technology mang set1

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Master of Business Administration in Information SystemMBA- Semester IV

MI0031- Technology Management 2 CreditsAssignment Set- 1 (30 Marks)

Note: Each question carries 10 Marks. Answer all the questions

Q.1.What is Technology Management? What are the role &Importance of Technology Management? What is appropriate &Disrupted Technology? How Technology Management is beinginherited by India?

Ans. Key Issues in Managing Technological Innovation

Technology is man-made. It is a means to enhance the physical and mentalcapability of human beings; it is also an instrument to transform natural

resources into useful goods; a tool for conditioning the environment; it is aresource for creating more wealth; a factor affecting development. It is also

a commodity which is bought and sold.

Innumerable technological developments have taken place in society during

the last two centuries and it is difficult, if not impossible, to enumerate all ofthem. However some significant technological developments in selected

areas are presented below:

Transistors and Computers They led to so many revolutionary

developments in electronics.

Air conditioning and refrigeration increased work productivity and varietyin diet.

Farm tractors and rural electrification bought the benefits of city life to

the farm and increased farm productivity.

Robotics increased efficiency in manufacturing.

Space exploration Sputnik, Mir, Neil Armstrong on the moon, the Hubble

Space Telescope, the space shuttle, long range craft exploring our planetarysystem and sending back data.

Nuclear energy The promise of unlimited energy damped byenvironmental concerns.

Managing technology implies use of new technology to gain competitive

advantages. It is not an easy problem to manage, partly because of the


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differing cultures in an organization. Technology is often considered to be thedomain of the scientific and engineering personnel of an organization.

However, successful business application of technology calls for strategicdecisions about technology by personnel in other functional areas includingproduction, marketing, sales, finance, and so on.

The main issues in managing technological innovation have been organized

under the following broad topics:

1) Innovation

2) New ventures

3) Corporate research, and

4) R&D infrastructure

Innovation is the most general concept covering the process from theinvention of technical knowledge to the commercialization of products andprocesses based on that knowledge.

Technology as a problem for countries:

Technology is a problem at the national level by virtue of its major role as a

determinant of a countrys economic growth and competitiveness.Economists have attempted to calculate precisely what proportion of

historical economic growth has been caused by technological improvements,as opposed to the amount which is due to investment, population increase,

trading patterns and other factors. Estimates vary, but there appears to be aconsensus that technological change is responsible for a large percentage of

economic growth.

Technology and long-term cycles:

Some economists also argue that technology affects the long-term cycles ofgrowth and recessions in the world economy, which span fifty to sixty years.

Mensch found that clusters of new technological applications precede andmay account for the upswings in these cycles. As the peak of the cycle isreached and a downturn begins, the economys physical and technologicalinfrastructure is committed to mature technologies in which there are few

opportunities for further improvements, and there is little incentive to applynew technologies at that point. As the trough of the cycle gives way to the

start of an upswing, firms must reinvest in capital equipment, which is basedon new technologies.

Technology and comparative advantage:


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use product type such as automobiles, computers, televisions, and theproduction tool type such as instruments, equipment and machinery.

Software technology can also be considered as being of two types, namely,the know-how type technology such as processes, techniques, methods,and the know-why type technology such as knowledge, skills andexperience.

Technology has been viewed differently by different people. Some viewtechnology as a source of wealth, well-being, and above all, as an instrumentof power to dominate nature and societies. Others view technology assomething that has enslaved human beings and destroyed jobs, environment

and social values. While there is a considerable concern that the use andabuse of technology is leading our societies towards disaster, there is also

considerable agreement that further development of human society ispossible only through the application of technology. If we can master its use,

technology can be the key to a prosperous society for all human beings including the poorest of the poor. Most of the poor countries, in fact, are rich

in natural resources. However, they have their basic problems: (i) They havea relatively large population base, which is increasing very rapidly; (ii) Their

technological base is very small and ineffective; and (iii) their naturalresources base is being depleted due to inefficient use and indiscriminate

export. To acquire and master the use of technology for development, it isessential to understand the basic concepts of technology and the process of

effective technology management.

The fact that we now live in a technological world can be seen very easily by

observing the ways and means of satisfying human needs in varioussocieties. There are many ways of classifying human needs. Table 1.2

indicates the implications of technological applications (positive effects andnegative effects) with respect to various human need factors.


