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Technological environment

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  • 1.
    • Technological Environment
  • 2.
    • Technological Environment
    • • J K Galbraith defines technology as a ‘systematic
    • application of scientific or other organised
    • knowledge to practical tasks’
  • 3.
    • Classification of Technology
    • Technology can be classified according to any of the
    • following categories :-
    • • State-of-the-art-technologies : Technologies that
    • equal or surpass the competitors.
    • • Proprietary technologies : Technologies
    • protected by patents or secrecy agreements that
    • provide a measurable competitive advantage.
    • • Known technologies : Technologies that may be
    • common to many organisations but are used in
    • unique ways.
  • 4.
    • • Core technologies : Technologies that are
    • essential to maintain a competitive position.
    • • Leveraging technologies : Technologies that
    • support several products, product lines, or classes of
    • products.
    • • Supporting technologies : Technologies that
    • support the core technologies.
    • • Pacing technologies : Technologies whose rate of
    • development controls the rate of product process
    • development.
    • • Emerging technologies : Technologies that are
    • currently under consideration for future products or
  • 5.
    • processes.
    • • Scouting technologies : Formal tracking of
    • potential product & process technologies for future
    • study or application.
    • • Idealized unknown basic technologies :
    • Technologies that, if available, would provide a
    • significant benefit in some aspect of life.
  • 6.
    • The Technology Cycle
    • Following classification, technology management
    • involves carefully implementing five stages :-
    • 1. Awareness phase
    • 2. Acquisition Phase
    • 3. Adaptation Phase
    • 4. Advancement Phase
    • 5. Abandonment Phase
    • (See Fig. Below)
  • 7. Technology Awareness of marketable invention Technology Acquisition by self-generation or transfer Technology Adaptation Minor modifications of acquired technology for specific needs Technology Advancement Innovation involving major modifications of acquired technology Technological Abandonment obsolescencing External & internal Environment Factors affecting the technology user Promotion Need driven expectations Justification Installation 1 2 3 4 5 6 Demolition Time
  • 8.
    • The Technology Cycle, showing the five basic elements
    • of technology management at any given level (product,
    • service, function, work centre, plant/division,
    • corporation, industry, national or international)
    • applicable to deal with an existing or new technology.
    • The dashed lines represent ‘analysis’.
  • 9.
    • Awareness phase
    • • This is the first phase of the technology cycle in
    • which a company has a formal mechanism to
    • become aware of emerging technologies
    • • 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.
  • 10.
    • 2. Acquisition Phase
    • • 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.
  • 11.
    • 3. Adaptation Phase
    • • Virtually every enterprise ends up adapting an
    • acquired technology for its particular needs
    • • If the homework done correctly, the transition from
    • acquisition to adaptation becomes much smoother
    • & less expensive
    • • 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.
  • 12.
    • 4. Advancement Phase
    • • When capital is limited one cannot indiscriminately
    • purchase & abandon technologies with scarce money
    • • It becomes imperative to improvise the acquired
    • technologies for one’s home needs.
  • 13.
    • 5. Abandonment Phase
    • • This last phase of the technology is the most critical
    • • 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.
  • 14.
    • Impact of Technology
    • • We propose to discuss the impact of technology in
    • general, under three heads :-
    • a) Technology & social change
    • b) Economic effects of technology, &
    • c) Technology & plant level changes
    • (See Fig. Below)
  • 15. Technology A. Social implications C. Plant level changes B. Economics implications High expectation of consumers Systems complexity Social systems Social changes Organisation structure Resistance to change Increased regulation & stiff opposition Problems of techno- structure Jobs become intellectual Increased productivity Fear of risk e-Commerce Telecommuting Rise & decline of products & organisations Boundaries redefined Transportation Markets Technology transfers Impact of Technology Need to spend on R&D
  • 16.
    • A. Social Implications
    • • 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.
  • 17.
    • A1. High Expectations of Consumers
    • • 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.
    • • This calls for substantial investment in R&D.
    • • One important compulsion for investing in
    • technological advances in Japan is its
    • customer’s high expectations regarding design
    • sophistication, quality, delivery, schedules, &
    • prices
  • 18.
    • • Industry owners in Japan swear by the dictum – the
    • customer is a god who is always right.
    • • High expectations of consumers pose a challenge &
    • an opportunity to the owners of business institutions.
