MB 08-01 : STRATEGIC TECHNOLOGY MANAGEMENT

1A. What are the components of technology?

Technology can be defined as all the knowledge, products, processes, tools, methods, and systems employed in the creation of goods or in providing services. In other words, technology is the way we do things. It is the means by which we accomplish objectives. Technology is the practical implementation of knowledge, a means of aiding human endeavor.
It is common to think of technology in terms of hardware, such as machines, computers, or highly advanced electronic gadgets. However, technology involves a lot more than just machines. There are several technological entities besides hardware, including software, and human skills. According to Zeleny, technology consists of three components:
Hardware: The physical structure and logical layout of the equipment or machinery that is to be used to carry out the required tasks.
Software: The knowledge of how to use the hardware in order to carry out the required tasks.
Brainware: The reasons for using the technology in a particular way. This may also be referred to as the know why.
In addition to these one must also consider know-how, the learned or acquired knowledge of or technical skill how to do things well. Know- how may be a result of experience, transfer of knowledge, or hands-on practice. People acquire technical know-how by receiving formal or informal education or training or by working closely with an expert in a certain fold.

1B. What are the two principal economic goals for managing strategic technology?
Technological change is a major factor in long term commercial failure or success. New technologies create new markets or substitute the existing markets by making obsolete the affected current technologies and any of the products, services or production processes in which these technologies are embedded. In a firm , there are two economic goals for managing strategic technologies:
- To innovate new markets
- To dominate and keep existing markets
Technology forecasting is difficult, for the future is never predictable. Yet clear trends of technical change often can be identified. Certainly, goals for improving existing technologies can be formulated and technically focused research can be planned, funded and managed.
Forecasting market development and competitive conditions under technological change is also difficult. However, general patterns can be identified in most histories of new markets created by new technologies and in the competitive conditions as these markets evolved. These patterns can assist the formulation of marketing and competitive strategies as technologies change.
Technology planning and implementation are even more difficult activities than forecasting, for then resources are staked and futures risked. Yet, even here practice and studies have formulated and identified useful approaches. There are techniques and procedures,which facilitate proper market attention for research efforts and which facilitate the proper transfer r of technical advances into competitive products, production and services.
An important problem in technology strategy arises from the fact that most large firms are diversified and since different businesses use many different technologies to a diversified firm can be complicated. Despite these complications, however, planning even for diversified firms still should be based on all the strategic bases of the business enterprise: technology, market, capital, production and organization.
Strategic technologies are the rapidly changing core technical competencies that provide competitive edge to the businesses of the corporation.

2. Explain the aspect of core competence hierarchy. How does it relate to technology management?

Core competencies are collective sets of knowledge, skills and technologies that a company applies to add value for its customers. This is what determines the company’s competitiveness. A Company can improve its competitive abilities by becoming a learning organization.



Hierarchy of competencies:
All organization contain a large and diverse array of discrete activities, skills and disciplines. These elements-termed primary capabilities- are the building blocks of core competencies. The development and operation of most primary capabilities are the responsibility of individual functions of a company.
Certain capabilities are distinct from other primary capabilities in that they have a direct and significant effect on competitiveness in their own right. These capabilities, termed critical capabilities, can provide reduced cost, improved product or service differentiation, increased speed to market to large barriers to competition. The development of critical capabilities is often a key element of strategies at the strategic business unit (SBU) level.
Primary capabilities may be usefully divided into different categories, as follows:
• Market interface capabilities- capabilities that are used in the marketplace or that are clearly visible to it: selling, advertising, consulting, invoicing or customer satisfaction monitoring are generic examples of these capabilities.
• Infrastructure capabilities- capabilities that concern the internal operations of the company and that are invisible externally: for example, management information systems or internal training.
• Technological capabilities-technical capabilities providing direct support to the product or service portfolio.
When a corporation owns or has control over all or most of the technologies that contribute to producing and marketing a product, is known as a vertically integrated corporation. This could be the case whether the technology is a product, process, marketing, or integrative type of technology. If a automobile manufacturing plant owns plants that manufacture the chassis, the transmission train, the engine, and most of the other components of automobiles and trucks then it is considered a vertically integrated corporation. It also exercises strong control over distribution and marketing arms of the business. Vertical integration of a company can be defined at any point on a continuum, with one end designating total ownership of the technology (making the product) and the other end showing no ownership i.e., having to buy everything, as opposed to owning the technology or making the product within the company.
Decisions as to whether technology should be owned or not, or whether products should be made or bought, must be guided by the company’s standing in technology. Therefore a company must be able to:
1. Identify its distinctive technologies and choose areas in which to build competence in technology.
2. Do all it can acquire or keep itself at the top of these technology areas.
3. Decide on the level of integration needed for its operation, based on realistic technology and business decision-making criteria.
4. Be aware of emerging technology that may impact its business.
5. Modify its business strategy to support its technology strategy.
A company’s strategy to integrate is made according to the direction of integration desired. Backward integration occurs when the company seeks ownership or control of its suppliers. Horizontal integration involves increased control over production competitors. Forward integration occurs when a company seeks to control distribution, retailing, and post manufacturing activities. Vertical integration may combine backward, horizontal, and forward integration. It involves ownership or control of activities over the entire value chain. Many companies achieve integration through mergers, acquisitions, and takeovers.