MTICTechnology Absorption

Topics in Syllabus• Technology Absorption

• Global Trends in Technology Management

Questions in Univ Exams

• Contrast between Collaboration, Licensing & Joint Ventures. Give

examples• What is joint venture abroad? Why we

need them ? Give Examples • Contract Research vs Cooperative

Research• Technology Adoption, Adaptation,

Absorption, Optimization & Upgradation• Diffusion of technology

What is Collaboration?

What is Collaboration? • Collaboration is working together to achieve a goal.• It is a recursive process where two or more people or

organizations work together to realize shared goals, — for example, an intriguing endeavor that is creative in nature—by sharing knowledge, learning and building consensus.

• Most collaboration requires leadership, although the form of leadership can be social within a decentralized and egalitarian group.

• In particular, teams that work collaboratively can obtain greater resources, recognition and reward when facing competition for finite resources.

• Collaboration is also present in opposing goals exhibiting the notion of adversial

collaboration.

General examples • Broadly defined, any technology that facilitates

linking of two or more humans to work together can be considered a collaborative tool. Viz Using Information & Communication Technologies for social networking, instant messaging, team spaces, web sharing, audio conferencing, video, and telephony etc

• The Internet - The low cost and nearly instantaneous sharing of ideas, knowledge, and skills has made collaborative work dramatically easier.

• Not only can a group cheaply communicate and test, but the wide reach of the Internet allows such groups to easily form in the first place, even among niche interests.

• The term massively distributed collaboration is used, to describe an emerging activity of wikis and electronic mailing lists and blogs and other content-creating virtual communities online.

General Examples • Commons-based peer production is a a term

used to describe a new model of economic production in which the creative energy of large numbers of people is coordinated (usually with the aid of the internet) into large, meaningful projects, mostly without traditional hierarchical organization or financial compensation.

• Examples of products created by means of commons-based peer production include Linux, a computer operating system; Slashdot, a news and announcements website; Kuro5hin, a discussion site for technology and culture; Wikipedia, an online encyclopaedia;

Enterprise (Internal) Collaboration Tools

• Traditional multi-functional teams• Many large companies are developing Enterprise

Collaboration Strategies and standardizing on a collaboration to allow their employees, customers and partners to intelligently connect and interact.

• Enterprise collaboration tools are centered around attaining collective intelligence and staff collaboration at the organization level, or with partners.

• These include features such as staff networking, expert recommendations, information sharing, expertise location, peer feedback, and real-time collaboration.

• At the personal level, this enables employees to enhance social awareness about their profiles and interactions

• Collaboration encompasses both asynchronous and synchronous methods of communication and serves as an umbrella term for a wide variety of software packages.

Enterprise (Internal) Collaboration Tools

• The most commonly associated form of synchronous collaboration is web conferencing, Cisco WebEx Meetings, HP Halo Telepresence Solutions, GoToMeeting Web Conferencing, or Microsoft Live Meeting, but the term can easily be applied to IP telephony, instant messaging, and rich video interaction with tele-presence, as well.

• Examples of asynchronous collaboration software include Cisco WebEx Connect, GoToMeeting, etc.

• The effectiveness of a collaborative effort is driven by three critical factors: - Communication - Content Management - Workflow control

What is Cooperative Research ? • Cooperative Research is based on the principles

of collaboration• Cooperative research is any research project that

is carried out by at least two persons / entities. • Often, entities / persons will choose to

collaborate to pool their areas of expertise - when a project is large or complex involves high risk , or involves huge funds.

• Many nations have set up cooperative research centres to promote collaborative R&D.

What is Cooperative Research ? • There can be some drawbacks to collaborative

research, however. • Sometimes it is difficult to know whether

collaboration will be fruitful. • A collaborator may be difficult to work with.• Another common pitfall is struggles over

authorship or ownership of the research.

- / Co operative & collaborative ventures strategic alliances

Strategic Alliances for Technology Transfer can be developed between the parties through following

routes:• Technical exchanges• - Cross licensing agreements• - Co production agreement between parties• Marketing agreements between parties• Joint product development program• Joint ventures with equity ownership

What is Licensing?

