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MANAGEMENT OF TECHNOLOGY
Lecture 4
BUSINESS STRATEGY AND TECHNOLOGY STRATEGY
1
At the end of the lesson, the student should be able to :
• Understand the capabilities needed to manage technology when developing a strategy.
• Recognize the importance of a strategy to a company
• explain the role of technology strategy in business strategy
2
Lesson outcome
Capabilities
• Capability – an ability to do something
• Technology capability
• An ability to apply knowledge into products and process to operate and to create
technology the capability, which provides to an organization technological strength and
gives opportunity to create competitive advantage
• Example :
• Successful technology transfer to developing country / adoption of new
technology by the developing country
• Includes the physical technology or equipment
• Blueprints, operating instructions but also
• include the transfer of tacit knowledge (know how)
• Requires the recipients to go through thr process of training, learning and
adaptation
3
• Dynamic capability
• dynamic capability is the capability of an organization to purposefully adapt
an organization's resource base.
• competitive advantage that applies to business environment that are
always changing.
• the firm's ability to integrate, build, and reconfigure internal and external
resources/competences to address and shape rapidly changing business
environments (Teece et al., 1997, 1990).
Example : ( next slide)
4
Capabilities
• Core competencies
• A unique ability that a company acquires from its founders or
develops and that cannot be easily imitated. Core competencies are
what give a company one or more competitive advantages, in
creating and delivering value to its customers in its chosen field.
• Core competency might be anything ranging from manufacturing to
advertising.
5
Capabilities
Great leadership
(Opportunity recognition and
entrepreneurial insight)
Rapid process and product
innovation
• Rapid New Product Development
• Leading in design innovation
6
Capabilities
Core competencies examples
Samsung – innovation, innovative culture
Coca Cola – brand value,
KFC – brand loyalty, brand image
Amazon – Premium service through fast delivery, accessibility and
lower cost
Air Asia – low cost
United Colours of Benetton - colour
Sony - miniaturization
7
Capabilities
Complementary asset
• Asset, capabilities that support the commercialization of technological
innovation
• Example
• Marketing
• Sales channel
• Infrastructure
• Culture
• Human resource
• Financial resources
• Strong supplier network …
8
Capabilities
• Strategy is a plan of action to achieve short, middle and long
term desired goals.
• Companies require strategy( at all levels) to survive.
• Strategy formulation is an ongoing task that requires an
evaluation of previous practices and the search for new ones.
What is a strategy?
9
• Internal & external analysis
• Planning
• Mission
• Vision
• Values
• Strategic goals
• Strategy
• Execution
• Evaluation and control
10
What is a strategy?
STRATEGY STEPS
Mission: The reason behind the existence of a
firm.
• HP: Technical support to the advancement
and welfare of mankind.
• Merck: To protect human life.
• Walt Disney: To make people happy.
Vision: Creativity and foreseeing the position of
the firm in near future.
• Nike: To beat Adidas
• Wal-Mart: To become 150 billion $ worth of
by year 2002
• General Electric: To be number one or two in
all markets where it has production and
services.
11
Mission and Vision
12
What is a strategy?
Strategy goals needs to be:
• clear
• measurable
• aggressive but reachable
• within time-perspective
Institutional Strategy:
• growth (revenue, ….)
• sustainability (market share,…)
Operational strategies:
• cost leadership
• differentiation
• focus (market, region, product)
• Strategic goal: To become the biggest distributor for beauty products
in Istanbul
Strategies:
• To construct centers in Asian and European side of Istanbul
• To increase distributor contracts with producers
• To increase imported beauty products
• To increase sales personnel
13
Examples of strategy
Internal
Analysis
External
Analysis
Strenght
Weakness
Opportunity
Threat
14
SWOT analysis
• External Analysis
• Focuses on the identification of
the value perceived by the
customer and its evolution.
• Demands could be not only the
satisfaction of existing needs but
also the creation or the
explicitation of latent or non-
articulated needs.
• Internal Analysis
 Identifying the competence and
skill base
 Benchmarking skills against
other firms
 (the breadth addresses the range
of applicability of a certain skill,
whereas the depth addresses the
degree of appropriability of a skill)
• Identifying the critical skills
15
SWOT analysis
16
(S)
 What are the strength areas?