  • 19.
    • A2. System Complexity
    • • Technology has resulted in complexity
    • • Modern machines work better & faster no
    • doubt
    • • But if they fail, they need the services of
    • experts for repairs
    • • They fail often because of their complexity
    • • A machine or a system is composed of several
    • hundred components
    • • All parts must work in tandem to accomplish
    • a desired task
    • • Reliable performance of each part, therefore,
  • 20.
    • assumes greater significance because of
    • interdependence of systems.
    • • Management is, therefore, under pressure to keep
    • the whole system working all the time.
  • 21.
    • A3. Social Change
    • • The role of technology on social change may be
    • observed in more than one way :-
    • 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.
    • Secondly , besides uprooting population,
  • 22.
    • 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 advance-
    • ment tends to smoothen out differences, as it creates
    • a more freer & egalitarian society.
    • 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,
  • 23.
    • 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.
    • 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.
  • 24.
    • 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),
    • modernisation pressures against genetically modified
    • foods to wholesale rejection of western technologies
    • by certain religious fundamentalists.
    • Sixth , technology has revolutionalised the education
    • system. The internet makes vast knowledge bases
    • available to a large number of people electronically.
    • It has virtually democratised education by enabling
    • in the very poor & remote countries to access the
  • 25.
    • world’s best libraries, instructors, & courses
    • available through the Internet.
  • 26.
    • A4. Social Systems
    • • Of particular interest is the knowledge of
    • technology
    • • At this level, technology creates a distinct type
    • of social system, namely, the knowledge society
    • • In the knowledge society, use & transfer of
    • knowledge & information, rather than manual
    • skill, dominates work & employs the largest
    • portion of labour force
    • • The knowledge-worker will have to show why
    • he should be retained, what benefit he can
    • offer to the organisation, & how he can add
  • 27.
    • value to whatever the organisation does
    • • He will have to create new jobs in consultation with
    • his employer
    • • A job will then become a joint venture
    • • When this happens, the worker can forget pension
    • plans.
  • 28.
    • B. Economic Implications
    • • Developments in technology also have
    • significant economic implications :-
  • 29.
    • B1. Increased productivity
    • • the most fundamental effect of technology is
    • greater productivity in terms of both quality
    • & quantity
    • • This is the main reason why technology at all
    • levels is adopted
    • • As a result of productivity improvements, real
    • wages of employees tend to rise & prices of
    • some products decline.
  • 30.
    • B2. Need to Spend on R&D
    • • Research & Development (R&D) assumes
    • considerable relevance in organisations as
    • technology advances
    • • Firms are required to consider, decide & take
    • action on at least six issues.
    • 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.
  • 31.
    • 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.
    • 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.
    • 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 that
  • 32.
    • technology to yield better performance. The R&D
    • manager must determine when to abandon present
    • technology & when to develop or adapt new
    • technology.
    • 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 :-
    • • The technology is of little significance to com-
    • petitive advantage
  • 33.
    • • The supplier has proprietary technology
    • • The supplier’s technology is better &/or
    • cheaper & reasonable easy to integrate into
    • the current system
    • • The technology development process requires
    • special expertise, &
    • • the technology development process requires
    • new people & new resources.
    • 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 as
  • 34.
    • improved manufacturing facilities, increasing
    • product quality, & faster distribution become
    • important in maintaining the product’s economic
    • returns.
  • 35.
    • B3. Jobs Become Intellectual
    • • With the advent of technology, jobs tend to
    • become more intellectual or upgraded
    • • A job hitherto handled by an illiterate & un-
    • skilled worker now requires the services of an
    • educated & component worker
    • • Introduction of new technology dislocates
    • some workers
    • • This makes it obligatory on the part of
    • business houses to retrain its employees & to
    • rehabilitate those displaced & untrainable
    • • Equal is the responsibility of the government
  • 36.
    • to 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
    • • Along with upgrading jobs, technology has its
    • impact on human relations
    • • Since interaction & activity affect sentiments, & they
    • begin to feel & think about one another & about
    • their work situation.
  • 37.
    • B4. Problem of Technostructure
    • • Not only jobs become more intellectual &
    • knowledge-oriented, even the incumbents tend
    • to become highly professional &
    • knowledgeable
    • • 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 motivated
  • 38.
