Posts
1A. What are the challenges in Strategic Technology Development? How can they be overcome?
The problems of technology strategy arise from the complexities of modern technological systems and from modern organizational structures of diversified firms. The personnel responsible for the business functions have been trained differently. Also, they have experienced different aspects of the business system. Accordingly, they actually perceive the world very differently. They even almost live in two different worlds-physical and economic.
Technical personnel predominantly see and live in a world of physical nature. Since the training of technical personnel is in the physical sciences, they come to appreciate that the most important thing about the world is that it is made up of matter and energy and force physical stuff. Business-functional personnel live in a world of social contracts and money. The training of business personnel responsible for marketing sales and accounting and production often is in economics and business. They appreciate primarily how much the world consists of human cooperation and competition-in which money measures, facilitates and gauges human interaction.
Which perception is correct-the world as physics or the world as money? Of course, both are correct, for the world has both a physical nature and a social nature. However, personnel trained primarily in one view have difficulty appreciating the alternative view.
The logical forms of thinking in which the two major groups of corporate personnel(technical and functional) have been trained to perceive and analyse the world differ significantly and impede their communication and cooperation. For example, personnel trained in science and engineering are taught to think with such concepts as design, analysis, synthesis, research and development etc. In contrast, personnel trained in economics and business are taught to think with such concepts as strategy and planning, capitalization and budgeting, organization, staffing, supply-demand curves, etc.
To reduce the risks in innovation, it takes special attention and effort to integrate the two strategic concerns of business and technology. The technical concerns of the engineers must be translatable and be integrated into the strategic concerns of management. The business concerns of managers must be capable of handling technical risk and exploiting technical progress.
Achieving communication and cooperation between technical and business functions and integrating business and technology strategies are not easy. Moreover, this does not involve simply teaching some management principles to technical personnel or, conversely, teaching a little technology to finance personnel. Both approaches have been tried in some engineering or business schools. The problem goes deeper. It has to do with having a refined perception of, sensitivity for commitment to the role of technology in the enterprise system.
The problem in managing strategic technologies is to adapt and refine the logic of management so as to effectively deal with the logic of technology.
The way to deal with the risks of technological innovation is to develop a corporate ability to strategically manage its core technology competencies in the enterprises of its businesses. To build such a capability, a corporation must be clear about the different logics in the innovation processes that create short and long term competitive advantages.
1B. Explain ay two lessons on risks and successes in technology in a company.
Some of the hard-won lessons about risks and success in innovation are:
· Unless a new technology offers really new functionality or significantly superior performance, it will now succeed as an innovation.
· Technologies are systems and until the system as a whole is complete and competent enough for an application, a new technology cannot succeed.
· A new technology diffuses into use for several reasons and the rate of diffusion varies. Accordingly, the rate at which a new market grows depends on many factors.
· Although the customer determines ultimate success or failure of an innovation, the criteria on which a customer judges may be multidimensional and customer judgment may change over time.
· Successful products in a new technology depend as importantly on standards and infrastructure as on performance.
· Because of a variety of factors, both technical and economic, a radically new technology usually requires a new business organization for successful innovation.
The first lesson is the key to commercial success in innovating a new technology. Technology essentially is about function and performance. If one is not offering really new functionality or the potential for intrinsically superior performance, then success in the marketplace against established technologies is not likely.
The second lesson is important because the fact that any technology is a system allows one to plan both incremental innovations in the technology and (infrequently) next generations of the technology. The systems perspective on technology is one of the central concepts.
The third, fourth and fifth lesions are important because the economic benefits of technological change are found in the marketplace. And the ability to plan the when, why and how of technological penetration into the marketplace is the to making or losing money in new technology.
The sixth lesson, about the importance of organizational factors in creating risks in innovation, is also a major source of risk in technological innovation. When innovating new technology, it is necessary to have very close coordination of the technical and business functions of a firm. Yet, as anyone with the experience of trying to get research, manufacturing, marketing and finance personnel working closely together will have experienced, such coordination is difficult to achieve in practice.
2A. Give an example of Core competence.
Core competencies are collective sets of knowledge, skills and technologies that a company applied 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.
Prahalad and Hamel (1990) propose that the core competencies of an organization “are the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies”.
The core competencies of an organization are usually converted to core products, which in turn may be embodied in one or more end products. The end products link the organization to its customers. The perceived value of an end product increases when the organization relates the product to its unique or specific competence. Prahalad and Hamel used a tree analogy to illustrate the idea of core competencies in a diversified corporation: the roots are the competencies of the corporation, the trunk represents core products, the small branches represent business units and the leaves are the end products. Indeed, competencies are the roots of competitiveness. The roots of the tree provide nourishment and keep the tree alive.
2B. Describe the three layers of technology in a company.
Products produced by any company either is base on a set of technologies linked to the set of competencies within the company or are dependent on technologies owned by; other companies. It is essential that each of these technologies be identified and categorized appropriately as to their relative importance to the company’s activities. Technology in accompany (or in a product) consists of three layers. The core represents the distinctive technologies; the middle circle, basic technologies; and the outer circle, external technologies. These are defined as follows:
Distinctive technologies: Those technologies in which the company’s standing gives it a distinctive competence.
