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23. Technological Environment
J K Galbraith defines technology as a ‘systematic application of scientific or other organized knowledge to practical tasks’
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25. Classification of Technology
26. Technology can be classified according to any of the following categories :-
27. • State-of-the-art-technologies : Technologies that equal or surpass the competitors.
28. • Proprietary technologies : Technologies protected by patents or secrecy agreements that provide a measurable competitive advantage.
29. • Known technologies : Technologies that may be common to many organizations but are used in unique ways.
30. • Core technologies : Technologies that are essential to maintain a competitive position.
31. • Leveraging technologies : Technologies that support several products, product lines, or classes of products.
32. • Supporting technologies : Technologies that support the core technologies.
33. • Pacing technologies : Technologies whose rate of development controls the rate of product process development.
34. • Emerging technologies : Technologies that are currently under consideration for future products orprocesses.
35. • Scouting technologies : Formal tracking of potential product & process technologies for future study or application.
36. • Idealized unknown basic technologies : Technologies that, if available, would provide a significant benefit in some aspect of life.
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41. The Technology Cycle
42. Following classificationtechnology management involves carefully implementing five stages :-
43. 1. Awareness phase
44. 2. Acquisition Phase
45. 3. Adaptation Phase
46. 4. Advancement Phase
47. 5. Abandonment Phase
50. Awareness phase
51. • This is the first phase of the technology cycle in which a company has a formal mechanism to become aware of emerging technologies
52. • Some companies from ‘think tank’ with engineers & scientists, who research from around the world & put in short internal report form for the benefit of corporate strategic planners & technology policy markers.
53. Acquisition Phase
54. • To go from the awareness phase from acquisition phase, the company’s technology group, in collaboration with the industrial engineering group, would conduct technical feasibility, & economic feasibility studies before justifying & acquiring a new technology.
55. Adaptation Phase
56. • Virtually every enterprise ends up adapting an acquired technology for its particular needs
57. • If the homework done correctly, the transition from acquisition to adaptation becomes much smoother & less expensive
58. • Conversely, this not only frustrates the people acquiring the technology but also slows down the assimilation rate, causes major productivity losses, & results in severe quality problems.
59. Advancement Phase
60. • When capital is limited one cannot indiscriminately purchase & abandon technologies with scarce money
61. • It becomes imperative to improvise the acquired technologies for one’s home needs.
62. Abandonment Phase
63. • This last phase of the technology is the most critical
64. • Bad timing in prematurely abandoning a product could result in lost revenues, & on the other hand, waiting too long to abandon might also result in lost revenues because a customer may find a better alternative in competition.
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66. Impact of Technology
67. • We propose to discuss the impact of technology in general, under three heads :-
68. a) Technology & social change
69. b) Economic effects of technology, &
70. c) Technology & plant level changes
72. A. Social Implications
73. • Perhaps the most striking influence of technology is found on society as every area of social life & the life of every individual has been, in some sense or the other, changed by the developments in technology.
74. A1. High Expectations of Consumers
75. • Technology has contributed to the emergence of affluent societies, who want more of many things than more of same things, like varieties of products, superior in quality, free from pollution, more safe, & more comfortable.
76. • This calls for substantial investment in R&D.
77. • One important compulsion for investing in technological advances in Japan is its customer’s high expectations regarding design sophistication, quality, delivery, schedules, & prices
• Industry owners in Japan swear by the dictum – the customer is a god who is always right.
78. • High expectations of consumers pose a challenge & an opportunity to the owners of business institutions.
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80. A2. System Complexity
81. • Technology has resulted in complexity
82. • Modern machines work better & faster no doubt
83. • But if they fail, they need the services of experts for repairs
84. • They fail often because of their complexity
85. • A machine or a system is composed of several hundred components
86. • All parts must work in tandem to accomplish a desired task
87. • Reliable performance of each part, therefore,assumes greater significance because of interdependence of systems.
88. • Management is, therefore, under pressure to keep the whole system working all the time.