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Various humanneed factors

Direct and indirect effects ofTechnology

Positive effects Negative effects

Air

Control of temperature, humidity,

impurities and quantity

Pollution,

destruction ofnatural cycles,

and equilibrium

Water

Increasing supply source (ground, sea);control of supply, temperature andimpurity

Pollution,

destruction ofmarine life;sinking of cities;frequent flooding

Food

Improved agricultural productivity;control of food quality, variety and

supply

Chemicalcontaminations

and diseases;destruction of

wildlife, forests,and fishing

grounds

Shelter

Improved living quarters and materials

of construction; better utility servicesand land uses

Artificialsurroundings andanti-social living,

destruction of thebeauty of Nature

Warfare

Development of civilian technologies asby-products of war technologies (space,nuclear, remote-controlled)

Accumulation ofmeans of warfare

and the menaceof large-scale

destruction oflife; risk of bio-weapons andnuclear war

ClothingEfficient production of high qualityclothing and apparel

Exploitations ofnon-renewable

resources andconsumer appeal

Health

Reduction in mortality, increase in lifeexpectancy; controlled birth, bettermedical care

Population

explosion; breakin familystructure; drug

abuses; sideeffects of medications

Communi-cation

Increased contact; reduced need for

physical movement; improved audio-video transmission

Culture shock;

co-ordination ofsabotage by

disruptive forces;

raising falseaspirations


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Table 1.2: Important implications of technological world

(Source: Sharif Nawaz, Management of Technology Transfer andDevelopment, APCTT, Bangalore, 1983.)

Some Definitions

Technology seems to be most widely used word today in industrial world and

several words/nomenclatures connected with technology are in vogue. Theseinclude R&D, invention, innovation, technology development, technologystrategies, technology absorption and adaptation, technology transfer,technology forecast, technology assessment, technology planning,

technology information, industrial property systems, code of conduct, andtechnology management. It is difficult to find a unique definition for

technology for it has been defined in many ways. One definition identifiestechnology as an application of knowledge that leads to production and

marketing of goods and services. According to Fredrick Betz, technologydevelops business by providing technical knowledge for the goods andservices that a firm produces.

Managing technology means using new technology to create competitive

advantages which is quite a difficult job, partly due to differing cultures in acompany. Technology is often thought to be solely the domain of thescientific and engineering personnel of an organization. Yet, successfulbusiness use of technology requires strategic decisions about technology by

personnel in other functional areas, such as production, marketing, sales,finance, and so on. Thus, the two cultures technical and functional need

to be bridged, and management should integrate technology strategy withbusiness strategy. This is the essence of technology management.

Innovation and Invention Invention is an idea for a novel product orprocess. Innovation is the introduction of new products, processes or services

into the market place. Technological innovation is a sub-set of innovation i.e.the introduction of new products, processes or services based on new

technologies. he technological innovation begins with invention. The first stepis the idea of the invention and the research to reduce the idea to practice.This often results in a functional prototype, which can be used for filing apatent. The next step is the research and development of the prototype into

a commercially designed product. Finally, the product is produced and sold.

Technology Management Many factors make up the technologydevelopment framework and there are several ways of condensing these into

a manageable number of groupings. Table 1.3 shows these factors groupedaround six broad dimensions:

1. Objectives


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2. Decision criteria

3. Time

4. Constraints

5. Activities

6. Mechanisms

Technology Management Dimensions

According to Solomon, Technology Management is the capacity of a firm, agroup or society to master management of the factors that condition

technical change so as to improve its economic, social and culturalenvironment and wealth. The importance of technology management

becomes obvious if one considers both what the economists call the input

and the output aspects of technical change, namely, sources of moderntechnology on one side and its pervasive impact on society on the other.These facts are obvious for all countries. However, technology management

is more important for those countries which do not participate directly in theinput aspects, or do so less intensively than the industrialized countries,

and are therefore necessarily less well-prepared to adjust to and master the output aspects. This is the case today in most developing countries.

According to Stephen Millett, the following four general factors areconsidered important for successful R&D management:

Responsiveness to the needs of clients and customers.

Regular top-down and bottom-up communication:

An awareness that technologies alone are not products; and

Recognition that non-technological factors have profound impact on R&D

Role and Importance of Technology Management

Technology and management of technology are critical for an enterprise for

its successful operation on long-term basis. Technology management is,however, a part of the total management system. There are three basic

considerations for starting any new firm based on technological innovation.