Basic technologies: Those survival technologies on which the company’s operations depend and without which it would be excluded from its markets. Basic technologies are necessary for a company to stay in business but do not differentiate or distinguish it from competitors.
External technologies: Those technologies which are supplied by other companies. These types of technologies are usually available to the market at large.
Distinctive technology is what gives an organization its unique competitive advantage in the marketplace. Organizations must protect it, nourish it and capitalize on the fact that they have something desirable that others do not have. However, distinctive technology may not be in a form that permits its commercialization. For example, a company holding a patent for a product design that constitutes a distinctive technology has no way of reaching a consumer without the support of basic technologies. These include production technologies, such as manufacturing, or logistic technologies, such as transportation and delivery. Manufacturing, in this case, will be a survival technology, without which the company’s product will not be produced and reach the market. To complement its technological need, the company may decide to develop its own manufacturing operation and control its survival technologies too.
Alternatively, the company may be able to contact out, engaging another company to manufacture a product based on the distinctive design for which it holds the patent (i.e., outsource its manufacturing operation). Managers can make this decision on the basis of economic criteria and market conditions.
Basic technologies are technologies widely available to may organizations. They are essential for the development of a product but do not give it a distinctive advantage.
External technologies provide a third level of technological need but they are not critical to the c9ompany’s survival. They have a much lower impact on the company’s competitive standing. External technologies, usually, are more economically supplies by an outside vendor. For example, a company may need standard components for its products, such as bolts and nuts, or need packaging material for shipment of its products. These can be acquired from an outside source. They are important items for the product; however, their technologies do not have to be owned or controlled by the company.
The distinctive, basic and external technologies of a company can be determined from a technology audit of the company and its products. For example, an audit of a company well recognized for its household appliances and had tools, reveals that its distinctive technology is the manufacturing of fractional horsepower electric motors. Its basic technology is the assembly process for small hand tools and the external technology includes plastic parts, which can be brought in from other companies.
3. How can the roles played by various firms to bring technology to the market classified? What are the advantages and disadvantages of being a leader?
Winners are those who can bring technology to the market. In terms of technological innovation, a firm can be one of three types:
· A leader: A leader or a first mover is a firm that is the first to market an innovation.
· A Follower: This firm misses the initial wave of capitalization on the technology but recognizes the technology’s impact on its business. Such firms follow closely behind the leader. They may be able to catch up or surpass the leader if they can capitalize on their own strengths.
· Laggard: This type of firm realizes a potential for profit on technology but seldom influences technology’s use. Often, their survival may depend on adopting new technology.
The advantages of being a leader in innovation are:
1. Name recognition: The names of leaders with innovative products come to be known to the public. For example, ‘Xerox’ with photocopying. Such a strong name can be converted into profitable long-term sustainability.
2. Better market position: Being first to market gives a firm an opportunity to capture a large market share.
3. A chance to define the industry standard: The firm comes out with a dominant design to define the industry standard.
4. A head start on the learning curve: Leaders start on learning curve before competitors.
5. Protective barriers: Leaders can protect their technology through patents and other means to prevent late entrants from competing.
6. High profits: Leaders command the market they establish a technology gap between their products and their customers or competitors, able to obtain a high price and profits for their products.
7. Delayed customer switching: Leaders establish special relations with their customers, building brand loyalty.
Favorable response by outsiders: Leaders have better potential for getting support from Government, financial institutions, and other industries.
However, there are also some disadvantages like high costs of development, initial investment in design, market uncertainty, difficulty of predicting demand, and competition.
4. How does the nature of competition change in the different phases of technology life cycle?
The Embryonic Stage
In the embryonic stage, competition is based on innovation. Companies depend on their innovation to add value to products and services they bring to their customers. The introduced technology has not yet demonstrated its potential for changing the basis of competition.
The Growth Stage
In the early phase of the growth stage of the TLC, the introduced technology helps expand the market size for the product or service offered. In this stage the technology has the potential for changing the basis of competition. In this stage a company must be able to balance its growth strategies with marketing strategies. But the attention to growth should not district the company from pursuing innovation.
Once the innovation has proved itself in the market, it permits its owner to take a patented position or to define the industry standard. A dominant design of the product emerges, and the technology has a major impact on the value-added stream of performance, cost, and quality. Technology in this phase of the growth stage is known as key technology, and a company should increase its capabilities in this area to compete.
The Maturity Stage
When the technology reaches a stage of maturity and the rate of innovation declines, it becomes a commodity, available to all competitors. Technologies in this category are also recognized as base technologies and have little ability to give a company a strong competitive edge.
5. What are the critical factors for successful management of product development cycle?
Management for the product-development cycle is critical to being a fast cycle company. Information obtained from various studies suggests that designing for competitive advantage requires much more than the adoption and the use of new computerized design practices.