89. A3. Social Change
90. • The role of technology on social change may be observed in more than one way :-
91. First , there is the change in social life, which results from a change in a technological process. Thus, an invention may displace thousand of workers, yet the same invention may result in the creation of a new city some- where else & create even more jobs than it originally destroyed. Technological changes of this sort create a turmoil in society.
92. Secondly , besides uprooting population,technology directly changes the patterns of their social life. An invention may open new employment opportunities to women, radically change hours spent at work & in the family, increase available leisure time, open jobs to youth, & deny them to middle-aged or old workers. Technological advancement tends to smoothen out differences, as it creates a more freer & egalitarian society.
93. Thirdly , though social differences tend to be ironed out, status differences are likely to be created by technological advancement in developing countries as technology flows to less developed countries mainly through multinational companies. In India,the employees in foreign collaborations are paid much more than are paid in other local Indian companies, though they do the same job in the same field.
94. Fourth , the way we cook, communicate,use media & work are affected by technology. Even the language we use is changing, terms that until recently were not even part of our lexicon have become common place. Social changes are also reflected in our vocabularies like, house-husband, surrogate mother, & domestic partner, etc. It is therefore, rightly said that the words are the bugles of social change. when our language changes, behaviour will not be far behind.
95. Fifth , technology has its impact on religion in at least two ways, first, religiosity has declined in importance as consumers have come to rely on technology rather than on benevolent deities for their well-being. Secondly, (on the negative side), modernization pressures against genetically modified foods to wholesale rejection of western technologies by certain religious fundamentalists.
96. Sixth , technology has revolutionalised the education system. The internet makes vast knowledge bases available to a large number of people electronically. It has virtually democratized education by enabling in the very poor & remote countries to access theworld’s best libraries, instructors, & courses available through the Internet.
97. A4. Social Systems
98. • Of particular interest is the knowledge of technology
99. • At this level, technology creates a distinct type of social system, namely, the knowledge society
100. • In the knowledge society, use & transfer of knowledge & information, rather than manual skill, dominates work & employs the largest portion of labour force
101. • The knowledge-worker will have to show why he should be retained, what benefit he can offer to the organization, & how he can addvalue to whatever the organization does
102. • He will have to create new jobs in consultation with his employer
103. • A job will then become a joint venture
104. • When this happens, the worker can forget pension plans.
105. B. Economic Implications
106. • Developments in technology also have significant economic implications :-
107. B1. Increased productivity
108. • the most fundamental effect of technology is greater productivity in terms of both quality & quantity
109. • This is the main reason why technology at all levels is adopted
110. • As a result of productivity improvements, real wages of employees tend to rise & prices of some products decline.
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112. B2. Need to Spend on R&D
113. • Research & Development (R&D) assumes considerable relevance in organizations as technology advances
114. • Firms are required to consider, decide & take action on at least six issues.
115. First , the allocation of resources to R&D. It enables business improve corporate performance by enabling the firm to better develop synergies among product lines & business units.
116. Secondly , technology transfer, the process of taking new technology from the laboratory to the market place is equally important when the company fails to develop much in the way of major innovations.
117. Thirdly , time factor is important in R&D. Companies can no longer assume that competition will allow them the time needed to recoup their investment.
118. Fourthly , as new technology comes in, the old technology needs to be abandoned. The process of old replaced by new is called technological discontinuity. Such discontinuity occurs when a new technology cannot be used simply to enhance the current technology but actually substitutes for thattechnology to yield better performance. The R&D manager must determine when to abandon present technology & when to develop or adapt new technology.
119. Fifthly , the firm must also decide on its own R&D or to outsource technology. As a rule, it may be stated that a company should buy technologies that are commonly available but make (& protect) those at are rare, valuable, hard to imitate, & have no close substitutes. In addition, outsourcing technology may be appropriate when :-
120. • The technology is of little significance to competitive advantage
121. • The supplier has proprietary technology
122. • The supplier’s technology is better &/or cheaper & reasonable easy to integrate into the current system
123. • The technology development process requires special expertise, & • the technology development process requires new people & new resources.
124. The sixth & the final issue relates to the decision on product innovation or process innovation. In the early stages, product innovations are most important because the product’s physical attributes & capabilities affect financial performance considerably. Later, process innovations such asimproved manufacturing facilities, increasing product quality, & faster distribution become important in maintaining the product’s economic returns.
