This document discusses natural and technological environments and their impact on innovation and business. It covers several topics: 1. Trends in the natural environment like resource shortages and increased pollution that affect businesses. 2. The technological environment creates new product opportunities but also replaces older technologies. 3. Innovation is introduced through new products, production methods, markets, materials or industry reorganization. Successful innovation depends on effective marketing. 4. Businesses can pursue technological leadership or followership depending on their strategy. Leadership provides first-mover advantages but also risks.

1. Natural & Technological
Environment
Unit IV

2. SYALLABUS
• UNIT IV ( 4Hrs)
• Natural and Technological Environment: Innovation, technological
leadership and followership impact of technology on globalization,
transfer of technology, time lags in technology introduction, Status of
technology in India; Management of technology; Features and Impact
of technol

3. Natural Environment
Natural resources that are needed as inputs by marketers or that are
affected by marketing activities.
Trends of Natural Environment:
1st trend - growing shortages of raw materials 2nd trend - increased
pollution
3rd trend - increased government intervention in natural resource
management

4. Technological Environment
• Technological Environment : Forces that create new technologies
creating new product and market opportunities. New technologies
can offer exciting opportunities for marketers Every new technology
replaces an older technology.

5. Innovation
• Innovation may be defined as introduction of a new
product, use of a new method of production, the
opening of a new market, a new source of raw
material supply, the reorientation of an industry.
• Joseph Schumpeter has classified five different
forms of innovation :
• Introduction of new goods
• Introduction of new method or technique of
production
• Opening of markets
• Exploration of new sources of raw materials
• Reorganization of an industry

6. Innovation
• In the business context, innovation may be defined as Technical,
industrial, and commercial steps which lead to the marketing of new
manufactured products and to commercial use of new technical
processes and equipment.

7. Innovation
• Innovations may be classified as
• Radical innovation: A basic technological innovation
that establishes a new functionality. Eg: steam
engine,, computer.BULB, CAR.
• Incremental innovation: A change in an existing
technology system that does not alter functionality
but incrementally improves performance, features,
safety or quality or lowers cost. eg: upgradation of
steam engine, upgraded computers and software,
various upgraded cars.

8. Innovation
• Next-generation technology innovation: A change in
an existing technology system that does not alter
functionality but dramatically improves performance,
features, safety or quality or lowers cost and opens up
new applications. e.g: substitution of jet propulsion
for propellers on airplanes, mobile phones by land
line phones.

9. Innovation
• Reasons for technological failure:
1. There may be products which have uniqueness and
superiority but fail to generate enough demand e.g.
nokia windows phone. It may be due to failure to
recognise consumer preference and demand.
2. Some products may be imitations of established
products and it may not succeed due to intense
competition.

10. Innovation
• Reasons for technological failure:
3. Some products may fail if they are not marketed
effectively. This includes promotion, distribution,
positioning etc. Sometimes competitors may market
a product more effectively than the pioneer e.g.
Tata sky vs dish tv
4. Some product failure may be on account of
ignorance or neglect of the environmental factors.
This includes regulatory framework,

11. Innovation
• Reasons for technological failure:
safety norms, cultural factors etc.
5. Some products may not be able to meet the
customer’s expectations in terms of required
technology, attributes or quality e.g Tata Nano
6. Some products may fail because of the price factor.
The price may not meet the customer’s value
perception. New products may be priced high.

12. Product and process innovations
• The pattern of innovation in a new technology based
industry will be first product innovations (Improving
the quality and performance of the product) followed
by process innovation aimed at improving production
quality and making the product cheaper.
• The rate of product innovation peaks and then begins
to decline after which the rate of process innovation
increases.

13. Product and process innovations
RateofInnovations
Time
Product
Innovations
Process
Innovations

14. Technological leadership and
followership
• Technological leadership – a firm seeks to be the first to introduce
technological changes that support its generic strategy. Leadership
can be established in technologies employed in any value activity.
• Technological followership refers to a conscious and active strategy in
which a firm chooses not to be the first on innovations.
• Eg first Andriod phone was launched by HTC and hen by other companies.

15. Technology and competitive advantage
• Technological change lowers cost or enhances
differentiation, so that the firm’s technology lead is
sustainable. It involves using the latest technology
that incorporates more features, higher performance,
greater quality or lower costs. Technological change
shifts costs or uniqueness in favour of a firm
• Pioneering technological change translates into First
mover advantage.
• Improves overall industry structure on innovations.

16. Technology and competitive advantage
• First mover advantage: Advantages that a firm reaps
from being the first e.g. reputation, preempting a
positioning , switching costs, unique access for a new
product, favourable access to facilities, inputs, scarce
raw materials, barrier against imitation and early
profits.
• First mover Disadvantages: Pioneering costs e.g.
Regulatory compliance, educating customers, high
cost of early inputs, demand uncertainty, difficulty in
getting investments, changes in buyer’s needs, low
cost imitation etc.

17. Technology and competitive advantage
• Improves overall industry structure on innovations:
Technology can change the overall industry structure,
as well as create new industries( Software, BPO, IT). It
is also a great equalizer , eroding the competitive
advantage of established firms and pushing new ones
to the forefront.
• Technology change can affect all the five competitive
forces as per Porter’s model.