Master of Business Administration in Information System

MBA- Semester IV
MI0031- Technology Management – 2 Credits
Assignment 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 being
inherited by India?

Ans. Key Issues in Managing Technological Innovation

Technology is man-made. It is a means to enhance the physical and mental

capability of human beings; it is also an instrument to transform natural
resources into useful goods; a tool for conditioning the environment; it is a
resource 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 of
them. 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 variety

in 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 planetary
system and sending back data.

· Nuclear energy – The promise of unlimited energy damped by

environmental concerns.

Managing technology implies use of new technology to gain competitive

advantages. It is not an easy problem to manage, partly because of the
differing cultures in an organization. Technology is often considered to be the
domain of the scientific and engineering personnel of an organization.
However, successful business application of technology calls for strategic
decisions about technology by personnel in other functional areas including
production, 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 the
invention of technical knowledge to the commercialization of products and
processes 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 country’s 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 a
consensus 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 of
growth and recessions in the world economy, which span fifty to sixty years.
Mensch found that ‘clusters’ of new technological applications precede and
may account for the upswings in these cycles. As the peak of the cycle is
reached and a downturn begins, the economy’s physical and technological
infrastructure is committed to mature technologies in which there are few
opportunities for further improvements, and there is little incentive to apply
new 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 based
on new technologies.

Technology and comparative advantage:

A further indication of the importance of technology at the national level is
the explanation that nations will export in industries where they not only
have a comparative advantage but also where their firms have a
technological lead. For example, the Korean shipbuilding industry became an
international leader by expanding the size of its shipyards, adopting new
building techniques that increased productivity and developing the technical
capacity to produce more sophisticated vessels. A combination of superior
organization, skills and technology secured their competitive leadership, not
simply more abundant or cheaper resources.

Table 1.1 presents a list of emerging technologies. Emerging technologies

are new and potentially disruptive technologies which are considered by
some to be critical to humanity’s future. A disruptive technology supersedes
or marginalizes an existing dominant technology or status quo product in the
market. Only new and potentially disruptive technologies should be included
in the list. e.g., information technology is an example of a technology which
has already proven disruptive, whereas artificial intelligence is a subset
information technology with the potential of becoming disruptive in its own
right.

Technologies
Emerging potentially madeMost important
technology obsolete applications

Creation of intelligent devices,

Artificial which could replace humans
intelligence Human brain for a number of tasks.

Creation of species,
modification of species to be
Biotechnology Evolution more fit for a purpose.

Nanomaterials Steel, Aluminium Stronger and lighter materials

Nanorobotics Immune system Help the body to heal quickly.

Jet engines,
Scramjet Rockets Very fast air travel

Wireless Wired Ensures connectivity

communication communication everywhere.

Table 1.1: Emerging technologies and their applications

Technology is generally a combination of hardware and software with relative

proportions varying from one extreme to the other. Hardware is any physical
product, component or means, while software is the know-how, technique or
procedure. Hardware technology again can be of two types, namely, the end-
use product type such as automobiles, computers, televisions, and the
production 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 and
experience.

Technology has been viewed differently by different people. Some view

technology as a source of wealth, well-being, and above all, as an instrument
of power to dominate nature and societies. Others view technology as
something that has enslaved human beings and destroyed jobs, environment
and social values. While there is a considerable concern that the use and
abuse of technology is leading our societies towards disaster, there is also
considerable agreement that further development of human society is
possible 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 have
a relatively large population base, which is increasing very rapidly; (ii) Their
technological base is very small and ineffective; and (iii) their natural
resources base is being depleted due to inefficient use and indiscriminate
export. To acquire and master the use of technology for development, it is
essential 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 various
societies. There are many ways of classifying human needs. Table 1.2
indicates the implications of technological applications (positive effects and
negative effects) with respect to various human need factors.
Various humanDirect and indirect effects of
need factors Technology

Positive effects Negative effects

Pollution,
destruction of
Control of temperature, humidity,natural cycles,
Air impurities and quantity and equilibrium

Pollution,
destruction of
Increasing supply source (ground, sea);marine life;
control of supply, temperature andsinking of cities;
Water impurity frequent flooding

Chemical
contaminations
and diseases;
destruction of
Improved agricultural productivity;wildlife, forests,
control of food quality, variety andand fishing
Food supply grounds