1. The idea for a technological innovation;

2. A potential market;

3. Team work in both technological and business expertise.


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The above points underline the need for interweaving the technologyframework with other areas of business in an enterprise. The idea of a

technological innovation should be based or linked with the potential marketand the technology team should closely interact with the rest of the divisionsof the enterprise leading to successful logical conclusions in terms ofproducts/ processes to be developed as per the objectives set in the

beginning. This strategy is best reflected in the form of a Business Plan ofan enterprise which needs to be prepared and approved before starting the

new business.

The Business Plan: It is a strategic summary of a new venture. Its

purposes are:

1. To ensure, by clear focus in strategy, that important points necessary tothe success of any business venture have been considered; and

2. To persuade financial investors to invest in the new venture. A new

venture business plan could include the following:

a. Current business status

. Business objectives

. Management and organization

c. Benefits to customers

. Market

. Marketing strategy

b. Products or services

. Product description

. Technological background

.Competition.

d. Capitalization

. Capital requirements

. Financial forecasts

. Benefits to investors

It is thus clear from the above that technology and technology managementare only a part of the total business activity or business plan of an enterprise.

Technology and Competition

Although technological competitiveness is necessary for corporate survival, it

alone is not sufficient. Of course, a corporation with inferior technologycannot compete at the same price level with a corporation superior in

technology. The reason why superior technology alone is not sufficient is thatbusiness is a system, and there are many other systems (or sub-systems)

that determine business success. Therefore, if technology is to give acompetitive edge, management must manage it as a part of the businesssystem. Technological innovation can be integrated with production,marketing, finance and personnel into a balanced business system. Managing


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technological advances in their areas of expertise than governmentsupported researchers or research departments in massive corporations.

Third World craftspeople, farmers and other villagers invent, create, andcontribute to the technological process of their area much more than outside"experts" do.

The idea of appropriate technology is that local people, struggling on a daily

basis with their needs, understand those needs better than anyone and cantherefore suggest or in fact, invent the technological innovations necessaryto meet those needs. Not only that, local people can prioritize solutions tosave precious funding and labour. Planners and those who want to help

others grapple with food and energy problems are wise to include localpeople in the early stages of project vision. The result is consistency in the

carry-through of the work by locals and continued maintenance and interestin the well-being of the project over the long haul.

The definition of "Appropriate Technology" changes with each situation. Its

not appropriate to install solar modules in a place with very little sun, a windgenerator in a place with little or no wind. Whats appropriate in a largeurban location is very different from whats appropriate in a remote, isolated

environment. One quality that remains the same, however, is taking care ofthings. In each situation, the essence of AT is that of appreciating, helping,and caring. Planned obsolescence, throw-away products, poor quality all goagainst intelligent decision-making and the true spirit of appropriate

technology.

Any technology is appropriate at the time of development, with respect tothe surroundings for which it has been developed, and in accordance with the

objective function used for development. It may or may not be appropriate atthe same place at a different time, because the surroundings and/orobjective functions may have changed. Similarly it may or may not

appropriate at a different place at the same time, or at different times,because the surroundings and objective function may be different. Thus,

technological appropriateness is not an intrinsic quality of any technology,but it is derived from the surroundings in which it is to be utilized and also

from the objective function used for evaluation. It is, in addition, a valuejudgment of those involved.

The surroundings differ not only from place to place but also over time. Withthe passage of time and application of technologies almost all elements of

the surroundings change for better or worse. Although in general twosurroundings are unlikely to be identical, for any particular technology manyapparently different surroundings may in fact be considered similar. Thefollowing examples will illustrate the concept of appropriateness of

technologies:

DDT was an appropriate pesticide at the place and time of originalapplication. However, after sometime it became inappropriate even at the


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place of origin and it is banned in industrialized countries. DDT is stillconsidered to be appropriate in many developing countries as the specific

surroundings and objectives are collectively judged to be similar to those ofthe place and time of original application.

Coal based technology for power generation was very appropriate at onetime, but became inappropriate due to technological substitution process.

Now with further change in the surroundings (with respect to resource aspectparticularly) the coal-based technology has become appropriate again.Because of the changes in the surroundings, technologies once labelledinappropriate can become appropriate technologies in the future.

Technologies such as electric tooth brush and cable car etc., are appropriateonly in a few places and inappropriate in many other places because of the

surroundings.