    • by opportunities which offer challenges or growth
    • or achievement.
    • 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 :-
    • • Regular attendance & punctuality have to be
    • relaxed
    • • Dual promotion ladders have to be established
    • so that distinguished technical people can rise
    • in rank
    • • Profit-sharing to be provided to give creative
  • 39.
    • persons a financial stake in the ideas they
    • create
    • • Attendance at professional get-togethers has
    • to be sponsored
    • • Writing professional articles has to be
    • encouraged & special assignments & part-time
    • teaching may be allowed.
    • Thirdly, scientific & professional workers constitute,
    • the technostructure . The technostructure tries to
    • control the organisation 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 a
  • 40.
    • in a tight position to balance the ruffled feelings of
    • technocrats & the social consequences of business
    • decisions.
  • 41.
    • B5. Increased Regulation & Stiff Opposition
    • • 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 govern-
    • ment has the powers to investigate & ban products that are directly harmful or hurt the
    • sentiments of a section of society.
  • 42.
    • B6. Rise & Decline of Products & Organisations
    • • Change of technology is a norm & not an exception
    • • This poses another problem to business
    • • A new technology may spawn a major
    • industry but it may also destroy an existing
    • one
    • • Transistors, for example, hurt the vacuum-
    • tube industry & xerography hurt the carbon
    • paper business
    • • A typical product, today, is subject to a cycle :
    • introduction, growth, maturity, decline, &
  • 43. abandonment • An organisation 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.
  • 44. B7. Boundaries Redefined Technological changes have significant consequences for industries :- • Technological change is a potent force in the reconfiguring of industry boundaries, it may broaden or narrow generally excepted industry boundaries • 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 business
  • 45. due to technological changes that they or others have effected • 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 • Technological change in the form of process (as opposed to product) & materials innovations may contribute to many of the impacts noted above • Finally, for multi-product companies (preceding
  • 46.
    • discussion applies to single-business units),
    • technological change may have multiple impacts.
  • 47.
    • C. Plant Level Changes
    • • The impact of technology at the plant level is also
    • significant.
  • 48.
    • C1. Technology & Organisation Structure
    • • Technology has considerable influence on
    • organisation structure, length of the line of
    • command, & span of control of the chief
    • executive
    • • Where companies use technology, which is fast
    • changing, matrix structures are more common
    • • Some companies use a matrix even though the
    • rate of technological change is not fast
    • • Besides technology, other factors that have
    • their influence on organisation structure are
    • history & background of a company & the
  • 49.
    • personalities of the people who founded the firm &
    • managed it subsequently, but the impact of techno-
    • logy is considerable
    • • Line of command tend to be lengthy where the
    • production is routine & process based
    • • Decision-making is highly centralised
    • • It tends to be short if the production activities are
    • customised
    • • The use of specialists will be more & hence decision-
    • making gets delegated
    • • In mass production technologies, the number of
    • people whom an executive controls tends to be larger
    • than when the production is unit based
  • 50.
    • • Any technological advancement will result in :-
    • a) the expanded availability of a range of
    • products & services
    • b) substitution of capital for labour, leading to
    • higher productivity & lower costs
    • c) increases in sales or power for the innovating
    • organisation 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.
  • 51.
    • C2. Resistance to Change
    • • The manager of a given business unit shall
    • face resistance to change as new technology
    • poses new problems
    • • The resistance to change is often psychological
    • • A typical businessman himself is opposed to
    • adopting new technology as it is expensive &
    • risky
    • • When he is making enough money with
    • obsolete technology why must he worry about
    • new technology?
  • 52.
    • Specifically, resistance to change stems from the
    • following reasons :-
    • 1. Psychological or social commitments to existing
    • products, process & organisation,
    • 2. Sizable capital investments in long-life single-use
    • facilities,
    • 3. Low profits & reduced rate of growth,
    • 4. Small size or fragmented activities,
    • 5. Complacent top management,
    • 6. Industry norms & associations or cartels that
    • perpetuate industry-bound thinking,
    • 7. Lack of successful entrepreneurial models to emulate, &
    • 8. Powerful labour resistance to changes in methods.
  • 53.
    • C3. Fear of Risk
    • • There is always the fear of risk.
    • • A research oriented-company like DuPont
    • Corfam, an intended substitute for the fore-
    • casted shortage of shoe leather, after an invest-
    • ment of $3000 million, abandoned the project
    • in 1971 because of quality & cost problems.
