Technological Environment:

Why is it So Important? So Important?

1. It brings new products, processes, and materials.
2. It directly impacts every aspects of our society (transportation, energy,
communications, entertainment, health care, food, agriculture, industry).
3. It alters the rules of global trade and competition.
Application of knowledge
* Intends to solve practical problems
* consists of:
Applied research with specific objectives
Development resulting in workable prototypes
Engineering defining the knowledge for commercial exploitation
Commercialization including mass production
IMPORTANCE OF TECHNOLOGY?
It is one of the most important driving force post-II world war in shaping up economies
of various countries.
It improves quality of life in the society. New and improved products and processes are
made available in society.
Technology is directly linked to level of scientific knowledge, particularly applied
sciences.
Technology is both hard and soft-that is machine, as well as, way of thinking
Technology is thus level of scientific sophistication and level of knowledge in application
of sciences to production processes, be it goods or services (like Heart operations or
Aircraft flying, or designing and fabricating a nuclear reactor).
The changes in Technology are so rapid now that the Industry has to keep track of same
and keep modernizing to remain competitive and in business.
Some of the areas of technology objectives are>>
- Method of manufacturing a product
- Improvement in product design or manufacturing process
- Reduction of waste
- Reduction of manufacturing cost
- Using new raw materials

- Using eco-friendly materials

- Improving process quality and reliability
- Introducing new products and services
- New methods of delivery and distribution
- New ways of management control and information (like ERP, VSAT, Video
conferencing, and now Convergence technology)
Major Challenges in use of technology is the rate at which it is diffused in the country,
companies and manufacturing plants, and also the suitable adaptation of the same for the
user of the technology.
Here comes the issue of the Appropriate Technology.
Some of the new technologies that have vastly impacted the manufacturing sector are:
1) Information technology (Internet). 2) IT enabled services (Call centers). 3) Bio
genetics or DNA Technology (Hybrid agricultural seeds) and genetic based medicines
(AIDS Vaccine) 4) Laser. 5) Robotics (Mechanization or atomization). 6)
Superconductivity. 7) Bio-degradable materials replacing convention materials. &
Ceramic materials (Like ceramic engine body)
This has had vast impact on availability of newer and newer products.
The World Economic Forum {WEF} considers technology as one of the 8 factors to
evaluate the global competitiveness of the countries.
The IT and Communication technology has made virtual factories and virtual universities
possible. The computer power has completely changed the warfare methods and defense
strategies of Nations.
Knowledge management and knowledge-based industries have thus emerged as sunrise
sectors in economy.
For utilizing this - a country needs following>>>
1. Computer literacy and skilled computer programmers
2. Efficient and deep penetration of telecommunication like Land and cellular phone
network with high bandwidth availability
3. Inventory of technically qualified persons in the country
4. World class Education and Training facilities.
5. Innovation Culture (Missing in India vis--vis USA, Japan)
6. In-house R & D facilities with Companies (Ranbaxy)
7. R&D support and Infrastructure by National and State Governments (DRDO,
RDSO,CDRI and so on).
8. A network of research Laboratories, training centers, Tool rooms and Incubation
centers for developing entrepreneurship.
9. Strategic global alliances for research and application of technology which in many

cases has prohibitive costs, like in Pharmaceuticals, Genetic Engineering, Space and
nuclear research.
10. Incentives for capital to flow into R&D in the country both internal and external
investments.
MEASURES OF TECHNOLOGICAL ENVIRONMENT:
India's Expenditure on R&D is less than 1% of GDP as against 2.5 % of developed
nations and the GDP itself being very low compared to these countries, the absolute
investment and expenditure on R&D is very poor (As against USA 247 Billion $ India
had barely 3.5 Billion $s). Apart from this the contribution of Corporate India is poor
(only 15%) in this. A good part of it goes into Strategic research budget like space and
defense.
Another Measure of technological Environment in the country is the Number of
International patents filed by the Laboratories and Firms from a country. Just compare
this for India with Lucent Laboratories USA (Now headed by an Indian), which files
more than almost one patent every day.
A third Measure could be the contribution of Capital Goods & Machine tools industry in
the GDP of the Country.
A fourth measure is the number and constitution of premier Technology institutes and
Technical training Centers and Research laboratories in the country, including
Communication and Information technology areas.
For modern industry environment the skill level of workers has gone very high and the
countries' basic infrastructure too is very important indicator.
It is very clear that any business investment will depend on technological Environment in
the host country or a State beside Infrastructure availability, Taxation and Fiscal
Incentives. Another important factor is availability of Power and Energy.
By virtue of above technological Environment limitations, India is attracting second-rate
technology investment. But India has definite advantage in Manual Skill and Knowledge
based sectors like Software development, Call centers, Genetic coding and other such
works which make India attractive in terms of English Speaking, technically qualified
low cost workforce and low cost of operations in the country.
Whereas a Dollar has value of Rs 50 in India, It has only value of Rs 22 in USA, based
on PPP (Purchase power parity). That makes outsourcing from India attractive. China has
still better advantage than India on this latter criterion.
Changes in the technological environment
* Induced changes