Technologies embodied in drugs, such as, antibiotics, vaccines; contraceptive

pills are appropriate all through the world because the specific surroundings

include mostly human body and, therefore, are somewhat similar. Some ofthe accepted criteria for selecting appropriate technologies in thecontemporary situation are considered below:

It should primarily aim at meeting the basic needs of rural people; it shouldbe capable of absorbing large labour force, preserve existing traditional jobs,

low cost and require low levels of skills;

It should provide viable means for small scale production operations;

It should consume lesser energy;

It should be capable of using indigenous raw materials and services;

It should provide for waste recycling and should be non-polluting;

It should be consistent with local culture and be compatible with social

system;

It should be acceptable to the political system.

Disruptive Technology

Disruptive technology is a term coined by Harvard Business Schoolprofessor Clayton M. Christensen to describe a new technology thatunexpectedly displaces an established technology. In his 1997 best-sellingbook, "The Innovators Dilemma," Christensen separates new technology intotwo categories: sustaining and disruptive. Sustaining technology relies on

incremental improvements to an already established technology. Disruptivetechnology lacks refinement, often has performance problems because it is

new, appeals to a limited audience, and may not yet have a proven practical
http://resources.smude.edu.in/slm/wp-content/uploads/2009/06/clip-image002104.gif


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application. (Such was the case with Alexander Graham Bells "electricalspeech machine," which we now call the telephone.)

A disruptive technology or disruptive innovation is a technological innovation,product, or service that eventually overturns the existing dominanttechnology or status quo product in the market. Disruptive innovations canbe broadly classified into lower-end and new-market disruptive innovations.

A new-market disruptive innovation is often aimed at non-consumption,whereas a lower-end disruptive innovation is aimed at mainstream customers

who were ignored by established companies. Sometimes, a disruptivetechnology comes to dominate an existing market by either filling a role in a

new market that the older technology could not fill (as more expensive, lowercapacity but smaller-sized hard disks did for newly developed notebookcomputers in the 1980s) or by successively moving up-market throughperformance improvements until finally displacing the market incumbents (as

digital photography has begun to replace film photography).

How does low-end disruption occur over time?

In low-end disruption, the disruptor focuses initially on serving the leastprofitable customer, who is happy with a good enough product. This type of

customer is not willing to pay premium for enhancements in productfunctionality. Once the disruptor has gained foothold in this customersegment, it seeks to improve its profit margin. To get higher profit margins,the disruptor needs to enter the segment where the customer is willing to

pay a little more for higher quality. To ensure this quality in its product, thedisruptor needs to innovate. The incumbent will not do much to retain its

share in a not so profitable segment, and will move up-market and focus onits more attractive customers. After a number of such encounters, the

incumbent is squeezed into smaller markets than it was previously serving.And then finally the disruptive technology meets the demands of the most

profitable segment and drives the established company out of the market.

"New market disruption" occurs when a product that is inferior by most

measures of performance fits a new or emerging market segment. The LinuxOperating System (OS) when introduced was inferior in performance to other

server operating systems like Unix and Windows NT. But the Linux OSdistributed through Red Hat is supposed to be inexpensive compared to otherserver operating systems. After years of improvements in this easilyavailable operating system, the functionality has improved so much that it

threatens to displace the leading commercial UNIX distributions.

Not all disruptive technologies are of lower performance. There are severalexamples where the disruptive technology outperforms the existingtechnology but is not adopted by existing majors in the market. This

situation occurs in industries with a high investment into the oldertechnology. To move to the new technology, an existing player not only must

invest in it but also must replace (and perhaps dispose of at high cost) theolder infrastructure. It may simply be the most cost effective for the existing


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player to "milk" the current investment during its decline mostly byinsufficient maintenance and lack of progressive improvement to maintain

the long term utility of the existing facilities. A new player is not faced withsuch a balancing act.

Technology Management in India

The development of Science and Technology (S&T) has been receiving

continuing attention of the government at the highest level in India.However, this development has been based more on science than

technology. On the industrial scene, the Indian industry accounting foralmost one-third of total production, has been generally operating under

controlled and regulated economy, in other words, assured markets. Theindustry did not generally realize the real need for internationalcompetitiveness in most of the sectors. It, therefore, did not give adequateattention and also did not make adequate investments in technology. The

technology management at enterprise level in India has therefore been

practically lacking except in a few cases. There have, however, been severalinstances where Indian companies have been able to develop and produceproducts for internationally competitive markets. Punjab Tractors, Tata

Automobiles, Amul Food, certain drugs and chemicals produced by somefirms, are some examples where Indian companies have excelled. Similarly,some of the R&D institutions have developed and commercializedtechnologies in areas such as drugs and Pharmaceuticals, chemicals, food

technology, computer software etc.