  • 54.
    • C4. E-commerce
    • • The phenomenal growth of the internet & the
    • associated World Wide Web has made e-
    • commerce possible
    • • E-commerce is contributing to a growing per-
    • centage of cross-border transactions
    • • It rolls back some of the constraints of
    • location, distance, scale, & time zones
    • • 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
    • • Modern factories are now able to produce
  • 55.
    • goods 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
    • • Six Sigma is a statistical term that means 3.5 errors
    • per million, effectively eliminating performance
    • problems & ensuring that products conform to
    • standards
    • • While e-commerce focuses on marketing & sales
    • process, E-business emphasises integration of
    • systems, processes, organisations, value chains, &
    • markets
    • • Integration operate through Internet & helps build
  • 56.
    • new relationships between businesses & customers
    • The internet & e-business provide a number of benefits
    • in global business, including the following :-
    • 1. Convenience in conducting business worldwide;
    • facilitating communication across borders which
    • brings markets closer
    • 2. An electronic meeting & trading place, which adds
    • efficiency in the conduct of business
    • 3. Power to consumers as they gain access to limitless
    • options & price differential
    • 4. Efficiency in distribution
  • 57.
    • C5. Telecommunications
    • • The obvious dimension of the technological
    • environment facing international business is
    • telecommunications
    • • This growth is welcome as business, domestic
    • or global, cannot prosper without an efficient
    • telephone system, such as, 3G, MMS of
    • NOKIA.
  • 58.
    • C6. Transportation
    • • In addition to developments in computers &
    • telecommunications, several major innovations
    • in transportation have occurred since World
    • War II
    • • While the advent of commercial jet has
    • reduced the travel time of businessmen,
    • containerisation has lowered the costs of
    • shipping goods over long distances.
  • 59.
    • C7. Gobalisation of Production
    • • Technological breakthroughs have facilitated
    • globalisation of production
    • • A satellite based communications system
    • allows Texas Instruments (TI) to co-ordinate
    • on a global scale, its production planning, cost
    • accounting, financial planning, marketing,
    • customer service, & human resource.
  • 60. C8. Markets • Along with the globalisation of production, technological innovations have facilitated the internationalisation of markets • As stated earlier, containerisation has made it more economical to transport goods over long distances, thereby creating global market • Low-cost global communications networks such as the World Wide Web are helping to electronic global market places • In additions, low-cost jet travel has resulted in the mass movement of people around the world
  • 61.
    • • This has reduced the cultural distance between the
    • countries & is bringing about convergence of
    • consumer tastes & preferences
    • • At the same time, global communications networks
    • & global media are creating a worldwide culture
    • • Worldwide culture is creating a world market for
    • consumer goods.
  • 62.
    • C9. Technology Transfers
    • Technology transfers includes :-
    • i) Internal transfer of technology from the R&D
    • or engineering department to the
    • manufacturing department of a firm based in
    • a country
    • 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
    • iii) The transfer of technology from a research
    • consortium supported by many firms to one of
  • 63.
    • its members
    • • Simply told, technology transfer is a process that
    • permits the flow of technology from a source to a
    • receiver through published material
    • • Purchase & sale of machinery, equipment & inter-
    • mediate goods, transfer of data & personnel; &
    • interpersonal communication
    • Technology transfer comprise six categories :-
    • 1. International Technology Transfer is across
    • national boundaries. Generally, such transfers take
    • place between developed & developing countries.
  • 64.
    • 2. Regional Technology Transfer is transferred
    • from one region of a country to another.
    • 3. Cross-industry or Cross-sector Technology
    • Transfer is transferred from one industrial sector
    • to another.
    • 4. Interfirm Technology Transfer is transferred
    • from one company to another.
    • 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.
  • 65.
    • 6. Pirating or Reverse-Engineering whereby
    • access to technology is obtained as the expense of the
    • proprietary rights of the owners of technology.
  • 66.
    • International Technology Transfer
    • Parties in the Transfer Process
    • i) Home country,
    • ii) Host Country, &
    • iii) The Transaction
  • 67.