Artificial
surroundings and
Improved living quarters and materialsanti-social living,
of construction; better utility servicesdestruction of the
Shelter and land uses beauty of Nature

Accumulation of
means of warfare
and the menace
of large-scale
destruction of
Development of civilian technologies aslife; risk of bio-
by-products of war technologies (space,weapons and
Warfare nuclear, remote-controlled) nuclear war

Exploitations of
non-renewable
Efficient production of high qualityresources and
Clothing clothing and apparel consumer appeal

Population
explosion; break
in family
structure; drug
Reduction in mortality, increase in lifeabuses; side
expectancy; controlled birth, bettereffects of
Health medical care medications

Culture shock;
co-ordination of
sabotage by
Increased contact; reduced need fordisruptive forces;
physical movement; improved audio-raising false
Communi-cation video transmission aspirations
Table 1.2: Important implications of technological world

(Source: Sharif Nawaz, Management of Technology Transfer and

Development, 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. These
include R&D, invention, innovation, technology development, technology
strategies, technology absorption and adaptation, technology transfer,
technology forecast, technology assessment, technology planning,
technology information, industrial property systems, code of conduct, and
technology management. It is difficult to find a unique definition for
technology for it has been defined in many ways. One definition identifies
technology as an application of knowledge that leads to production and
marketing of goods and services. According to Fredrick Betz, technology
develops business by providing technical knowledge for the goods and
services 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 a
company. Technology is often thought to be solely the domain of the
scientific and engineering personnel of an organization. Yet, successful
business 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 with
business strategy. This is the essence of technology management.

Innovation and Invention – Invention is an idea for a novel product or

process. 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 step
is 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 a
patent. 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 technology

development framework and there are several ways of condensing these into
a manageable number of groupings. Table 1.3 shows these factors grouped
around six broad dimensions:

1. Objectives
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, a

group or society to master management of the factors that condition
technical change so as to improve its economic, social and cultural
environment 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 modern
technology 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 the
“input” 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 are
considered 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.

The above points underline the need for interweaving the technology
framework with other areas of business in an enterprise. The idea of a
technological innovation should be based or linked with the potential market
and the technology team should closely interact with the rest of the divisions
of the enterprise leading to successful logical conclusions in terms of
products/ processes to be developed as per the objectives set in the
beginning. This strategy is best reflected in the form of a “Business Plan” of
an 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 to

the 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 c. Benefits to customers

. Business objectives . Market

. Management and organization . Marketing strategy

b. Products or services d. Capitalization

. Product description . Capital requirements

. Technological background . Financial forecasts

.Competition. . Benefits to investors

It is thus clear from the above that technology and technology management
are 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 technology
cannot compete at the same price level with a corporation superior in
technology. The reason why superior technology alone is not sufficient is that
business is a system, and there are many other systems (or sub-systems)
that determine business success. Therefore, if technology is to give a
competitive edge, management must manage it as a part of the business
system. Technological innovation can be integrated with production,
marketing, finance and personnel into a balanced business system. Managing
technology essentially involves four central concepts: New ventures,
Innovation, Research, and Research infrastructure.

New Ventures: Although new ventures centred around technology are an

important class of business, new hi-tech ventures are difficult because they
involve two major risks: developing new products and creating new markets.
Ideas central to new ventures are concerned with entrepreneurial
management, overall business plan, and the dynamics of organizational
growth.

Innovation: It denotes the whole span of activity from creating new

technological knowledge to implementing it in new business. Ideas central to
innovation include concepts such as types of innovation, processes of
innovation, the technology S-curve, technology life cycle, economic life
cycles, sources of innovation, business opportunities in a technological
system, marketing and new technology, corporate diversification through
new ventures, and technology in manufacturing strategies.

Research: Technological change is new knowledge about what things to

produce and how to produce them; and in the corporation, new knowledge
often comes from corporate research. The corporate laboratory is charged
with the responsibility of looking after the present and future productivity of
the corporation. Managing and integrating corporate research with other
management functions and strategies is essential to technology
management. Research management includes organization of research,
project management, research personnel, and corporate research strategy.

Research infrastructure: The technologies of a corporation do not exist in

a vacuum but are part of a larger technological context, first of the industry,
then of the nation, and then of the world. This larger context is a research
and development infrastructure, and it has an important influence on the
competitive conditions in a country. With the expansion and increase of
intensity of international competition, the R&D infrastructure of a nation
plays a critical role in economic competition.