The Indian industrial production has been substantially based on importedtechnologies, accompanied by import substitution efforts through indigenous

sources. It is recognized that a large number of industrial products today arebased on obsolete technologies which are not cost-effective and consume lotof energy. Further, they are not friendly to the environment, and their quality

is not of desired level. Since Indian industry has largely enjoyed monopolisticmarkets, their interactions with S&T based institutions, R&D laboratories, and

academic institutions have been rather limited, and their R&D expenditureshave also been much less than the desired levels (when compared to

investments in R&D by industry in developed or industrially advancedcountries). In fact, there appears to be a technology paradox in India as faras S&T is concerned. On the one hand, we have developed capabilities ofhigh order in hi-tech areas such as space, atomic energy, defence and

computer software; on the other hand, our manufacturing capabilities are

limited to products ranging from needles or paper pins to electronic products,the quality levels are low and prices are not competitive. We have importedtechnologies for almost everything that we use.

Q.2. Discuss various Technology Acquisition alternatives. List the

important points to be kept in mind while managing an acquisition of


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technology. With regard to the integrated framework for technologychoice, explain the three stages used for carrying out the study.

Ans. Where a firm wants to harness a new technology which has to bedeveloped, ab initio, the company has to make some basic decisions. Thus,whenever the resources required for the development of new product orprocess are more, the acquisitions decisions are correspondingly more

important and complex. Also, the company has to consider its R&Doperational experience in relation to its actual need for the technology to be

acquired. Again, where strong competition is expected and market lead timeis important the manner of technology acquisition can become critical.

Acquisition of technology from collaborators is a major strategy for bridgingthe technology gaps in a developing country like India. Having missed the

Industrial Revolution of the 18th century, which was really the take-off pointin technology race in developed countries, India started its technology race

nearly 100 years behind the developed countries, save, in some specificareas. Fortunately, however, during the last 40 years since Independence

this technology gap has been bridged to some extent, due to large-scaleimport of technology from the developed countries. Over 13,000

collaboration agreements have been concluded between Indian and foreigncompanies since Independence. An analysis of foreign collaborations

approved during the last ten years shows that more than 64% of theapprovals were front only four countries viz. USA, West Germany, UK and

Japan, which proves that they are the major players in the technologymarket (DGTD data).

Hence, the fastest way to bridge the technological gap is by import oftechnology through collaborations. In many cases, it would also be cost

effective to import / buy technology than develop it through in-house R&Defforts. It must, however, be borne in mind that collaborationsper seare not

bad, but dependence on collaborations is bad. Hence, the role of self-reliancein Technology Acquisition should not be lost sight of.

Options for technology acquisition are linked to a large extent on policyenvironment. Whenever economic policies of the country do not permit the

foreign suppliers to freely sell their goods and services in the domesticmarket, they are more willing to sell technologies for their products. It isbecause they realize that the only way to enter the domestic market isthrough collaboration arrangement and get financial returns by way of

payments on account a of lump sum and royalty and by sale of raw materials

and components. As most of the technology transactions of the LDCs areheld with developed countries, there is considerable difference in thetechnological capabilities of the buyer and seller of technology, which

adversely affects the bargaining power of the buyer organisation in adeveloping country. Such organisations must learn to successfully negotiateand conclude collaboration agreements on best possible terms.


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Technology acquisition is the process by which a company acquires the rightsto use and exploit a technology for the purpose of improving or renewing

processes, products or services. It does not include retailed or mass marketoff the shelf software which is generally governed by non-negotiable "shrinkwrapped" licences.

Support for technology acquisition is primarily designed for business-to-

business technology acquisition, but in some cases the technology may comefrom a university or research organisation. The technology or know-how mayoriginate in Ireland or abroad, and should normally be tested, proven andready to use.

Technology Acquisition is a huge area and the productivity improvement fundtargets a specific part of the technology acquisition process. Companiesapplying for funding for technology acquisition under this fund will berequired to have carried out their due diligence and identified the technology

they wish to acquire. The applicant company will also know the details of the

licence agreement between the two companies and details of the costsinvolved as part of the application.

Technology Acquisition Alternatives

1. Develop Technology in-house

The company has to estimate the financial costs of the required R&D and its

opportunity cost of that choice. Its impact on the direction of, and thecommitment to, other research projects is also relevant. In addition to this,

the company has to assess the suitability of its staff and equipment for the

new project. Among the risks, it has to face are blocking patents. However,the developed technology can be customized to its precise requirements.

