A review of 2012 and a look ahead of 2013

Happy New Year!

With our“Trade Policy and International Marketing” 2013 Conference due in a few weeks in March 2013, the year of 2012 has been a fruitful year.

Major accomplishments in 2012 include:

My blog has also been selected as the 8th best blogs by Business Professors in the world.

Thank you all for your interests and attention. Let’s continue our journey in 2013.

Happy New Year!

Embrace Innovation to Increase International Market Share

 This article is taken from Marketing Management,April 2011, and co-authored by Michael Czinkota and Andreas Pinkwart.

Embrace innovation to increase international market share

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Election Effects on International Business

The U.S. election determines the political landscape for the next two years. But though we know that all politics are local, globalization provides all these local politics with major influence on the international marketplace. Though there is no strict cohesion within Democrats, the Republicans, and the Tea Party, an examination of their typical perspectives on international business issues may be helpful.

Support payments for the agricultural sector, infant industries, and worker adjustment assistance will be favored by Democrats, opposed by Republicans, and viewed with dismay by Tea Party players.

Tax abatements to encourage domestic investment, tax deferrals for foreign profits, and reduced taxation of income earned abroad will be opposed by Democrats, thus raising taxes on foreign activities. Republicans favor increased deferrals. Tea Party members are opposed to more government involvement in general, but might find good reason to support locals.

Protection against imports is more likely to be supported by Democrats. Past actions provided large benefits to few firms, and the cost were borne by many. Now there will be smaller benefits to many by taking aggressively from a few.

Exchange rate regimes are crucial. Trade used to drive currency values, but now exchange rates dominate trade. All three groups see exchange rate issues as important. For Democrats they are one more tool for international negotiations. Republicans tend to rely more on market forces – but have demonstrated their willingness to help these forces along. Tea Party players are most likely to stay away from interference in floating exchange rates.  

For international institutions, such as the World Bank, the IMF and the World Trade Organization, Democrats tend to demand a broadening of activities, with no new funds. Republicans will invest in rear guard actions to preserve U.S. preeminence and may even provide some creative funding in support of such a goal.

In foreign policy, Democrats are more likely to seek negotiated political solutions. In contrast, Republicans and Tea Party players recognize opportunities for a nexus between trade policy and foreign policy to bridge relational gaps.

There is also a growing indifference, if not disdain of international business concerns by voters. The Wall Street Journal reports that the American public is increasingly hostile to free trade.  84% of Democrats and 90% of Republicans are fearful of outsourcing . Congress will find it quite difficult to exercise leadership if there are no followers.

Non-voters not interested or disenchanted  require major new reason to get involved and may become motivated by charisma or focused bitterness. Already chomping at the bit are the teenagers who are old enough to understand how their future is being mortgaged but too young to vote. They sense frustration, disappointment and anger. There will be a payback for the ‘domestics’ who screwed it all up, says my daughter Margaret !

So what needs to be done?  An unskilled and unmotivated worker in the U.S. cannot compete with a similar Chinese or Indian laborer.  Education and interest  will be for many the determining lifestyle factor. At the same time, not everybody needs to go to college. Plumbing or landscaping are activities of dignity, necessity, and virtue, and deserve to be skillfully taught and learned, rather than looked down upon.  

In an age of participation, people no longer just trade their work for money. Firms need to provide context for activities and their repercussions. Everyone in the U.S. knows about the trauma of international competition, but few are aware of its prosperity. Job reductions are familiar, while new jobs are obscure.  Firms must let the world know about growth and profits. Instead of TV shows on how to get rich by picking random brief cases, it is high time to launch a show on New York exporters or to launch a national competition on how to resolve international business obstacles.

After the election, we can expect overall more introspection on part of the United States. Export issues will gain support, with much less enthusiasm about imports. There will be limited encouragement  of inward investments. Trade treaties, once modified for U.S. benefit are likely to be ratified. Ongoing difficulties precipitated by large budget deficits, will encourage the finding of foreign scapegoats. President Obama, in keeping with established tradition, will increase his international travel and exposure, which will translate into very limited financial support by Congress.