Managing technology is taking risks in novel products and developing new

markets. In the world of rapid technological progress and changing
competitive environments and market needs, firms must pay increasing
attention to developing new innovative products for domestic and world
markets, and therefore an efficient technology management system is
important for them.

Appropriate Technology

Appropriate Technology (AT) is being mindful of what we’re doing and aware
of the consequences. Appropriate technology works from the bottom up; it is
not an overlay to the situation; it is a genuine grassroots solution to
economic needs. In the Industrial World small businesses account for more
technological advances in their areas of expertise than government
supported researchers or research departments in massive corporations.
Third World craftspeople, farmers and other villagers invent, create, and
contribute 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 can
therefore suggest or in fact, invent the technological innovations necessary
to meet those needs. Not only that, local people can prioritize solutions to
save precious funding and labour. Planners and those who want to help
others grapple with food and energy problems are wise to include local
people in the early stages of project vision. The result is consistency in the
carry-through of the work by locals and continued maintenance and interest
in the well-being of the project over the long haul.

The definition of "Appropriate Technology" changes with each situation. It’s

not appropriate to install solar modules in a place with very little sun, a wind
generator in a place with little or no wind. What’s appropriate in a large
urban location is very different from what’s appropriate in a remote, isolated
environment. One quality that remains the same, however, is taking care of
things. In each situation, the essence of AT is that of appreciating, helping,
and caring. Planned obsolescence, throw-away products, poor quality all go
against intelligent decision-making and the true spirit of appropriate
technology.

Any technology is ‘appropriate’ at the time of development, with respect to

the surroundings for which it has been developed, and in accordance with the
objective function used for development. It may or may not be appropriate at
the same place at a different time, because the surroundings and/or
objective 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 value
judgment of those involved.

The surroundings differ not only from place to place but also over time. With
the passage of time and application of technologies almost all elements of
the surroundings change for better or worse. Although in general two
surroundings are unlikely to be identical, for any particular technology many
apparently different surroundings may in fact be considered similar. The
following examples will illustrate the concept of appropriateness of
technologies:

DDT was an appropriate pesticide at the place and time of original

application. However, after sometime it became inappropriate even at the
place of origin and it is banned in industrialized countries. DDT is still
considered to be appropriate in many developing countries as the specific
surroundings and objectives are collectively judged to be similar to those of
the place and time of original application.

Coal based technology for power generation was very appropriate at one
time, but became inappropriate due to technological substitution process.
Now with further change in the surroundings (with respect to resource aspect
particularly) the coal-based technology has become appropriate again.
Because of the changes in the surroundings, technologies once labelled
inappropriate can become appropriate technologies in the future.
Technologies such as electric tooth brush and cable car etc., are appropriate
only 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 of
the accepted criteria for selecting appropriate technologies in the
contemporary situation are considered below:

· It should primarily aim at meeting the basic needs of rural people; it should
be 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 School

professor Clayton M. Christensen to describe a new technology that
unexpectedly displaces an established technology. In his 1997 best-selling
book, "The Innovator’s Dilemma," Christensen separates new technology into
two categories: sustaining and disruptive. Sustaining technology relies on
incremental improvements to an already established technology. Disruptive
technology lacks refinement, often has performance problems because it is
new, appeals to a limited audience, and may not yet have a proven practical
application. (Such was the case with Alexander Graham Bell’s "electrical
speech 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 dominant
technology or status quo product in the market. Disruptive innovations can
be 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 disruptive
technology 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, lower
capacity but smaller-sized hard disks did for newly developed notebook
computers in the 1980s) or by successively moving up-market through
performance 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 least