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126. B3. Jobs Become Intellectual
127. • With the advent of technology, jobs tend to become more intellectual or upgraded
128. • A job hitherto handled by an illiterate & un- skilled worker now requires the services of an educated & component worker
129. • Introduction of new technology dislocates some workers
130. • This makes it obligatory on the part of business houses to retrain its employees & to rehabilitate those displaced & untrainable
131. • Equal is the responsibility of the governmentto provide training & educational facilities to its citizens - those who pick up & acquaint themselves with the new technology, the job will be rewarding as they stand to gain through increased productivity, reduced prices, & increased real wages
132. • Along with upgrading jobs, technology has its impact on human relations
133. • Since interaction & activity affect sentiments, & they begin to feel & think about one another & about their work situation.
134. B4. Problem of Technostructure
135. • Not only jobs become more intellectual & knowledge-oriented, even the incumbents tend to become highly professional & knowledgeable
136. • Such an enterprise has to face on this account serious problems :- First , motivation of such employees is a difficult task because incentives as attractive remuneration, job security, & just treatment, hardly inspire the enlightened employees to work more. They are instead motivatedby opportunities which offer challenges or growth or achievement.
137. Secondly , retraining such employees for long is a difficult job. Flighting & not sticking to one company is their culture. The company has to make several exceptions to discourage rootless ness of its professional employees :-
138. • Regular attendance & punctuality have to be relaxed
139. • Dual promotion ladders have to be established so that distinguished technical people can rise in rank
140. • Profit-sharing to be provided to give creativepersons a financial stake in the ideas they create
141. • Attendance at professional get-togethers has to be sponsored
142. • Writing professional articles has to be encouraged & special assignments & part-time teaching may be allowed.
143. Thirdly, scientific & professional workers constitute, the technostructure . The technostructure tries to control the organization through influencing management’s decision-making. But they are more action oriented & are yet to learn social problems of business decisions. Management is, therefore, in ain a tight position to balance the ruffled feelings of technocrats & the social consequences of business decisions.
144. B5. Increased Regulation & Stiff Opposition
145. • A by-product of technological advancement is the ever-increasing regulation imposed on business by the government of the land & stiff opposition from the public as the host government has the powers to investigate & ban products that are directly harmful or hurt the sentiments of a section of society.
146. B6. Rise & Decline of Products &Organizations
147. • Change of technology is a norm & not an exception
148. • This poses another problem to business
149. • A new technology may spawn a major industry but it may also destroy an existing one
150. • Transistors, for example, hurt the vacuum- tube industry & xerography hurt the carbon paper business
151. • A typical product, today, is subject to a cycle : introduction, growth, maturity, decline, &abandonment
152. • An organization that is associated with particular technology will go in sequence through the following stages :- (i) birth, (ii) growth, (iii) policy, (iv) procedure, (v) theory, (vi) religion, (vii) ritual, & (viii) last rites.
153. B7. Boundaries Redefined
154. Technological changes have significant consequences for industries :-
155. • Technological change is a potent force in the reconfiguring of industry boundaries, it may broaden or narrow generally excepted industry boundaries
156. • As a consequence of its impact on whole industries, technological change can have a significant impact on the prevailing business definition of individual companies. Companies may find themselves in a different businessdue to technological changes that they or others have effected
157. • Technological change is one of the important factors giving rise to product substitution & product differentiation. Technological change is a dominant force in shaping competitive dynamics in many industries. It influences industry boundaries & structure, product substitution & differentiation, & the price quality relationships between products
158. • Technological change in the form of process (as opposed to product) & materials innovations may contribute to many of the impacts noted above
159. • Finally, for multi-product companies (precedingdiscussion applies to single-business units), technological change may have multiple impacts.
160. C. Plant Level Changes
161. • The impact of technology at the plant level is also significant.