    • Home country
    • • Argue that the establishment of production facilities
    • by MNCs in subsidiaries abroad decrease their
    • export potential
    • • Some of the MNCs imports stem from their
    • subsidiaries, the volume of imports of the home
    • country tends to increase
    • • Besides, technology transfer tends to effect adversely
    • competitive advantage of the home country
    • • 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.
  • 68.
    • ii) Host Country
    • a) Economic Implications
    • b) Social Implications
  • 69.
    • Economic Implications
    • • Economic implications include payment of fee,
    • royalty, dividends, interest, & salaries to foreign
    • technicians & tax concessions resulting in loss to the
    • national exchequer
    • • All these are payable to the transferring country &
    • might prove very expensive to the host country
    • • 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 to
  • 70.
    • resources endowment of developed nations.
  • 71.
    • b) Social Implications
    • • Along with the transfer of technology, there is the
    • transmission of culture from the exporting countries
    • • The upper & middle class Indians are a case in point
    • • Majority of these neo-rich people are totally Wester-
    • nised & Americanised in their attitudes, behaviours,
    • food habits, & dress accustomedness
    • • This is because, we import technology from the
    • United States & European countries.
  • 72.
    • iii) Transaction
    • • This element focuses on the nitty-grities of the
    • transfer.
  • 73.
    • Stager in the Transfer Process
    • The transfer of technology between countries,
    • particularly from rich to developing nations, proceeds
    • in five different, but coordinated stages :-
    • 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.
    • 2. Arrangements, covering the provision of know-how
    • & technical expertise in the form of feasibility
  • 74.
    • studies, plans, diagrams, models, instructions,
    • guides, formulations, service contracts &
    • specifications, &/or involving technical, advising,
    • & managerial personnel, personnel training, &
    • equipments for training.
    • 3. Arrangements, covering the provision of basic or
    • detailed engineering designs, & the installation &
    • operations of plant & equipment.
    • 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
  • 75.
    • 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.
  • 76.
    • International Technology Issues
  • 77.
    • Technology Issues
    International Technology Issues Terms of Technology Transfer Choice of Technology Creating Local Capability Foreign Technology Acquisition Globalisation Barriers
  • 78.
    • Foreign Technology Acquisition
    • • One of the major issues in technology relates to the
    • mode of acquisition
    • • Developing new technology may conjure up visions
    • of scientists & product developers working in R&D
    • laboratories
    • • In reality, new technology comes from many
    • different sources, including suppliers, manufacturers
    • users, other industries, universities, government &
    • MNCs
    • • While every source needs to be explored, each firm
  • 79.
    • has specific sources for most of the new technologies.
    • Broadly the acquisition routes are three :-
    • A. Internal Technology Acquisition
    • B. External Acquisition
    • C. Combined Sources
  • 80.
    • Internal Technology Acquisition
    • • Internal technology acquisition option have the
    • advantage that any innovation becomes the exclusive
    • property of the firm
    • • In addition, the resulting technology will be tailored
    • to meet the firm’s needs
    • • However, internal development has risks
    • • The development take longer time than acquiring
    • already developed technology from external sources
    • • In addition, internally generated technology is more
    • expensive than the one acquired from outside
    • sources.
  • 81.
    • B. External Acquisition
    • • External technology acquisition is the process of
    • acquiring technology developed by other for use in
    • the company
    • • External technology acquisition generally has the
    • advantage of reduced cost & time to implement &
    • lower risks
    • • However, technology available from outside sources
    • was generally developed for different applications
    • • Therefore, external acquisition should contain an
    • aspect of adaptation to the acquiring co. application.
  • 82.
    • C. Combined Sources
    • • Many forms of technology acquisition are
    • combinations of external & internal activities
    • • Combined acquisition seek to overcome the
    • limitations of internal & external sources, taking
    • advantages of both the actions at the same time
  • 83.
    • Technology acquisition Routes
    Purely Internal Purely External Seizing Tacit X Knowledge Internal R&D X Internal R&D with X Networking Reverse X Engineering Covert acquisition With R&D Covert Acquisition X
  • 84.
    • Technology transfer X
    • & Absorption
    • Contract R&D X
    • R&D Strategic
    • Partnership X X
    • Licensing X
    • Purchasing X
    • Joint Venture X
    • Acquisition of Co.
    • With Technology X
  • 85.