2. Buy the firm that has the Technology

The investment here could be substantial and great care is needed in theevaluation of the prospective acquisition. Also, it is important that following

the purchase, that the operations can be effectively integrated and that thereis no undue loss of key staff.

3. Enter into joint ventures

The costs are shared but so are the benefits of the new technology. Wherethe risks are high and the costs heavy, membership of a research consortiumbecomes a more attractive option. There is also the co-development of new

products or processes, such as between a key supplier and a majorcustomer.

4. Enter into research contract


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R&D contracts can be placed with research associations, universities orconsultants. The company has to consider the costs and the nature of control

of the project. There is the risk of know-how loss.

5. Obtain license for use of Technology

This is essentially the purchase of access to proprietary technology. It can beanything from the right to use a particular patent to a complete package,

which includes know-how agreements, commissioning assistance for newplant and processes and the provision of updated designs and other technical

information.

6. Education and training

Soft technologies with a strong management dimension e.g. JIT, Qualitycircles, or Kaizen can be acquired through training programmes. However,the underlying experience, which makes these techniques more effective, is

often achieved through personal contacts between companies.

Integrated Technology Choice Framework

Technology choice is a multi-judge, multi-objective, multi-criteria decision

making process, requiring analysis of priorities of alternatives based on bothobjective and subjective factors. Therefore, technology choice decisions

making should be an integrated model which allows the users to rank criteriaand alternatives either as a group or as an individual. It is necessary todevelop a general frame work for technology choice. It is observed from theliterature that no generalized, acceptable framework or methodology was

proposed for technology choice decision making. Such a framework isessential for researchers and analysts, otherwise, every individual will follow

whatever he feels right. Such a generalized framework brings in uniformityand understanding among the people carrying out such studies. Therefore,

the applications of technology choice methods that are available now arethoroughly probed. A synthesis of various approaches is carried out, toevolve the basis for developing an integrated framework for technologychoice.

In this integrated framework for technology choice, study is carried out inthree stages, namely (i) Decision factors identification, (ii) Alternativetechnologies evaluation, (iii) Alternative policy analysis and final decision

making.

Decision Factors Identification

In this stage, different alternative technologies and evaluation criteria are to

be identified. The following are various steps to identify the decision factorsrelated to technology choice of the given process.


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Step 1: Verify the need for new technology

Technology has to be tailored to the needs of the industry. Need can be

defined in terms of suitability, urgency, and benefits that a company hopesto gain from the new technology. The need of the new technology is to be

assessed based on the internal strengths, weaknesses, opportunities, andconstraints. Based on the analysis, the objectives of technology choice

making are to be identified. One can go for technology choice for any of thefollowing reasons:

i) To start up a new Industry

ii) To expand existing plant capacity to meet future demand (capacity

expansion)

iii) To modernize existing plant to meet competition (Modernization /Technology upgradation)

Depending upon the reason for choice making, the aim of the decision to be

made for the technology choice problem varies. For example, for the reasonscited above, the decisions may be;

i) Evaluating appropriateness of all the available alternatives and selectingthe best one,

ii) Improving the existing technology for additional capacity or adding theextra capacity separately with a new technology, or scraping the old

technology and replacing it with a new technology for entire old and

additional capacity,

iii) Upgrading the existing technology by incorporating the latestdevelopments related to that technology or scraping the old technology by

replacing it with a new advanced technology, respectively.

Step 2: Define the objectives of technology choice decision making

The management must clearly define their objectives and constraints relatedto acquiring a new technology. The constraints are as follows: amount ofcapital that can be spend on the new technology, allowable limits ofproduction capacity, technical skills and knowledge levels of local

manpower, etc. The objectives are as follows: utilization of local availablemanpower and raw materials, technology self-reliance, technology

leadership or follower-ship, ambition to enter into global markets, futuregrowth , etc. The objectives and the constraints are governed by external

and internal factors. The external factors are market competition andgovernment regulations. For example, based on the market competition, thepermissible limits for productivity and quality of production are to be fixed.And to take the advantage of local government incentives, the allowable


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limits for production capacity and the preferable locations for plant site are tobe decided. The internal factors are resources availability, skills and

knowledge availability, raw materials availability, etc. For example, basedon the type and the amount of natural resource reserves, the permissible rawmaterials are to be decided. And based on the technical skills and theknowledge levels of local manpower, the allowable limits for training

requirements are to be decided.