162. C1. Technology &Organization Structure
163. • Technology has considerable influence on organization structure, length of the line of command, & span of control of the chief executive
164. • Where companies use technology, which is fast changing, matrix structures are more common
165. • Some companies use a matrix even though the rate of technological change is not fast
166. • Besides technology, other factors that have their influence on organization structure are history & background of a company & thepersonalities of the people who founded the firm & managed it subsequently, but the impact of techno- logy is considerable
167. • Line of command tend to be lengthy where the production is routine & process based
168. • Decision-making is highly centralized
169. • It tends to be short if the production activities are customized
170. • The use of specialists will be more & hence decision- making gets delegated
171. • In mass production technologies, the number of people whom an executive controls tends to be larger than when the production is unit based
172. • Any technological advancement will result in :-
173. a) the expanded availability of a range of products & services
174. b) substitution of capital for labour, leading to higher productivity & lower costs
175. c) increases in sales or power for the innovating organization relative to its competitors d) initiation of changes in behaviour among customers, suppliers, employees, or society, & e) side-effects on the quality of physical environment.
176. C2. Resistance to Change
177. • The manager of a given business unit shall face resistance to change as new technology poses new problems
178. • The resistance to change is often psychological
179. • A typical businessman himself is opposed to adopting new technology as it is expensive & risky
180. • When he is making enough money with obsolete technology why must he worry about new technology?
181. Specifically, resistance to change stems from the following reasons :-
182. 1. Psychological or social commitments to existing products, process &organization,
183. 2. Sizable capital investments in long-life single-use facilities,
184. 3. Low profits & reduced rate of growth,
185. 4. Small size or fragmented activities,
186. 5. Complacent top management,
187. 6. Industry norms & associations or cartels that perpetuate industry-bound thinking,
188. 7. Lack of successful entrepreneurial models to emulate, &
189. 8. Powerful labour resistance to changes in methods.
190. C3. Fear of Risk
191. • There is always the fear of risk.
192. • A research oriented-company like DuPont Corfam, an intended substitute for the fore- casted shortage of shoe leather, after an investment of $3000 million, abandoned the project in 1971 because of quality & cost problems.
193. C4. E-commerce
194. • The phenomenal growth of the internet & the associated World Wide Web has made e- commerce possible
195. • E-commerce is contributing to a growing percentage of cross-border transactions
196. • It rolls back some of the constraints of location, distance, scale, & time zones
197. • The Web allows, both small & large, to expand their global presence at a lower cost than ever before, wherever they may be located, & what ever their size
198. • Modern factories are now able to producegoods in a shorter period of time (to produce one car it takes less than 10 seconds) & with fewer defects - thanks to the introduction of ‘Six Sigma’ quality programmes
199. • Six Sigma is a statistical term that means 3.5 errors per million, effectively eliminating performance problems & ensuring that products conform to standards
200. • While e-commerce focuses on marketing & sales process, E-business emphasises integration of systems, processes, organizations, value chains, & markets
201. • Integration operate through Internet & helps buildnew relationships between businesses & customers The internet & e-business provide a number of benefits in global business, including the following :-
202. 1. Convenience in conducting business worldwide; facilitating communication across borders which brings markets closer
203. 2. An electronic meeting & trading place, which adds efficiency in the conduct of business
204. 3. Power to consumers as they gain access to limitless options & price differential
205. 4. Efficiency in distribution
206. C5. Telecommunications
207. • The obvious dimension of the technological environment facing international business is telecommunications
208. • This growth is welcome as business, domestic or global, cannot prosper without an efficient telephone system, such as, 3G, MMS of NOKIA.
209. C6. Transportation
210. • In addition to developments in computers & telecommunications, several major innovations in transportation have occurred since World War II
211. • While the advent of commercial jet has reduced the travel time of businessmen, containerisation has lowered the costs of shipping goods over long distances.
212. C7. Globalisation of Production
213. • Technological breakthroughs have facilitated globalisation of production
214. • A satellite based communications system allows Texas Instruments (TI) to coordinate on a global scale, its production planning, cost accounting, financial planning, marketing, customer service, & human resource.