Basic Requirements for Product Introduction
A study emphasized that in addition to the modern technologies of computer-aided design and manufacturing, management of the product introduction process also required
(1) Continuous and incremental improvements in manufacturing and
(2) Appropriate project management techniques and design practices, as well as a design setting tailored to the technical nature of product lines.
Lessons from Successful Products
In addition to reports such as the preceding, other studies have emphasized the importance of proper management of the product-development process. A study of a sample of 203 new-product projects in 125 firms for success and failures in each firm indicated 123 successes and 80 failures.
The factors that financially successful product-development projects had in common were:
1. Superior products that delivered unique benefits to the user were more often commercially successful than “me too” products.
2. Well-defined product specifications allowed a clearly focused product-development effort.
3. The quality of execution of the technical activities in development, testing and pilot production affected the quality of the product.
4. Technological synergy between the firm’s technical and production capabilities contributed to successful projects.
5. Marketing synergy between technical personnel and the firm’s sales force facilitated the development of successful products.
6. The quality of execution of marketing activities also was important to product success.
7. Products that were targeted for attractive markets in terms of inherent profitability added to success.
Note that the first and last of these factors have to do with the relationship between the product design and the market-a superior product aimed at a financially attractive market provides both competitiveness and profitability. Factors 5 and 6 have to do with marketing activity. Sales efforts are helped by products that fit well into an existing distribution system and by properly managed marketing activities that test and adapt a product to a market. Factors 2, 3and 4 have to do with the quality of the technical development process. Good management of the technical activities in product development helps produce good products. And good project management includes having a clearly focused product definition, managing well the different phases of the product-development process and having the proper technical skills to execute the project.
The success of a new product requires not only a good product design but also good management of both the product-development and marketing process. The product-development cycle should be managed to provide innovation in product performance, innovation in productivity, responsiveness to market changes and competitive advantages.
6. What are the various channels of flow under technology transfer?
A user of a technology does not have to be its creator or inventor. In fact, most inventions are created outside the firms that benefit from them. Innovation may also occur outside a firm’s boundaries, and even if it happens within the firm, it may be confined to one department or division. Transfer of technology is a process essential for the wide application and utilization of technology by one or more users.
Technology transfer is a process that permits the flow of technology from a source to a receiver. The source in this case is the owner or holder of the knowledge, while the recipient is the beneficiary of such knowledge. The source could be an individual, a company or a country.
CHANNELS OF TECHNOLOGY TRANSFER:
Technology transfer requires a channel for its flow, as it is intangible. There are three types of channels that allow the flow of technology:
General Channels:
The technology is done unintentionally and may proceed without the continued involvement of the source. Information is made available in the public domain with limited or no restrictions on its use. This information is harnessed by users and applied to their purposes. Channels of this type of transfer include education, training, publications, conferences, study missions and exchange of visits.
Reverse-engineering Channels:
Other channels in which the transfer occurs with no active contribution from the source include reverse engineering and emulation. Here a host, or a traditional receiver of a technology, is capable of breaking the code of technology and developing the capability to duplicate it in some fashion. This is provided that the host has the knowledge to do this and there is no legal violation of intellectual property rights.
Planned Channels:
The technology transfer is done intentionally, according to a planned process and with the consent of the technology owner. There are several types of agreements that are used to effect planned transfers:
(a) licensing: The receiver purchases the right to utilize someone else’s technology. This may entail an outright purchase or a payment of an initial lump-sum amount plus a percentage of sales.
(b) Franchising: This is a form of licensing; however the source usually provides some type of continual support to the receiver, for example, by supplying materials, marketing support, or training. This channel is commonly used in food chains and service organizations.
(c) Joint Venture: Two or more entities combine their interests in a business enterprise in which they can share knowledge and resources to develop a technology, produce a product, or use their respective know-how to complement one another. They also share in the rewards of the venture. International joint ventures are frequently used by recipients to acquire technology and by sources of technology to gain access to local markets and distribution skills.
(d) Turnkey Project: A country buys a complete project from an outside source and the project is designed, implemented, and delivered ready to operate. Special provisions for training or continued operational support may be included in the agreement between the parties. Engaging in a turnkey project is equivalent to buying or selling a machine, but on the scale of an entire plant.
(e) Foreign direct investment: A corporation, usually a multinational, decides to produce its products or invest some of its resources overseas. This permits the transfer of technology remains controlled by the firm. This type of investment has advantages for both the investor and the host country. The investor gains access to a labour force, natural resources, technology or markets. The host country receives technological know-how, employment opportunities for its people, training for the workforce, and investment capital that adds to the development of its infrastructure. The host country will also get tax advantages, since most employees will be contribution to the local economy. The multinational may also gain a tax advantage by locating facilities offshore in a country or territory that gives a tax break. Some developing countries provide long-term tax relief for foreign companies located in their soil.
(f) Technical consortium and joint R&D project: This is a mode, in which two or more entities collaborate in a large venture because the resources of one are inadequate to affect the direction of technological change. This type normally takes place between two countries or two large conglomerates. For example, a consortium was formed between
0 Comments:
Post a Comment