Global Technology Management

Unit-V

Dr. R. JAYARAJ, M.A., PH.D.,

Assistant Professor (SG),
Karunya School of Management,
Coimbatore-614441.
 GLOBAL
TECHNOLOGY
MANAGEMENT
Technology and International Business
 Definition of Technology
 Technology refers to the theoretical and practical
knowledge, skills, and artifacts that can be used to
develop products and services as well as their
production and delivery systems
 Technology by this definition is not a product or
service, but is part of the underlying process used
to produce products and services.
Definition of Innovation
 The process of making improvements by
introducing something new that is used.

 Introduction of a new idea into the marketplace in

the form of a new product or service, or an
improvement in organization or process.
Definition of Invention
 A creation (a new device or process) resulting from
study and experimentation
 The creation of something in the mind
 Innovation Vs. Invention

Technology
Patents Invention Singular
Change

Commercialization Innovation Use Group

Model of the Process State
of Innovation
of
(Marquis, 1969)
Technology

Search, Solution
Recognition of experimentation through
technical & calculation invention
feasibility activity

Fusion into
Work out bugs Implementation
design concept & scale-up & use
& evaluation

Information readily Solution

Recognition of
available through
potential demand
adoption

1. Recognition 2. Idea formulation 3. Problem Solving 4. Solution 5. Development 6.Utilization & Diffusion

State of Societal Demand

Schumpeter’s Waves

NANO MEMS
Digital Network
Kondratieff Wave
Physical Products
 Manufacturing Categories
Physical products can be easily bifurcated based on their Manufacturing
Categories to provide managers with insight.

They are:
 Materials
 Fabrication and Assembly (F&A)
Physical Product Category
Materials

Based on a Transformation Process - which

elevates a raw material to a new and higher
customer valued state

ex: sand to glass, iron to steel

Physical Product Category
F&A
 F&A based physical products emphasize
systems integration.
 This process assembles components and

sub-components into a more valued product.

Ex: Autos and Computers
Service Products
 comprised both infrastructure (process) and a product
portion.
 Service products can be easily trifurcated for
management insight based on where the knowledge
lies in the service delivery.
 These knowledge based categories can provide
managers with insight. They are:
 Knowledge Based

 Knowledge Embedded

 Knowledge Extracted
Service Product Categories
 Knowledge Based
The value (knowledge) is resident in the human service
provider, not in the infrastructure process

ex: teacher, lawyer, etc.

Service Product Categories
 Knowledge Embedded
 The majority of value (knowledge) is resident
in the system that provides the service rather
than in the (Human) service provider
ex: M.D.s, ?
Bank teller,
Mickey Dees, etc.
Service Product Categories
 Knowledge Extracted
The entire value of the service is resident in the
system, there is no human point provider. Any
knowledge is provided by the user
ex: ATM’s
Candy Machines, etc.
Technology transfer
Technology transfer
 A technology developed by an organization for a
particular purpose was further given to other
entities in order to exploit its potential in some
areas.
 A transfer/transformation/transition process
between the technology originator/possessor and
the receiver
Technology Transfers: Positive and Negative
Effects
Technology Transfer Positive Negative

Product Sales Upgrades Consumption Affordable only to affluent

(Consumer) know how/consumer
education
Product Sales Upgrades production
(Industrial) process technologies;
technician/engineering
skills; lowers per unit
production costs/prices
Licensing, technology  Broadens, elevates
agreements; corporate R & technology bases and
D efforts workforce vocational and
scientific skills
Banking and Financial Mobilizes savings to create
institutions investment markets for
public/private sector-stock
market capital;
consumer/installment
credit for individuals and
business
segments
 
 
 
Displaces workers with
more intensive use of
capital
Only the wealthy benefit in
the short term and leads to
power concentrations;
possible unwanted foreign
influences encouraging
buyers to purchase goods
beyond their means.
Table Continued

Local procurement of Stimulus for private Easier for other foreign

materials and components enterprise/local initiatives firms to meet procurement
quality requirements

Establishment of Creates distribution Foreign control over

wholesale/retail infrastructure/expertise;
distribution systems increases customer
exposures to modern
goods & services
Worker training in Upgrades labor skills and
technologies and vocational bases
production know how
distribution; consumer
exposed to products that are
beyond their means to
purchase
For a minority only;
majority have insufficient
education