Generally, the objectives of public (government) and private firms indeveloping countries may vary .The private firms mostly look for more profitsand future business growth prospects as the main objectives of their

technology choice; whereas public firms, in addition to the above objectives,also intend to improve national employment opportunities, economic growth,

and technology self-reliance.

Step 3: Form a committee of experts

A committee of experts, who have knowledge / experience in operation andmaintenance of related industry, is to be formed to evaluate the priorities ofthe alternative technologies. The number of experts in the group may dependupon their availability. It is always better to choose experts from different

backgrounds, i.e., economists, academicians, researchers, production andoperation people, environmentalists, policy makers of government, etc.

Step 4: Identify the alternative technologies

Alternative technologies are different combinations of techniques/ processes

used for production of a single product. The alternatives may be at various

stages of development, i.e., conceptualization, laboratory research andtesting, pilot plant, and commercialization stages. There are certain risks andbenefits in choosing a technology at each stage. For the commercialized

technologies, expertise on the production and maintenance problems isreadily available. Therefore to minimize the risks, commercial technologies

are preferable for any new entrepreneur or for locations where availability oftechnical expertise is limited. The technologies which are in the other stages

of development regularly require an in-house R&D support to overcome theday to day operational problems. As such the selection of technologies inthose stages involves high risk. However anyone who wants to takeadvantages of the latest developments, and aspires to be among the leaders

of that technology can only consider the technologies in the above stages of

development, as alternatives.

Step 5: Short-list the alternatives

Alternatives are to be short-listed based on whether an alternatives

characteristics are with in the specified objectives and constraints or not. Forexample, if the amount of capital required for any alternative exceeds themaximum limits specified in the objectives and constraints or if the pollutant


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levels from the emissions of an alternative exceeds the governmentregulations norms or if a particular raw material required for any alternative

falls in the list of government banned materials, such alternatives must beeliminated from further analysis. Similarly alternatives are verified whetherthey are with in the specified characteristics of other objectives andconstraints. Short-listing of the alternatives will reduce the extra calculation

burden. The short-listed alternatives are called potential alternatives. Onlythe potential alternatives are to be considered for evaluation of the priorities.

Step 6: Identify the evaluation criteria

Depending upon the objectives, and based on the technical structure of the

alternatives, various key elements related to alternatives are to be identifiedto compare the alternatives. The key elements should include various factorsrelated to economic, social, political, technical, and environmental aspects ofthose alternatives. The following are some of the factors related to each of

the above categories.

Economic: capital cost, royalty or technology know-how cost, operation andmaintenance cost, etc.

Social: employment potential, safety associated with that technology, etc.

Political: Government regulations.

Technical: quality of production, productivity, operational flexibility, typeand quantity of raw materials, amount of energy requirement, amount oftraining requirement for employees, waste recycling possibilities, etc.

Environmental: amounts of each of the solid, liquid, gaseous, and noisepollution levels.

Q.3. Discuss the role of Technology Transfer and its key factors as

applicable to an organization? What do you understand by atechnology package and what are its features? List the initiatives ofIndia Government in improving technology absorption?

Ans. Meaning of Technology Transfer:- Transfer, as defined, means theacquiring through purchase and use of technology. Therefore, the definition

of technology transfer is the acquisition and use of knowledge. There is notransfer of technology unless and until the technical knowledge is put to use.

Technology transfer is not restricted here only to scientific or engineeringitems. The manufacturing, marketing, distribution and customer service areamong the factors that are included in technology transfer.

The key factors in technology transfer include:


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Transplantation of technology involves shift from one set of well-definedconditions to another set in which at least one key variable may differ.

Secondly, the recipient may apply the technology to a different purpose fromthat of the supplier.

A sense of opportunism prevails in technology transfer, whether justified ornot.

The transfer process embraces a rich variety of mechanisms andrelationships between recipient and donor (supplier of technology) .The

process can vary from a routine peopleless passive transfer to turnkeycontract where the donor takes the full responsibility for all phases of the

contract.

The nature of the transferred technology and how it is transferred are

critical to the success of the technology transfer process.

Technology transfer may begin as a solution to someone elses problems.Adoption of such outside solution to solve an inside problem is technologytransfer. The advantage lies in avoiding "reinventing the wheel".