profitable customer, who is happy with a good enough product. This type of
customer is not willing to pay premium for enhancements in product
functionality. Once the disruptor has gained foothold in this customer
segment, 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, the
disruptor 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 on
its 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 Linux
Operating System (OS) when introduced was inferior in performance to other
server operating systems like Unix and Windows NT. But the Linux OS
distributed through Red Hat is supposed to be inexpensive compared to other
server operating systems. After years of improvements in this easily
available 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 several
examples where the disruptive technology outperforms the existing
technology but is not adopted by existing majors in the market. This
situation occurs in industries with a high investment into the older
technology. 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) the
older infrastructure. It may simply be the most cost effective for the existing
player to "milk" the current investment during its decline – mostly by
insufficient maintenance and lack of progressive improvement to maintain
the long term utility of the existing facilities. A new player is not faced with
such 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 for
almost one-third of total production, has been generally operating under
controlled and regulated economy, in other words, assured markets. The
industry did not generally realize the real need for international
competitiveness in most of the sectors. It, therefore, did not give adequate
attention 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 several
instances where Indian companies have been able to develop and produce
products for internationally competitive markets. Punjab Tractors, Tata
Automobiles, Amul Food, certain drugs and chemicals produced by some
firms, are some examples where Indian companies have excelled. Similarly,
some of the R&D institutions have developed and commercialized
technologies in areas such as drugs and Pharmaceuticals, chemicals, food
technology, computer software etc.

The Indian industrial production has been substantially based on imported

technologies, accompanied by import substitution efforts through indigenous
sources. It is recognized that a large number of industrial products today are
based on obsolete technologies which are not cost-effective and consume lot
of energy. Further, they are not friendly to the environment, and their quality
is not of desired level. Since Indian industry has largely enjoyed monopolistic
markets, their interactions with S&T based institutions, R&D laboratories, and
academic institutions have been rather limited, and their R&D expenditures
have also been much less than the desired levels (when compared to
investments in R&D by industry in developed or industrially advanced
countries). In fact, there appears to be a technology paradox in India as far
as S&T is concerned. On the one hand, we have developed capabilities of
high 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 imported
technologies 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
technology. With regard to the integrated framework for technology
choice, explain the three stages used for carrying out the study.
Ans. Where a firm wants to harness a new technology which has to be
developed, ab initio, the company has to make some basic decisions. Thus,
whenever the resources required for the development of new product or
process are more, the acquisitions decisions are correspondingly more
important and complex. Also, the company has to consider its R&D
operational experience in relation to its actual need for the technology to be
acquired. Again, where strong competition is expected and market lead time
is important the manner of technology acquisition can become critical.

Acquisition of technology from collaborators is a major strategy for bridging

the technology gaps in a developing country like India. Having missed the
Industrial Revolution of the 18th century, which was really the take-off point
in technology race in developed countries, India started its technology race
nearly 100 years behind the developed countries, save, in some specific
areas. Fortunately, however, during the last 40 years since Independence
this technology gap has been bridged to some extent, due to large-scale
import of technology from the developed countries. Over 13,000
collaboration agreements have been concluded between Indian and foreign
companies since Independence. An analysis of foreign collaborations
approved during the last ten years shows that more than 64% of the
approvals were front only four countries viz. USA, West Germany, UK and
Japan, which proves that they are the major players in the technology
market (DGTD data).

Hence, the fastest way to bridge the technological gap is by import of

technology through collaborations. In many cases, it would also be cost
effective to import / buy technology than develop it through in-house R&D
efforts. It must, however, be borne in mind that collaborations per seare not
bad, but dependence on collaborations is bad. Hence, the role of self-reliance
in Technology Acquisition should not be lost sight of.

Options for technology acquisition are linked to a large extent on policy

environment. Whenever economic policies of the country do not permit the
foreign suppliers to freely sell their goods and services in the domestic
market, they are more willing to sell technologies for their products. It is
because they realize that the only way to enter the domestic market is
through 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 LDC’s are
held with developed countries, there is considerable difference in the
technological capabilities of the buyer and seller of technology, which
adversely affects the bargaining power of the buyer organisation in a
developing country. Such organisations must learn to successfully negotiate
and conclude collaboration agreements on best possible terms.
Technology acquisition is the process by which a company acquires the rights
to use and exploit a technology for the purpose of improving or renewing
processes, products or services. It does not include retailed or mass market
off the shelf software which is generally governed by non-negotiable "shrink
wrapped" licences.

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

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

Technology Acquisition is a huge area and the productivity improvement fund

targets a specific part of the technology acquisition process. Companies
applying for funding for technology acquisition under this fund will be
required 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 costs
involved 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 the
commitment 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 the
evaluation of the prospective acquisition. Also, it is important that following
the purchase, that the operations can be effectively integrated and that there
is no undue loss of key staff.

3. Enter into joint ventures

The costs are shared but so are the benefits of the new technology. Where
the risks are high and the costs heavy, membership of a research consortium
becomes a more attractive option. There is also the co-development of new
products or processes, such as between a key supplier and a major
customer.