 Where are the best performances?
(W)
 What could be improved?
 What are the weaknesses?
 What could be prevented?
(O)
 Changing technology
 changing markets
 changing government policies
 changing life-style
What new opportunities arise?
(T)
 What is the position of competitiors?
 What are the risks of change?
SWOT analysis
• Business strategy is a roadmap for guiding the company actions and
decisions in achieving company business goals and stay
competitive.
• Business strategy should be based on the overall vision for the
company.
• Sets the direction for the entire company and helps to align all
employees towards a common goal.
Business strategy
17
Example of Business strategy
Changing the rules of the music industry
Spotify placed customers at the
forefront of their business strategy
giving them freedom and control over
their music
Spotify offered a free
version of the service, but
also had premium options
for those who wanted more
features and services
18
Example of Business strategy
dominate then monetise
19
BCG Matrix for strategic planning
BCG Matrix is also known growth
share matrix is a business tool
that you can use to help you
create strategic, long-term
planning
20
Stars
• are excellent products to
invest
• strong market
• High profit
• Strong economic growth
Cash Cows
• high market share
• high market growth
• Provide stable cash flow
to the company
Question Marks( problem
child)
• products that have the
potential to become Stars.
• High market share
• Low market growth
• You can invest or discard them
on a product-by-product basis
because each one is different
Pets (dog)
• Low market share
• Low market growth
• products you can often discard
because they drain resources
you can use to invest in your
other products.
BCG Matrix for strategic planning
21
BCG Matrix for Nestle and Mc Donald
(edrawmind.com) 22
Porter’s Five (now six) Forces Model can be used to analyze and
understand the competitive environment before a company makes any
strategic decisions.
Porter Five Forces for strategic planning
23
• https://www.cascade.app/blog/porters-5-forces
Porter Five Forces for strategic planning
24
25
26
Blue ocean strategy and red ocean strategy
Blue ocean strategy Red ocean strategy
Create new market rather than
competing in the existing one
Create new demand
Examples
Compete in the existing market space
Exploit existing demand
Beat the competition
Examples
27
Technology strategy
The purpose of business strategy is to gain a sustainable economic advantage.
The purpose of technology strategy is to gain a sustainable technological
advantage that provides a competitive edge. The two strategies must be closely
intertwined and highly integrated. This requires extensive forethought about
the firm's distinctive technologies, the products or services it can provide, the
potential customers, and where the organization wants to be in the future. The
company's technologies must be harnessed and exploited according to a well-
designed plan. Effective technology management is based on successfully
linking business and technology strategies.
(Khalil,2000)
28
Based on Porter(1985) study, technology strategy consist of three
decisions:
• The selection of technology to be develop
• What type of competitive advantage the company wants to achieve
• Whether to be leader or follower
• The advantages and the disadvantages of becoming the first mover
• The sustainability of the technological leadership
• Sustainability that depends on R&D activities, technological competencies, rate of
diffusion ,the protection of the technology and etc)
• Whether to sell the technology or not
• Licensing the technology
Technology strategy development
29
30
Example of technology strategy
Partnership with Google
Google cloud – Toyota and Lexus audio multimedia system
Google Cloud- AI- based speech service
AI technology
31
SkyGrid, a joint venture between Boeing and
SparkCognition has deployed AI-powered
cybersecurity systems on drones, to protect
them from zero-day attacks during flight
In the era of IR 4.0, where digitization is required.
Developing AI skills in-house, obtaining AI services from
vendors, or investing in AI startups could all be part of a
technology strategy.
Example of technology strategy
Some generic questions need to be addressed
To what extent is technology relevant to business?
2 Which business strategies require technology?
3 Where will we get it [the technology]?
4 What are our core technologies for the business?
5 In which technologies should we focus our research effort?
6 What new strategic options will technologies provide?
Linking technology and business strategy
32
Linking technology and business strategy
33
To identify the relationship between products or services and the
underlying technology, a company can use any of several
methodologies. One example is by using product- technology matrix
Linking technology and business strategy
34
No matter what kind of business it is, a company requires a strong
technology strategy.
Business strategy and technology strategy are connected. It is
challenging for a company to survive without a technological strategy.