Technology Package and Technological Dependence

Technology from abroad is acquired by Indian industry in the form of

hardware, software and related services. In some instances, it could be onlyfor using foreign brand names. It could be for a grass-root project or forfurther technological requirements of an existing plant, or for modernisationor enhancement of a product capability. A foreign technology package may

consist of all or any of the aspects, such as product design, process orproduction know-how, systems engineering, application information, tailor-

made equipment and/or their designs, technical services regardingmaintenance/ safety / continued improvements/international experiences,

etc.

Technological dependence on foreign know-how can be in any of the

following areas such as:

Product designs/ standards/ specifications

Know-how for assembly of products

Licensing for the use of patents/ trade marks

Process know-how designs and basic engineering, detailed engineering,production technology

Quality control, safety, pollution control and continued assistance inimprovements of technology used in the existing manufacturing facilities


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Supplies of hardware and proprietary equipment and their designs

Adoption

Adoption of a technology is a process under which the various features of thetechnology which are the subject of transfer are suitably modified, changedor altered keeping in view the needs of the buyer. In other words, the needsof the buyer of technology crystallized and the supplier makes suitable

modifications in the technology being supplied so that it conforms as far aspossible, to the requirements of the buyer. This in essence would mean that

a foreign technology is scaled up or down or modified where necessary, bythe supplier ill accordance with the requirements of the buyer of technology.

Such adopted features, are finalized as a part of the technology package.

Adaptation

Adaptation of technology is a phase that takes place after a technology has

been adopted and put to use in production activities/facilities. During thisstage, a number of alterations and modifications to suit the indigenousconditions are made and they may relate to the use of raw materials/

components manufactured, practical difficulties in down scaling etc. Thus, theparticular plant in India could gear itself up to meet the desired, capacity,

production, product quality and. other related aspects, as planned. Theadaptation exercise covers both product modifications as well as producttechnology changes, using indigenous skills and facilities as materials.

Absorption

Technology is said to be absorbed if it is fully understood so that it is in aposition to be further optimised and upgraded. Technology absorption

involves Know-why exercises, basic investigations into the product and/ orprocess and/ or systems. To avoid further dependence, technology

absorption requires R&D projects in know-why, optimisation andimprovement of product/ process/ systems and related equipment. Suchefforts encompass design investigations, alternate raw materials/components, modifications to suit Indian requirements, etc. Successful

projects in these areas will lead to achieving technology absorptioncapabilities.

Optimization

After understanding the relevant features of technology, further exercises in

removing rough edges through R&D and value engineering to effect savingsin the materials, energy consumption, etc. both in product and processes,constitute optimization of technology.

Improvement and upgradation


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Capability in technology absorption and optimization can lead to furtherexercises in improving the existing products and processes by R&D efforts of

industry and other associated research organisations. This will enableindustry to meet the changes in technology of the product or processes.Technology upgradation exercises lead to industrys efforts in extending itsknow-why capability to a higher range of products or in upscaling the

existing process / production technology or manufacturing equipment.

The role of technology absorption in the implementation of a project is shownin Figure 8.1. It will be seen that Technology Absorption activity is taken uponly after a project is executed through acquired technology or when the

company diversifies or faces threats from market forces to update itsproducts or processes. Figures 8.2 and 8.3 explain the process of "know-

why" arising out of imported "know-how". "Know-why" exercises lead tobetter understanding of the basics or principle involved in the design and

production of a product/ process which enables any organization to develop

or build technological capabilities for further improvements.

Figure 8.1: Role of Technology Absorption in Project Implementation

Government Initiatives : Government has, over the years, directed the

industry to take necessary steps to set up R&D units for up-gradation andabsorption of imported technology. There is also a stipulation with respect to

this in the terms and conditions of foreign collaborations. However, it has notbeen very effective. While formal extensions of collaborations have not beennumerous in comparison to the number of new collaborations, Indianindustry has quite often gone in for further collaborations to avail of

technologies for higher ranges/ capabilities or improved process/ production

techniques. The newer grass-root plants have used later technologies, butthey are also likely to become obsolete as the years pass by unlessnecessary efforts to catch up with technical changes are made. Industry, in

general, stays at a particular level for a number of years and then considersa jump in product range or volume of production through further technologyinduction. Pursuant to the Technology Policy Statement, the Government hadstipulated that industries using technologies costing more than a payment of

Rs.2 cr. should bring out comprehensive Technology Absorption, Adaptation
http://resources.smude.edu.in/slm/wp-content/uploads/2009/06/clip-image002182.jpg


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and Improvement (TAAI) plans. Government has also directed industry tosubmit annual returns for technology implementation and absorption.

technology mang set1

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