Management training in Increased managerial  

organizational know education and efficiency  
how/methods Only educated elites
benefit

Financial and accounting Planning and budgetary

skills control
 Channels of technology flow
 Public dissemination (spread in diff directions)
 Reverse engineering (the process of discovering the
technological principles of a device, object or system
through analysis of its structure, function and operation)
 Purposeful acquisition
 Licensing
 Franchise
 Joint venture
 Turkey project
 Foreign direct investment
 Technological consortium (agreement)& joint R&D
Technology transfer crossing
industries
 U.S. Department of defense
 1980 Stevenson-Wydler technology innovation act
 1986 technology transfer act
 1989 national competitiveness & technology transfer
act
 E.g., the 2G CDMA mobile technology
International technology transfer

 The goose-fleet pattern—the international

technology transfer from U.S. to Japan, and then
retransfer to four Asia Tigers, and Thailand,
Indonesia, Malaysia, China, Vietanam, etc.
 The macro view of international
technology transfer
 Counterparts
 the private enterprises of developed countries, LDs (transferor),
vs. the governments of less developed countries, LDCs
(transferee)
 The transferor
 economic gains of technology by strategically taking the
advantage of LDCs (transferees)
 The transferee
 the governmental interventions for GDP growth contributed
from the expected technology externalities of transfer
 prevent the indigenous resources and employment from being
exploited
 The processes of technology transfer are more political
than economic negotiation
 Analysis framework of international
transfer of technology
DCs supply side

transaction mechanism:
perceived transaction cost governance structure designing

micro hierarchy
.the nature of technology .wholly owned or majority-owned subsidiary
.selection, negotiation, drafting, (direct foreign investment package)
bonding cost of contracts .equity joint venture
.legal system for IPR .the contractual joint venture
.political stability .partnership or strategic alliance
.social context and cultural congruence .pure contract (licensing, technical assistance)
.financial and taxation policy
market.localized, customized, decentralized
.the education level and absorptive ability
macro vs. globalized, standardized, centralized
.market potential & economics of scale
demand side
LDCs
 Transfer concerning focus
 Technology transaction mode
 The nature of technology: general/specific, tacit/explicit, tangible/intangible,
mature/emerging, standardized/integrated, product design/process integration
 The phase of transfer :development/production/marketing
 Accompanying mechanism
 payments of transfer: time base or performance criteria—
installation/operation/profitability
 measurement of transfer: metering scale and information monitoring
 Circumstance & context
 Home country: the policy of leakage/security
 Host country: the policy of spillover/employment
 Evolutionary process
TECHNOLOGY
STRATEGY
What is a Successful Technology Strategy?

VALUE
CREATION
VALUE
DELIVERY
VALUE
CAPTURE
Effective Strategies Answer 3 Key Questions:

How will we
Create
value?

How will we How will we

Deliver value? Capture
value?
Successful strategies are dynamic

How will we
Create
value?

How will we How will we

Deliver value? Capture
value?
Creating the value:
Value creation is the primary aim of any business entity. Performing activities that
increase the value of goods or services to consumers.

Delivering value:

Whether you are working in a sales organization or a factory or an R&D lab, you are also
a part of a larger system of delivering value to customers. This end-to-end system that
collaborates to deliver value to customers is called a Value Delivery System.
Customers receive value every time they touch us or our products. This customer
lifecycle has been characterized by the following stages, which spell the unforgettable
word 'COILUSD': Choosing,Ordering, Installing, Learning, Using, Supporting,
Disposing

Capturing the Value:

Broad meaning of capturing the value is the way by which a business retains value it
has created in a prior step for its customers. Generally studied under operations
and technology management, typical questions for a firm trying to capture value
include How should we design the business model?
Where should we compete in the value chain?
How should we compete if standards are important?"
AND HAVE REAL
RESOURCES IN
PLACE BEHIND THEM….
WHY HAVE A
STRATEGY?