Summary
35
References
Khalil, T.M., 2000. Management of technology: The key to
competitiveness and wealth creation. McGraw-Hill Science,
Engineering & Mathematics.
Other sources from the internet

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LECTURE 4: Business Strategy and Technology Strategy

  • 1. MANAGEMENT OF TECHNOLOGY Lecture 4 BUSINESS STRATEGY AND TECHNOLOGY STRATEGY 1
  • 2. At the end of the lesson, the student should be able to : • Understand the capabilities needed to manage technology when developing a strategy. • Recognize the importance of a strategy to a company • explain the role of technology strategy in business strategy 2 Lesson outcome
  • 3. Capabilities • Capability – an ability to do something • Technology capability • An ability to apply knowledge into products and process to operate and to create technology the capability, which provides to an organization technological strength and gives opportunity to create competitive advantage • Example : • Successful technology transfer to developing country / adoption of new technology by the developing country • Includes the physical technology or equipment • Blueprints, operating instructions but also • include the transfer of tacit knowledge (know how) • Requires the recipients to go through thr process of training, learning and adaptation 3
  • 4. • Dynamic capability • dynamic capability is the capability of an organization to purposefully adapt an organization's resource base. • competitive advantage that applies to business environment that are always changing. • the firm's ability to integrate, build, and reconfigure internal and external resources/competences to address and shape rapidly changing business environments (Teece et al., 1997, 1990). Example : ( next slide) 4 Capabilities
  • 5. • Core competencies • A unique ability that a company acquires from its founders or develops and that cannot be easily imitated. Core competencies are what give a company one or more competitive advantages, in creating and delivering value to its customers in its chosen field. • Core competency might be anything ranging from manufacturing to advertising. 5 Capabilities
  • 6. Great leadership (Opportunity recognition and entrepreneurial insight) Rapid process and product innovation • Rapid New Product Development • Leading in design innovation 6 Capabilities
  • 7. Core competencies examples Samsung – innovation, innovative culture Coca Cola – brand value, KFC – brand loyalty, brand image Amazon – Premium service through fast delivery, accessibility and lower cost Air Asia – low cost United Colours of Benetton - colour Sony - miniaturization 7 Capabilities
  • 8. Complementary asset • Asset, capabilities that support the commercialization of technological innovation • Example • Marketing • Sales channel • Infrastructure • Culture • Human resource • Financial resources • Strong supplier network … 8 Capabilities
  • 9. • Strategy is a plan of action to achieve short, middle and long term desired goals. • Companies require strategy( at all levels) to survive. • Strategy formulation is an ongoing task that requires an evaluation of previous practices and the search for new ones. What is a strategy? 9
  • 10. • Internal & external analysis • Planning • Mission • Vision • Values • Strategic goals • Strategy • Execution • Evaluation and control 10 What is a strategy? STRATEGY STEPS
  • 11. Mission: The reason behind the existence of a firm. • HP: Technical support to the advancement and welfare of mankind. • Merck: To protect human life. • Walt Disney: To make people happy. Vision: Creativity and foreseeing the position of the firm in near future. • Nike: To beat Adidas • Wal-Mart: To become 150 billion $ worth of by year 2002 • General Electric: To be number one or two in all markets where it has production and services. 11 Mission and Vision
  • 12. 12 What is a strategy? Strategy goals needs to be: • clear • measurable • aggressive but reachable • within time-perspective Institutional Strategy: • growth (revenue, ….) • sustainability (market share,…) Operational strategies: • cost leadership • differentiation • focus (market, region, product)
  • 13. • Strategic goal: To become the biggest distributor for beauty products in Istanbul Strategies: • To construct centers in Asian and European side of Istanbul • To increase distributor contracts with producers • To increase imported beauty products • To increase sales personnel 13 Examples of strategy
  • 15. • External Analysis • Focuses on the identification of the value perceived by the customer and its evolution. • Demands could be not only the satisfaction of existing needs but also the creation or the explicitation of latent or non- articulated needs. • Internal Analysis  Identifying the competence and skill base  Benchmarking skills against other firms  (the breadth addresses the range of applicability of a certain skill, whereas the depth addresses the degree of appropriability of a skill) • Identifying the critical skills 15 SWOT analysis
  • 16. 16 (S)  What are the strength areas?  Where are the best performances? (W)  What could be improved?  What are the weaknesses?  What could be prevented? (O)  Changing technology  changing markets  changing government policies  changing life-style What new opportunities arise? (T)  What is the position of competitiors?  What are the risks of change? SWOT analysis