215. C8. Markets
216. • Along with the globalisation of production, technological innovations have facilitated the internationalisation of markets
217. • As stated earlier, containerisation has made it more economical to transport goods over long distances, thereby creating global market
218. • Low-cost global communications networks such as the World Wide Web are helping to electronic global market places
219. • In additions, low-cost jet travel has resulted in the mass movement of people around the world
220. • This has reduced the cultural distance between the countries & is bringing about convergence of consumer tastes & preferences
221. • At the same time, global communications networks & global media are creating a worldwide culture
222. • Worldwide culture is creating a world market for consumer goods.
223. C9. Technology Transfers Technology transfers includes :-
224. i) Internal transfer of technology from the R&D or engineering department to the manufacturing department of a firm based in a country
225. ii) The same transfer of technology from a laboratory or operations of an MNC in one country to its laboratory or operations in another country
226. iii) The transfer of technology from a research consortium supported by many firms to one ofits members
227. • Simply told, technology transfer is a process that permits the flow of technology from a source to a receiver through published material
228. • Purchase & sale of machinery, equipment & inter- mediate goods, transfer of data & personnel; & interpersonal communication Technology transfer comprise six categories :-
229. 1. International Technology Transfer is across national boundaries. Generally, such transfers take place between developed & developing countries.
230. 2. Regional Technology Transfer is transferred from one region of a country to another.
231. 3. Cross-industry or Cross-sector Technology Transfer is transferred from one industrial sector to another.
232. 4. Interfirm Technology Transfer is transferred from one company to another.
233. 5. Intra-firm Technology Transfer is transferred within a firm, from one location to another. Intra- firm transfers can also be made from one department to another within the same facility.
234. 6. Pirating or Reverse-Engineering whereby access to technology is obtained as the expense of the proprietary rights of the owners of technology.
235. International Technology Transfer
236. Parties in the Transfer Process
237. i) Home country, ii) Host Country, & iii) The Transaction
238. Home country
239. • Argue that the establishment of production facilities by MNCs in subsidiaries abroad decrease their export potential
240. • Some of the MNCs imports stem from their subsidiaries, the volume of imports of the home country tends to increase
241. • Besides, technology transfer tends to effect adversely competitive advantage of the home country
242. • Labour unions in the home country too oppose technology transfer on the ground that the jobs generated from the new technology will benefit the host country citizens.
243. Host Country
244. a) Economic Implications b) Social Implications
245. Economic Implications
246. • Economic implications include payment of fee, royalty, dividends, interest, & salaries to foreign technicians & tax concessions resulting in loss to the national exchequer
247. • All these are payable to the transferring country & might prove very expensive to the host country
248. • Many times, the type of technology transferred by international business is not appropriate to developing countries, is designed to produce the types of goods that a rich country needs & to do so by methods, which are appropriate toresources endowment of developed nations.
249. Social Implications
250. • Along with the transfer of technology, there is the transmission of culture from the exporting countries
251. • The upper & middle class Indians are a case in point
252. • Majority of these neo-rich people are totally Westernised & Americanised in their attitudes, behaviours, food habits, & dress accustomedness
253. • This is because, we import technology from the United States & European countries.
254. Transaction
255. • This element focuses on the nittygrities of the transfer.
256. Stages in the Transfer Process
257. The transfer of technology between countries, particularly from rich to developing nations, proceeds in five different, but coordinated stages :-
258. 1. Assignments, including sale & licensing agreements covering all forms of industrial property including patents, inventor’s certificates, utility models, industrial designs, trademarks, service names, & trade names.
259. 2. Arrangements, covering the provision of know-how & technical expertise in the form of feasibilitystudies, plans, diagrams, models, instructions, guides, formulations, service contracts & specifications, &/or involving technical, advising, & managerial personnel, personnel training, & equipments for training.
260. 3. Arrangements, covering the provision of basic or detailed engineering designs, & the installation & operations of plant & equipment.
261. 4. Purchases, including leases & other forms of acquisition of machinery, equipment, intermediate goods, &/or raw materials insofar as they are part of transactions involving technology transfers
262. 5. Industrial & technical cooperation agreements of any kind, including turnkey agreements, international subcontracting, as well as provision for managements of & marketing services Technology is not a homogeneous phenomenon. There are different types of technology, each posing fundamentally different problems & demanding different solutions in the international transfer process.