    • Choice of Technology
    • Terms & Conditions of Technology Transfer
  • 86. Restrict Clauses No. of clauses/ Agreements
    • Export Clause
    • i) Permission of collaborator for exports
    • ii) Export permitted only to certain countries
    • iii) Export prohibited to certain countries
    • iv) Export prohibited
    • v) Export restricted to certain types of product
    • vi) Export restricted only to collaborators/
    • Agents/ Distributors
    • vii) Restrictions on use of trade marks for
    • exports
    169 37 80 22 18 1 6 5
  • 87.
    • Sources of Supply of Raw Materials & Plant &
    • Machinery
    • Payment of Minimum Royalty
    • Restrictions on Production Pattern
    • Restrictions on Sale Procedures
    • Restrictions on Termination of Agreement
    94 40 27 5 1 Total Number of Agreements with Restrictive Clauses 213
  • 88.
    • Globalisation
    • • The world economy is passing through structural
    • changes
    • • These changes are driven by globalisation of
    • business as well as by the revolution in information,
    • communication, & transportation technology
    • • Nations now have powerful technology in their
    • hands, fundamentally transforming the way in
    • which business is conducted around the globe
    • • The World Trade Organisation (WTO) is
    • contributing to globalisation by removing trade
  • 89.
    • barriers between countries & involving mechanism
    • for smooth conduct of trade among nations
    • • the WTO has also evolved a mechanism to manage
    • technology better
    • • The main provision of the WTO that influence
    • technology transfer are included under the following
    • sections :-
    • 1. Trade Related Aspects of Intellectual Property
    • Rights (TRIPs)
    • 2. Trade Related Investment Measures (TRIMs)
    • 3. Subsidies & Countervailing Measures (SCMs)
    • 4. The Information Technology Agreements
    • (ITA)
  • 90.
    • Barriers to Technology Transfer
    • The final international technology issue relates to
    • barriers. The problems encountered in transfer of
    • technology are :-
    • • A limited general understanding of the concept of
    • technology, & the lack of consistent framework for
    • its study
    • • Lack of systematic planning for technology in
    • developing countries or misunderstanding of its
    • underlying philosophy
    • • Lack of bilateral scientific/ technology advantage in
  • 91.
    • the process of technology transfer (mutual benefits)
    • • Lack of systematic & integrated engineering & sicio-
    • economic approach to the technology transfer
    • process
    • • Lack of a relevant quantitative framework/
    • approach to the analysis & evaluation of technology
    • transfer to developing countries
    • • Failure to include ergonomic aspects in technology
    • transfer or to accord sufficient value to the human
    • machine interface variable of the transferred
    • technology, or the failure to adjust the technology to
    • the existing socio-cultural system
    • • Lack of attention to environmental consideration &
  • 92.
    • assessment of technological impact
    • • Failure to determine whether a national consensus
    • & orientation exist for a transfer
    • • Failure to recognise the local potential (cultural &
    • economic) for adoption of technology (that is, failure
    • to determine the availability of social & economic
    • infrastructures)
    • • Failure to determine if the existing national
    • productive capacity is adequate to support the
    • application of the transferred technology
    • • Restricting the feasibility study of technology
    • transfer to financial assessments (mostly cost benefit
    • analysis)
  • 93.
    • • Absence of any substantial effort to review & utilise
    • the potential of technological interchange & socio-
    • technical collaboration for technology transfer
    • between developing countries
    • • Presence of ethnical problems within the technology
    • transfer
    • • failure to evaluate or consider ‘conflict causing’
    • factors pertaining to the transferred technology.
    • these factors can be categories into :-
    • 1. ‘sector conflict factors’ conflicts that can arise
    • within the techno-economic systems
    • 2. ‘rural urban conflict factors’ arising because of
    • spatial (that is, regional) imbalance in the
  • 94.
    • distribution of physical resources needed for specific
    • industry in the long-term (for instance, sacrificing
    • the existing production institutions in an area in
    • order to initiate to new, imported, mostly large scale
    • technology), leading to
    • 3. Factors ‘ disturbing the socio-cultural balance’ that
    • operate with in the social system :
    • due to the nonconformity of the transferred
    • technology with the available potential, & with the
    • inherent objective of development policies &
    • national techno-economic plans in developing
    • countries ; & due to the lack of specific software &
    • any other sophisticated supportive tools for
  • 95.
    • technological planning & technology assessment
    • within the technology transfer framework.
  • 96.  

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