 Created by social, political, or economic forces.

* Autonomous changes
Occurred by the independent actions of technology developers in their quest for
competitive advantage.
And are drivers of fundamental social and economic change.
Theories for autonomous changes
* Social- change theory
Each of social stages corresponds to a specific technology of production.
See " Alvin Toffler, The third wave "
* Long- wave theory of economic change
Stage 1: new discoveries leading to new products and markets
Stage 2: new industries expanding products and markets
Stage 3: technology matures creating excess capacity and a decreasing profitability
Stage 4: business failures, unemployment leading to depressions
Any type of changes in technological environment creates opportunities and threats.
So, firms should track these changes on an ongoing basis.
They have different implications for the management of technology.
For example, they differ in predictability.
Current Trends in the Technological Environment:
* Globalization Resource allocated to technology development
Changing location of manufacturing facilities
Rise of multinationals
Comparative advantage of nations
* Time Compression Shortened product life cycles
Shortened development times
Decreasing payback periods
* Technology Integration
Combining technologies to develop new products
Combining technologies to commercialize products
Globalization
* The process by which the various nations in the world are increasingly being
interconnected politically and economically through international trade.
Globalization : Resource allocated to technology development
* The greater participation of countries that have been less active in technology
development.
* Technology development is now being conducted all over the world, which broaden the
scope of technological environment.
Ex. Japan, Korea, China, Islael, etc.

Globalization : Location of manufacturing facilities

* Shift in locations of manufacturing facilities from advanced countries to
underdeveloped economies.
Western Countries>>To Japan, Brazil, Taiwan, Korea>>ToKorea, China, Eastern
Europe>>To China, South- eastern Asia
Globalization: Rise of Multinationals (MNCs)
* Multinational Corporation is doing its business in a number of countries.
(Manufacturing, marketing, and even R& D).
* The growing R& D activity outside one's host country.
* More common for European firms than for U. S. firms.
Time Compression
* Product life cycles
Time period from introduction to market maturity
34 years (before 1920),
22 years (1920- 1939),
8 years (1939- 1959)
(- By A. Toffler)
Time Compression
* Development times: Invention to production
1852 fluorescent Tube 82 years
1887 Radar 46 years
1891 Zipper 34 years
1907 Television 29 years
1940 Transistor 10 years
Technology time lags
Many leading firms have enjoyed benefits from decreasing development times in their
projects {like by use of AutoCad Type software).
Time Compression
* Decreasing payback period
Capital markets press to yield quick returns in investment in technology development.
Institutional ownership increased from 8% in 1950 to 60% in 1990.
Time Compression
* Implication to firms
There is not enough time to engage in technology development by themselves.
They also should consider collaborating with others, or to imitate or borrow
technologies from other firms.
Combining technologies to develop new products:

* Many U. S. firms including those in Silicon Valley have been weaker in this way.
* Japanese firms like Sony, Matsushita, Toshiba and Hitachi have been good to develop
new products in this way.
<Ex> Mobile phone with digital camera, DVD+ Video Combo Dec. etc.
Combining technologies to commercialize products.
* In order to succeed in this way, a firm has to utilize its Process technologies as
manufacturing, marketing, and after- sales support.
* Many a technology- based startup firms often fail to accommodate themselves to this
way.
<Ex> New marketing channel such as Web- based shopping.
IT- based transactions of commodities.
Technology Integration:
* Implication to firms
In- house R& D is not the only source of technologies. Firms should not only farm
technologies, but also gather technologies from outside.
The main actors will be increasingly interconnected, which help foster the transfer of
technology among institutions.
These trends, globalization, time compression, technology integration, are creating
TURBULENT technological environment for many organizations.
How technology environment is created?
1. Countries that have high entrepreneurial environment foster technologies better
2. Role of Government in identifying technological areas for National priorities
3. Venture capital Funds Availability
4. Innovation culture in industry and business- Radical, incremental or Next generation
5. Fundamental research in the country
6. Research Laboratories-Like CSIR, CFTRI, DRDO, ISRO in the countries
7. Role of Large organizations and Public sector Enterprises-These serve as nucleus of
growth of technology
8. Premier research Institutes like IIT
9. Mechanism for transfer and absorption of technologies-Commercialization
opportunities. Requires promotional incentives by State.
10. Trained technocrats that have international exposures-like NRIs have significant role
in current technology contribution
11.Testing Laboratories and Tool Room facilities.
Development of technology can take place through slow improvements, need for
introducing new products, and outsourcing of technology from advanced nations.
One important method for creating Technology environment is through creating
Industrial clusters which are product focused like Hosiery in Ludhiana & Tirupur, Steel

Rolling in Mandi Gobindgarh and Electronics in Bangalore and NOIDA.

Innovation Networks:
Interconnections among organizations whose missions are widely different to achieve
technological innovation by facilitating the flow of information, resources, personnel, and
other inputs.
Interconnections among developers
* Private and private
* Private and public
Joint research with universities
* R& D consortia
Sharing resources
Lowering risks
Interconnections among developers and facilitators:
Three major functions of facilitators
Whatever they are private or public.
Resource providers Policy analysts -Linking organizations
Geographical features of the networks:
* Industrial Complex
* Industrial Park
* Industrial Cluster
Examples of USA:
* Silicon Valley, California
* Route 128, Massachusetts
* North Carolina Research Triangle
* Grand Rapids, Michigan, for Furniture
* Dalton, Georgia, for carpet
* Northern Italy for Weaving
What are benefits from the networks?
1. Networks assist in the diffusion of technology.
2. They create a critical mass of skills that speed knowledge development.
3. They provide a social net for individuals.
In India>>
Ministry of Science and Technology of India through its THREE Principal departments
looks after Technology thrust in India.
Department of Science and Technology (DST), Department of Scientific and Industrial

Research (DSIR), and Department of Biotechnology (DBT).

Role of IT and Computer power in organizations can be easily seen that have transformed
the organizations and these can result in Strategic advantages to the companies.
For example models like CRM (Customer relationship management, ERP and Retail
Supply Chain management have changed the complexion of retailing from Fragmented to
Consolidated, from Local to Global from Traders to Retail Brand Managers and Market
Place to Market Space.
Case: The Race on IC Chips
* The transistor was first invented by U. S. firms in the 1950s. It was primarily used for
military purposes.
* The Japanese were utilizing it into consumer applications during the 1960s, and
captured most consumer electronics market by the mid 1970s
* U. S. also developed IC (Integrated Circuit) during the 1960s. The Japanese did not
have IC- related technology, though making transistors at that time. They have to import
IC chips from U. S. to produce electronics products.
* Recognizing their technological weakness, Japanese industry, in partnership with the
government, began to develop technologies needed to make ICs in 1970, and continued
the effort for years.
* By the late 1970s, the Japanese registered about 1,000 patents from the work, and
finally have technological capabilities equal to their U. S. counterparts.
They had become a key player in the world semiconductor market.
Messages from the case:
* Technological development:
- Needs a network consisting of developers and facilitators.
- Occurs in stages. It is often difficult to know what the next stage may be.
- Is determined not only by a developer, but also by national, international and political
forces.
Finally:
Concept of technology we use is not one where firms and countries can produce and use
innovations by dipping freely into a general "stock" or "pool" of technological
knowledge. Rather, innovation activities should be seen as firm specific, local and
cumulative. These processes - change in main branches of production, shifts in
geographic structure of production and trade - have important effects on the environment
through emissions from production and transportation, which will differ by country and
region.
We report the first results of the application of the method, examining both the likely
impacts and the regional implications of those impacts of three technologies -

Information Technology, Biotechnology and Nano-technology - that are likely to have the
most pervasive influence over the next 50 years.