What is Licensing? • The verb license or grant licence means

to give permission.• A license may be granted by a party

("licensor") to another party ("licensee") as an element of an agreement between those parties. A short definition of a license is "an authorization (by the licensor) to use the licensed material (by the licensee).“

What is Licensing? • A licensor may grant a license under intellectual

property laws to authorize a use (such as copying software or using a (patented) invention) to a licensee, sparing the licensee from a claim of infringement brought by the licensor.

• A license under intellectual property commonly has several component parts beyond the grant itself, including a term, territory, renewal provisions, and other limitations deemed vital to the licensor. It is similar to assignment.

Examples: • Mass licensing of software• Trademark and brand licensing• Artwork and character licensing

Benefits of Licensing? To Licensor or Owner • Builds and strengthens the brand image beyond traditional

boundaries and builds brand value • Increases awareness of the brand and its core products

amongst consumers who otherwise might not be aware of brand.

• Helps to reinforce brand message and position in the marketplace.

• Attracts new customers to the brand name • Allows consumers to acquire authorized rather than illegal or

unauthorized products using the brand name, marks and logo.

• Enhances the importance of the brand name to existing customers

• Allows entry to additional or new trade channels • Protects trademarks by broadening the trade use of marks

• Generates revenue beyond the normal revenue and profit stream of the brand owner  

Benefits of Licensing? To Licensees or Manufacturers• Increases market share of core products through

brand acceptance • Opens new retail channels by channeling

appropriate brands to their proper niches. • Gains shelf space at retail by offering multiple

valid alternative profit solutions to the retailer • Increases awareness of product offerings • Attracts new customers to existing products

Benefits of Licensing? To Licensees or Manufacturers … contd… • Builds competitive advantage over companies

who compete only on price • Increases sales through a wider assortment of

products, giving reasons for additional space • Lends credibility to their products through brand

association • Generates incremental revenues through the

sale of licensed product over and above core non-branded products.

Disadvantages of Licensing? To Licensor or OwnerTo Licensees or Manufacturers

What is Joint Venture ?

What is Joint Venture ? • A joint venture is a business agreement in

which parties agree to develop, for a finite time, a new entity and new assets by contributing equity.

• A joint venture takes place when two parties come together to take on one project. In a joint venture, both parties make investment in the project in terms of money, time, and effort to build on the original concept.

• The parties exercise control over the enterprise and consequently share revenues, expenses and assets.

• Some major joint ventures include Dow Corning, Millor Coors, Sony Ericsson , Maruti Suzuki etc.

What is Joint Venture ? Foreign Joint Ventures into India – • India allows investments through Foreign Direct

Investment (FDI), meant for long-term controlling investments.

• Foreign companies can make investments or operate their business in a number of ways as given below: -

• � Liaison/representative office • � Project Office • � Branch Office• � 100% Wholly owned subsidiary • � Joint venture company

What is Joint Venture ? Foreign Joint Ventures into India – contd …• Any company set up with FDI has to be incorporated under the

Indian Companies Act with the Registrar of Companies and all Indian operations would be conducted through this company.

• i) Automatic Approval through Reserve Bank of India is available for all items/activities except select / few items / activities. The sector specific guidelines have been laid down in the Manual on Industrial Policy & Procedures in India.

• ii) FIPB approval is required for all other proposals not eligible for Automatic Approval.

• Applications to be submitted with full details to the Secretariat for Industrial Assistance (SIA) for the cases involving NRI/OCB investment and 100% EOU.

• For remaining cases, the applications may be submitted to Department of Economic Affairs, Ministry of Finance

What is Joint Venture ? Foreign Joint Ventures into India – contd …• Many sectors are subject to sectoral caps.• In some sectors, FDI is permitted upto 100%• FDI is prohibited under the Government / FIPB Route as

well as the Automatic Route in the following sectors:– i) Retail Trading (except single brand product

retailing) – ii) Atomic Energy– iii) Lottery Business– iv) Gambling and Betting– v) Business of Chit Fund– vi) Nidhi Company– vii) Agricultural

• Accordingly MNCs can enter into JV subject to sectoral caps.

What is Joint Venture ? Foreign Joint Ventures Abroad / Out of India – • RBI vide Notification No. FEMA 120/2004-RB dated

July 7, 2004, has notified the guidelines; and A Master Circular titled Direct Investment by Residents in JV/WOS Abroad dated July 1, 2009, contains updated guidelines.