4. Enter into research contract

R&D contracts can be placed with research associations, universities or
consultants. 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 be

anything from the right to use a particular patent to a complete package,
which includes know-how agreements, commissioning assistance for new
plant 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, Quality

circles, 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 both
objective and subjective factors. Therefore, technology choice decisions
making should be an integrated model which allows the users to rank criteria
and alternatives either as a group or as an individual. It is necessary to
develop a general frame work for technology choice. It is observed from the
literature that no generalized, acceptable framework or methodology was
proposed for technology choice decision making. Such a framework is
essential for researchers and analysts, otherwise, every individual will follow
whatever he feels right. Such a generalized framework brings in uniformity
and understanding among the people carrying out such studies. Therefore,
the applications of technology choice methods that are available now are
thoroughly probed. A synthesis of various approaches is carried out, to
evolve the basis for developing an integrated framework for technology
choice.

In this integrated framework for technology choice, study is carried out in

three stages, namely (i) Decision factors identification, (ii) Alternative
technologies 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 factors
related to technology choice of the given process.
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 hopes
to gain from the new technology. The need of the new technology is to be
assessed based on the internal strengths, weaknesses, opportunities, and
constraints. Based on the analysis, the objectives of technology choice
making are to be identified. One can go for technology choice for any of the
following 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 reasons
cited above, the decisions may be;

i) Evaluating appropriateness of all the available alternatives and selecting

the best one,

ii) Improving the existing technology for additional capacity or adding the
extra 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 latest

developments 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 related
to acquiring a new technology. The constraints are as follows: ‘amount of
capital that can be spend on the new technology’, ‘allowable limits of
production capacity’, ‘technical skills and knowledge levels of local
manpower’, etc. The objectives are as follows: ‘utilization of local available
manpower and raw materials’, ‘technology self-reliance’, ‘technology
leadership or follower-ship’, ‘ambition to enter into global markets’, ‘future
growth’ , etc. The objectives and the constraints are governed by external
and internal factors. The external factors are market competition and
government regulations. For example, based on the market competition, the
permissible limits for productivity and quality of production are to be fixed.
And to take the advantage of local government incentives, the allowable
limits for production capacity and the preferable locations for plant site are to
be decided. The internal factors are ‘resources availability’, ’skills and
knowledge availability’, ‘raw materials availability’, etc. For example, based
on the type and the amount of natural resource reserves, the permissible raw
materials are to be decided. And based on the technical skills and the
knowledge levels of local manpower, the allowable limits for training
requirements are to be decided.

Generally, the objectives of public (government) and private firms in

developing countries may vary .The private firms mostly look for more profits
and 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 and

maintenance of related industry, is to be formed to evaluate the priorities of
the alternative technologies. The number of experts in the group may depend
upon their availability. It is always better to choose experts from different
backgrounds, i.e., economists, academicians, researchers, production and
operation 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 and
testing, pilot plant, and commercialization stages. There are certain risks and
benefits in choosing a technology at each stage. For the commercialized
technologies, expertise on the production and maintenance problems is
readily available. Therefore to minimize the risks, commercial technologies
are preferable for any new entrepreneur or for locations where availability of
technical expertise is limited. The technologies which are in the other stages
of development regularly require an in-house R&D support to overcome the
day to day operational problems. As such the selection of technologies in
those stages involves high risk. However anyone who wants to take
advantages 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 alternative’s

characteristics are with in the specified objectives and constraints or not. For
example, if the amount of capital required for any alternative exceeds the
maximum limits specified in the objectives and constraints or if the pollutant
levels from the emissions of an alternative exceeds the government
regulations norms or if a particular raw material required for any alternative
falls in the list of government banned materials, such alternatives must be
eliminated from further analysis. Similarly alternatives are verified whether
they are with in the specified characteristics of other objectives and
constraints. Short-listing of the alternatives will reduce the extra calculation
burden. The short-listed alternatives are called potential alternatives. Only
the 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 identified
to compare the alternatives. The key elements should include various factors
related to economic, social, political, technical, and environmental aspects of
those 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 and

maintenance cost, etc.

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

· Political: Government regulations.

· Technical: quality of production, productivity, operational flexibility, type

and quantity of raw materials, amount of energy requirement, amount of
training requirement for employees, waste recycling possibilities, etc.

