-O Theory) seems to gain predictive power after accounting for the impact of technology on the productivity of the goods and services.
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Absolute advantage and comparative advantage are two important concepts in international trade that largely influence how and why nations devote limited resources to the production of particular goods. They describe the basic economic benefits that countries get from trading with one another. Absolute advantage is a condition in which a country can produce particular goods at a lower cost in comparison to another country. On the other hand, comparative advantage is a condition in which a country produces particular goods at a lower opportunity cost in comparison to other countries.
Monopolistic advantage theory, first proposed by S. H. Hymer in his doctoral thesis and later expanded by C. P. Kindleberger. Monopolistic advantage theory states that the reasons multinational corporations (MNCs) are able to compete successfully against local firms. It is a microeconomic theory that makes the firm the center, as well as the cause, of the international movement of capital and goods.
The theory elucidates why firms choose to internationalize their operations. Typically, MNCs are at a disadvantage compared to local firms because they have to cope with liabilities of foreignness, lack of local know-how, high cost of acquiring this knowledge in other countries, etc.
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