1. To make choices
OVERCOMMITMENT
DESTROYS
PRODUCTIVITY
 REASONS TO HAVE A
STRATEGY:

2. To be able to change it
A Key Framework: The industry life cycle

Era of Ferment/
Disruption

“Dominant design”
Maturity emerges

Incremental
Innovation
 The Industry Life Cycle as an S curve

Maturity
Performance

Takeoff
Discontinuity

Ferment

Time
INFORMATION TECHNOLOGY
AND INTERNATIONAL
BUSINESS
 India is the preferred outsourcing destination

 Great quality at a good price

 On time and on budget

 Passion and commitment

 Technical skills

 Process strength
 What is the Internet?
 The Largest computer network in the world (a
network of networks)
 Exchanges information seamlessly by using the
same open, non-proprietary standards and
protocols, within interconnected networks
 Forms a massive electronic communications
network
 Provides a true democratic communications forum
and has produced a democratization of
information
The Evolution of the Internet

1969 ARPANET
Late 1970s USENET (User’s Network)
Early 1980s Computer Science network
(CSNET) and BITNET
1986 NSFNET
Today Internet
 The Infrastructure of the Internet

 Commercial communications companies provide the

physical network backbone of the Internet
 Based on the networks of communications carriers
 Internet Service Providers:
 Backbone providers
 Access provider
 Reciprocal agreement
 Global IT Management
43
 Cultural, Political, and
44
Geoeconomic Challenges
 Cultural challenges
 Differences in languages
 Cultural interests
 Religions
 Customs
 Social attitudes
 Political philosophies
 Cultural, Political, Geoeconomic
Challenges (continued)
45

 Political challenges
 Rules regulating or prohibiting transfer of data across
their national boundaries
 Severe restrictions, taxes, or prohibitions against
imports of hardware and software
 Local content laws
 Reciprocal trade agreements
 Cultural, Political, Geoeconomic
Challenges (continued)
46

 Geoeconomic Challenges
 The effects of geography on the economic realities of
international business activities
 Distance
 Real-time communication
 Lack of good-quality telephone and telecommunications
service
 Lack of job skills
 Cost of living and labor costs
 Global e-Business Strategies
47

 Moving away from

 Autonomous foreign subsidiaries
 Autonomous foreign subsidiaries, dependent on
headquarters for new processes, products, and ideas
 Close management of worldwide operations by
headquarters
 Global e-Business Strategies
48
(continued)
 Moving toward
 Reliance on information systems and Internet
technologies to help integrate global business activities
 An integrated, cooperative worldwide hardware,
software, and Internet-based architecture for IT
platforms
 Global e-Business Applications
49

 IT applications depend on a variety of global

business drivers, caused by the nature of the
industry and its competitive or environmental
forces
 Global customers
 Global products
 Global operations
 Global resources
 Global collaboration
 Global IT Platforms
50

 The technology infrastructure

 Technically complex
 Major political and cultural implications
 Challenges
 Managing international data communications networks
 Network management issues
 Regulatory issues
 Technology issues
 Country-oriented issues
 Global IT Platforms (continued)
51

 The Internet as a Global IT Platform

 Companies can
 Expand markets
 Reduce communications and distribution costs
 Improve their profit margins
 Low cost interactive channel for communications and
data exchange
 Global IT Platforms (continued)
52
PROSPECTS AND PROBLEMS
FOR GLOBALIZATION
OF MNCS
What is Globalisation: The term ‘globalisation’, as we all know, has
different connotations, one of which refers to the growing
international integration of markets for goods, services, capital and
labour. The process of globalisation is certainly not new, although it
has changed its pace and character over time, facilitated by
technological developments. In fact, globalisation over the last three
decades or so, has been associated with greater intra-industry and
intermediate goods trade, reflecting more intense global
competition; increasing share of services in world output; increasing
asymmetry in the international mobility of labour and capital; and
totally unregulated mobility of international capital as opposed to
domestic capital (Reddy, 2001). The extent of globalisation of
different countries and of different markets continues to vary.
Globalisation --- Pros and Cons: Globalisation offers
both
opportunities and challenges to national economies.
 The opportunities have generally taken the form of access
to international markets for goods, services, technologies and
finance and reaping the benefits there from.
 The costs are reflected in the faster and wide-spread
propagation of adverse global or regional shocks, volatility of
output and employment, environmental damage in the quest to
be globally competitive, and exacerbation of income and wealth
inequalities within and across countries.