Choice of technology

1. SCHOOL OF MANAGEMENT STUDIES, CALICUT

2. Concept of Technology
 Technology may be defined as the expertise, equipment and
procedures used by organizations to transform resource inputs into
outputs.
 Technology generally considers product design, production
techniques, quality assurance measures, human resource
development and management system.

3. Need for Technology
1. A specific level of technological advancement is highly desirable
to ensure economic growth.
2. It improves productivity of labour, capital and other factors of
production.
3. It also helps in creation of skills, new means and methods of
production, new use of raw materials and the widespread use of
machinery.
4. It is most powerful means of wresting power from nature in the
shape of different inputs.

4.  Choice of technology is the most important decision from the
accelerated development point of view. So entrepreneur should take
this decision very seriously and carefully.
 If an entrepreneur has committed mistakes in selection of technology,
the only result is the failure of planning as well as lack of confidence
towards planning.
 So a accelerated pace of economy and the enterprise concerned is
directly related with choice of technology.

5. 1. Labour intensive technique
2. Capital intensive technique
1. Labour intensive technique
 It uses comparatively larger amount of labour and small dose of capital. In this
technique, a large amount of labour is combined with a smaller amount of capital.
Thus, it relied more on labour input and less on capital input.
 In this way, labour intensive technique depends more on the labour factor as
compared to capital factor. It also encourages the manpower skill as well as
capital formation.

6. Advantages in Labour Intensive Technology
1. Increase in Employment opportunities
2. Effective utilisation of capital
3. Decentralised production system
4. Distribution of income
5. Higher level of production
6. Creation of economic and social endowments
7. Saving of foreign exchange
Limitation of labour intensive technique
1. They are static and of short term in nature
2. They provide scope for low rate of capital formation
3. They fall to improve the skill of manpower

7. 2. Capital intensive technique
 Capital intensive technique may be defined as that technique in which
comparatively larger amount of capital is used but small number of labour.
 Under this technique, amount of capital required per unit of production is large in
comparison to labour intensive technique. It uses more volume of input of capital
rather than the input of labour.
 Thus, capital intensive technique prefer more unit of capital and less unit of
labour and give due emphasis on mechanised process of production.

8. Advantages of capital intensive technique
1. Rapid economic development
2. Latest production system
3. Higher level of production
4. Improvement in standard of living
5. Strategic effect
6. Creation of economic and social endowments
7. Increase in employment opportunities
Limitations of capital intensive technique
1. It exploits labour work force as well as consumers.
2. It divides society into two parts: haves and have nots or rich and
poor
3. It avoids balanced regional development.
4. It encourages wasteful use of capital resources

9. 1. Unit and small batch technology
it is a type of technology in which products are produced to
customer specifications or produced in small quantities by skilled
technicians.
2. Mass production and large batch technology
it refers to a type technology in which products are manufactured in
large quantities, offer on an assembly line. This more complex type of
technology is used by Maruti Udyog Limited or Suzuki Motor Car
company to produce automobiles.

10. 3. Continuous flow process technology
it is a type of technology in which products are manufactured
through an interrupted series of transformation process. This
technology is more complex and is used by processing-
manufacturing units like chemical companies or refining companies.
Factors determining the choice of technique
1) Government policy
2) Prevailing factor endowments
3) Existing technological level
4) Available resources
5) Institutional arrangement
6) Technological capability