  • 17. • Business strategy is a roadmap for guiding the company actions and decisions in achieving company business goals and stay competitive. • Business strategy should be based on the overall vision for the company. • Sets the direction for the entire company and helps to align all employees towards a common goal. Business strategy 17
  • 18. Example of Business strategy Changing the rules of the music industry Spotify placed customers at the forefront of their business strategy giving them freedom and control over their music Spotify offered a free version of the service, but also had premium options for those who wanted more features and services 18
  • 19. Example of Business strategy dominate then monetise 19
  • 20. BCG Matrix for strategic planning BCG Matrix is also known growth share matrix is a business tool that you can use to help you create strategic, long-term planning 20
  • 21. Stars • are excellent products to invest • strong market • High profit • Strong economic growth Cash Cows • high market share • high market growth • Provide stable cash flow to the company Question Marks( problem child) • products that have the potential to become Stars. • High market share • Low market growth • You can invest or discard them on a product-by-product basis because each one is different Pets (dog) • Low market share • Low market growth • products you can often discard because they drain resources you can use to invest in your other products. BCG Matrix for strategic planning 21
  • 22. BCG Matrix for Nestle and Mc Donald (edrawmind.com) 22
  • 23. Porter’s Five (now six) Forces Model can be used to analyze and understand the competitive environment before a company makes any strategic decisions. Porter Five Forces for strategic planning 23
  • 25. 25
  • 26. 26
  • 27. Blue ocean strategy and red ocean strategy Blue ocean strategy Red ocean strategy Create new market rather than competing in the existing one Create new demand Examples Compete in the existing market space Exploit existing demand Beat the competition Examples 27
  • 28. Technology strategy The purpose of business strategy is to gain a sustainable economic advantage. The purpose of technology strategy is to gain a sustainable technological advantage that provides a competitive edge. The two strategies must be closely intertwined and highly integrated. This requires extensive forethought about the firm's distinctive technologies, the products or services it can provide, the potential customers, and where the organization wants to be in the future. The company's technologies must be harnessed and exploited according to a well- designed plan. Effective technology management is based on successfully linking business and technology strategies. (Khalil,2000) 28
  • 29. Based on Porter(1985) study, technology strategy consist of three decisions: • The selection of technology to be develop • What type of competitive advantage the company wants to achieve • Whether to be leader or follower • The advantages and the disadvantages of becoming the first mover • The sustainability of the technological leadership • Sustainability that depends on R&D activities, technological competencies, rate of diffusion ,the protection of the technology and etc) • Whether to sell the technology or not • Licensing the technology Technology strategy development 29
  • 30. 30 Example of technology strategy Partnership with Google Google cloud – Toyota and Lexus audio multimedia system Google Cloud- AI- based speech service AI technology
  • 31. 31 SkyGrid, a joint venture between Boeing and SparkCognition has deployed AI-powered cybersecurity systems on drones, to protect them from zero-day attacks during flight In the era of IR 4.0, where digitization is required. Developing AI skills in-house, obtaining AI services from vendors, or investing in AI startups could all be part of a technology strategy. Example of technology strategy
  • 32. Some generic questions need to be addressed To what extent is technology relevant to business? 2 Which business strategies require technology? 3 Where will we get it [the technology]? 4 What are our core technologies for the business? 5 In which technologies should we focus our research effort? 6 What new strategic options will technologies provide? Linking technology and business strategy 32
  • 33. Linking technology and business strategy 33
  • 34. To identify the relationship between products or services and the underlying technology, a company can use any of several methodologies. One example is by using product- technology matrix Linking technology and business strategy 34
  • 35. No matter what kind of business it is, a company requires a strong technology strategy. Business strategy and technology strategy are connected. It is challenging for a company to survive without a technological strategy. Summary 35
  • 36. References Khalil, T.M., 2000. Management of technology: The key to competitiveness and wealth creation. McGraw-Hill Science, Engineering & Mathematics. Other sources from the internet