Overall, in terms of public enthusiasm, international trade and investment issues are likely to go back to the conditions of the early 1980’s. Relevant for specialists, but held at bay by a key focus on domestic concerns.

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Michael Czinkota teaches International Business at Georgetown University and the University of Birmingham in the UK. He can be reached at czinkotm@georgetown.edu

On the Need for Dreams

The following is an editorial I have written concerning the need to aspire toward one’s dreams despite the odds.

On the Need for Dreams

Going for the new and unknown is my job. I am a university professor and do my professing  through research, teaching, and writing. Most of my activities tend to be new. I never really know how a class discussion will turn out. When formulating research hypothesis the whole idea is to be wide open to new indications and findings. And even in the 10th edition of my text book, there are major new directions and changes to be captured.

Yet,  thinking new or unexpected thoughts is disquieting to some. For example, I still dream of living some day in a castle.  To many friends and neighbors, this is one of those silly dreams which  should  have been shed decades ago. Sometimes, when I describe my castle, people  even get openly hostile, declaring such thoughts to be outlandish, wasteful and reflective of delusions of grandeur. They tell me that spending even a minute on such ideas takes away from productivity and is a giant waste.

But I’ve discovered that I may not be alone. On occasions when I mention castles, I see eyes light up, reflecting dreams remembered and imagination recaptured. The voices might be slightly lowered, but the intensity of the conversation picks up. Sometimes we even repair to the internet and do some searches.  Entering, for example, “Schloss Verkauf” under Google brings up the hunting castle in Magdeburg, the castle with the moat near Berlin, the family castle from the 16th century in Bavaria. There are many more in Austria, Switzerland, France, and Italy. Some of them come with an ante-castle area of large proportion.  Many have the requisite tower, the horse stables and the huge gate. Then there are those with bordering forest areas or vineyards. Some are fully restored, others need some help, but they all require loving tender care- if only because preservation regulations require it.  The price typically seems reasonable or even low when compared to real estate prices in many of the metropolis.

I am told about the deleterious effects of a castle. There are the terrible tax burdens, the upkeep and maintenance nightmares, the isolation, and the total excess of space. Forests may mean that one has to pay for a forester. Woods will have to be scouted regularly for infested trees. The deer population will have to be managed. Who shovels the snow in winter? All so true.

But then I think of my youth, when dreaming about  special things was not out of reach, but rather part and parcel of life.  Over time, not too many dreams of childhood  have been  preserved.  Yet, the move to a castle is not an introverted return to the olden days, but in its own way a new, pioneering action. A new environment, an entirely different set of challenges, new neighbors, combined with history and closeness to nature.

It’s also a new perspective.  Castles, by their very nature tend to have a far reaching outlook. Typically they are built on top of a hill or even a mountain, with the tower reaching well above the trees. After all, you want to see who is coming up the road. Just as the climbing of a mountain lets you see vistas never taken in before, a castle gives an overview. A castle reflects promises of safety and freedom. There is an aura of peace and a welcoming of guests. A certain ampleness is also built into castles. There is the knights room, the salon, the dining hall, and of course,  the ballroom. What a feeling of open space!

As time flies by, in many societies one is encouraged to settle down, which means to settle for what we have. Contentment eliminates pain.  But it also pours concrete onto our limitations and focuses us on the low end of the horizon. By contrast, sleep research tells us that dreams help sustain life.  Perhaps even God was dreaming when he did his creating.

Castles are not easy. Even the Bavarian King Ludwig, who built Neuschwanstein, the model for later replicas by Disney, learned that harsh reality. When he built too many castles, he was deposed, and, some say murdered. I think that we all need our castles. We’re all born with some, we drop them often, but there is a time to have our dreams return. A castle can be our defiance of time, our dedication to life and culture. You don’t have to be a king to dream, but if you get your castle, you will be a king.

Michael Czinkota teaches international business at Georgetown University and is a visiting professor at the University of  Liechtenstein. He can be reached at  czinkotm@georgetown.edu