· Environmental: amounts of each of the solid, liquid, gaseous, and noise

pollution levels.

Q.3. Discuss the role of Technology Transfer and its key factors as
applicable to an organization? What do you understand by a
technology package and what are its features? List the initiatives of
India Government in improving technology absorption?

Ans. Meaning of Technology Transfer:- Transfer, as defined, means the

acquiring through purchase and use of technology. Therefore, the definition
of technology transfer is the acquisition and use of knowledge. There is no
transfer of technology unless and until the technical knowledge is put to use.
Technology transfer is not restricted here only to scientific or engineering
items. The manufacturing, marketing, distribution and customer service are
among the factors that are included in technology transfer.

The key factors in technology transfer include:

· Transplantation of technology involves shift from one set of well-defined
conditions to another set in which at least one key variable may differ.
Secondly, the recipient may apply the technology to a different purpose from
that of the supplier.

· A sense of opportunism prevails in technology transfer, whether justified or

not.

· The transfer process embraces a rich variety of mechanisms and

relationships between recipient and donor (supplier of technology) .The
process can vary from a routine peopleless passive transfer to turnkey
contract 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 else’s problems.

Adoption of such outside solution to solve an ‘inside’ problem is technology
transfer. 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 only
for using foreign brand names. It could be for a grass-root project or for
further technological requirements of an existing plant, or for modernisation
or enhancement of a product capability. A foreign technology package may
consist of all or any of the aspects, such as product design, process or
production know-how, systems engineering, application information, tailor-
made equipment and/or their designs, technical services regarding
maintenance/ 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 in

improvements of technology used in the existing manufacturing facilities
· Supplies of hardware and proprietary equipment and their designs

Adoption

Adoption of a technology is a process under which the various features of the

technology which are the subject of transfer are suitably modified, changed
or altered keeping in view the needs of the buyer. In other words, the needs
of the buyer of technology crystallized and the supplier makes suitable
modifications in the technology being supplied so that it conforms as far as
possible, to the requirements of the buyer. This in essence would mean that
a foreign technology is scaled up or down or modified where necessary, by
the 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 this
stage, a number of alterations and modifications to suit the indigenous
conditions are made and they may relate to the use of raw materials/
components manufactured, practical difficulties in down scaling etc. Thus, the
particular plant in India could gear itself up to meet the desired, capacity,
production, product quality and. other related aspects, as planned. The
adaptation exercise covers both product modifications as well as product
technology 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 a

position to be further optimised and upgraded. Technology absorption
involves ‘Know-why’ exercises, basic investigations into the product and/ or
process and/ or systems. To avoid further dependence, technology
absorption requires R&D projects in know-why, optimisation and
improvement of product/ process/ systems and related equipment. Such
efforts encompass design investigations, alternate raw materials/
components, modifications to suit Indian requirements, etc. Successful
projects in these areas will lead to achieving technology absorption
capabilities.

Optimization

After understanding the relevant features of technology, further exercises in

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

Improvement and upgradation

Capability in technology absorption and optimization can lead to further
exercises in improving the existing products and processes by R&D efforts of
industry and other associated research organisations. This will enable
industry to meet the changes in technology of the product or processes.
Technology upgradation exercises lead to industry’s efforts in extending its
know-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 shown

in Figure 8.1. It will be seen that Technology Absorption activity is taken up
only after a project is executed through acquired technology or when the
company diversifies or faces threats from market forces to update its
products or processes. Figures 8.2 and 8.3 explain the process of "know-

why" arising out of imported "know-how". "Know-why" exercises lead to

better 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 and
absorption of imported technology. There is also a stipulation with respect to
this in the terms and conditions of foreign collaborations. However, it has not
been very effective. While formal extensions of collaborations have not been
numerous in comparison to the number of new collaborations, Indian
industry 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, but
they are also likely to become obsolete as the years pass by unless
necessary efforts to catch up with technical changes are made. Industry, in
general, stays at a particular level for a number of years and then considers
a jump in product range or volume of production through further technology
induction. Pursuant to the Technology Policy Statement, the Government had
stipulated that industries using technologies costing more than a payment of
Rs.2 cr. should bring out comprehensive Technology Absorption, Adaptation
and Improvement (TAAI) plans. Government has also directed industry to
submit annual returns for technology implementation and absorption.