in this chapter we will discuss that 1.why any company acquire technology. 2.acquisition of information technology is good or bad etc,

1. UNIT 3
Acquisition of Information
Technology

2. Acquisition
Acquisition of technology and knowledge involves the purchase of
external knowledge and technology without active co operation
with the source. This external knowledge can be embodied in
machinery or equipment that incorporates this knowledge. It can
also include the hiring of employees who possess the new
knowledge, or the use of contract research and consulting services.
Disembodied technology or knowledge also includes other know-
how, patents, licences, trademarks and software.

3. Need to acquire technology
An organisation’s motive for wanting to acquire a technology
will affect the kind of technology they are looking for, the
partners from whom they decide to acquire it and the process
they follow to make the acquisition.
Previous research indicates that there are a wide variety of
motivations. We find that these motivations can be broadly
classed into four categories:
 Developing new technological capabilities
 Increasing strategic options
Gaining efficiency improvements
 Sources for acquiring technology
 Responding to the competitive environment.

4. Developing new technological capabilities
One of the fundamental motivations for the acquisition of
external technologies is the need to develop new technological
capabilities and to fill gaps in the R&D knowledge base.
The objective of these acquisitions is sometimes to fill holes in
an existing product line, while in other cases it is to create and
establish a brand new product. This need may arise because
specialist technical expertise and capabilities are often difficult
to obtain and firms may not have the ability to develop these
valuable knowledge-based resources internally.
This may be the case, for instance, when the technological
knowledge of a firm is close to exhaustion and most of the
possible technological combinations have already been tried.

5. Increasing strategic options
Acquisitions can enable a firm to improve its strategic flexibility. Increasing
its internal technological capabilities, can give the company more strategic
options, allowing it to select the best available technology. For example:
• Acquisitions can encourage innovation, countering inertia and rigidity
and increasing R&D productivity. Relying on incremental improvements to
existing technologies may limit a firm’s potential. Experimenting with novel
and emerging technologies can provide opportunities for more radical
innovation.
• Acquisitions can open new markets, allowing the knowledge of new
customers, channels, inputs, processes and markets to be exploited.
• Acquisitions may help to deal with uncertainty and risk. Companies
operating in high-tech industries are often dependent on uncertain future
outcomes or developments. In such cases, managers are more likely to
avoid risky internal investments in R&D with long - term payback periods,
investing instead in external technologies as a way of keeping their options
open until the risks and uncertainty diminish.

6. Gaining efficiency improvements
The need to innovate more rapidly is another
motivation for technology acquisition as it can reduce the
time to market. The internal development of new capabilities
may take too long or be too costly. Technology acquisition
can create these more quickly so that the firm can be more
responsive to market demands.
There are often cost advantages to acquiring
technologies externally. Firms substitute fixed investment
costs with variable acquisition costs and such costs can be
recovered via profits from new businesses that follow a
partnership - based strategy.

7. Sources for acquiring technology
Technology Sourcing Strategies
Technology sourcing, or the pursuit of implementing new technologies
within a businesses strategic framework, involves isolating and applying
new technologies to current models.
Technology can be developed internally or isolated through technology
scouting and then implemented through technology transfer.
In deciding which approach is optimal for them, organizations must
consider such factors as the advantage of being first to market, research
and developments costs and capabilities, and market research and data
gathering costs.
Therefore the strategies behind sourcing technology can be complex,
varying by industry, company size, economic strength, and the
availability of easily implemented technology.

8. Sources for acquiring technology
Technology Scouting
Technology scouting is essentially forecasting technological
developments through information gathering. Technology scouts can
either be internal employees or external consultants specifically
designated to the task of researching developments in a particular
technological field. This can be loosely referred to as a three-step
process:
a) Identify emerging technologies.
b) Channel and organize new technological data within an organization.
c) Provide a corporate context to support or refute the acquisition of said
technology.
When technology scouting isolates new developments that could
potentially provide advantages for an incumbent, strategies to acquire or
source this technology become a focal point.

9. Sources for acquiring technology
Technology Sourcing Pros and Cons
In the Information Age knowledge is power, and more than ever
companies are trying to protect their knowledge from competitors or
freeloaders by using patents and trade secrets.
Transfer of technology is therefore expensive,
from licensing the patented technology to
requesting training in new technological advances
for staff.
Despite the distinct advantages of staying ahead
of the curve relative to technological capabilities,
there are some drawbacks to tech transfer.
One strong example of the drawbacks in
technological transfer and sourcing can be
illustrated by the image below.

10. Responding to the competitive environment
Firms are more likely to consider technology
acquisitions as environments become more hostile, when
there is rapid technological change and fast-moving
competition in their market area. Acquiring technologies
helps the firm to feel less vulnerable and more competitive.
In such an environment it is likely there will be a greater use
of partnerships, collaborations and outsourcing as a substitute
for in-house activities.

11. Example: Identifying your firm’s motives for
technology acquisition