• Direct investment outside India means investments, either under the Automatic Route or the Approval Route, by way of contribution to the capital or subscription to the Memorandum of Association of a foreign entity, signifying a long-term interest (setting up a Joint Venture (JV) or a Wholly Owned Subsidiary (WOS)) in the overseas entity.

What is Joint Venture ? Foreign Joint Ventures Abroad / Out of India – Guidelines contd…. • An Indian Party can make overseas direct

investment in any bonafide activity (except those that are specifically prohibited like real estate, banking business etc)

• Under the Automatic Route, an Indian Party does not require any prior approval from the Reserve Bank for setting up a JV/WOS abroad.

• The Indian Party can invest up to 400 per vent of its net worth (as per the last audited Balance Sheet) in JV / WOS for any lawful activity permitted by the host country.

What is Joint Venture ? Foreign Joint Ventures Abroad / Out of India – Guidelines contd…. • The ceiling of 400% of net worth will not be

applicable where the investment is made out of balances held in the EEFC account of the Indian party or out of funds raised through ADRs/GDRs;

• Investment in Pakistan is not allowed under the Automatic route. Investments in Nepal can be only in Indian Rupees. Investments in Bhutan are allowed in Indian Rupees and in freely convertible currencies.

• Proposals not covered by the conditions under the automatic route require the prior approval of the Reserve Bank.

What is Joint Venture ? Foreign Joint Ventures Abroad / Out of India – Guidelines contd…. • Some of the proposals which require prior approval are:• i) Overseas Investments in the energy and natural

resources sector exceeding 400% of the net worth of the Indian companies as on the date of the last audited balance sheet;

• ii) Investments in Overseas Unincorporated entities in the oil sector by resident corporates exceeding 400% of their net worth

• iii) Overseas Investments by proprietorship concerns and unregistered partnership firms satisfying certain eligibility criteria; and

• iv) Investments by Registered Trusts / Societies (satisfying certain eligibility criteria) engaged in the manufacturing / educational / hospital sector in the same sector in a JV / WOS outside India.

What is Contract Research ?

What is Contract Research ? • It is a method of outsourcing technology

development to external entities.• Under this route technology development work is

assigned to some external entity in return for compensation.

• This route is adopted when the organization has constraints / dis-incentives to go for in-house technology development.

• It has certain associated risks as well. Like … technological dependence, high costs, inappropriate of technologies, risk of acquisition of technology by competitor

• During last few decades many contract research organizations have emerged to cater to such requirements.

What is Technology Absorption?

What is Technology Absorption? • , Technology Absorption refers to the acquisition

, development assimilation & utilization of technological knowledge and capability by a firm or

. some macro entity from an external source It .occurs between transferring & receiving entities

• The technology absorption is wider in scope than . technology acquisition

• Technology absorbed without changing parameters of acquired technology is called Technology

. Adoption• Technology absorbed by changing certain

parameters of acquired technology is called .Technology Adaptation

What is Technology Adaptation? Technology Adaptation may arise due to following

:reasons• Non availability of supporting infrastructure• / For meeting location market specific needs• To make it compatible with existing plant &

machinery• Non availability of ancillary units for components• To meet legal requirements• , , Pressure from NGOs environmentalist human

. : rights group viz example Government insistence , to not to use BVO in soft drinks forced cola

.companies to change their formulations

Structure/ Components of Technology Absorption Technology Absorption involves following four basic

:components• – Hardware refers to particular physical structure of

components & also their logical layout which are subject matter of absorption

• - - Software refers to Know how of carrying out tasks to achieve goals & objectives

• - , Brainware refers to application & justification of hardware , - - .software development know what & know why of technology

, , , , That is what to employ how when where and ?why• - , Support Net refers to complex network of physical

– informational and socio economic transformations that support the proper use and functioning of given

technology.

Differences between Technology Acquisition and Technology

AbsorptionIf both Technology Acquisition & Technology Absorption

occur simultaneously, then there is no difference in two terms. Sometimes there may be time lag between two. In case of time lag, differences may be as follows:

• 1. Technology Acquisition - Focus is on acquiring . . technology i e becoming owner; Technology

Absorption - Focus is on putting the acquired ; . . technology to use i e reaping the benefits from technology acquired

• 2. Technology Acquisition - Leads to firm specific technological knowledge and advantage; Technology

Absorption - Leads to market competitive advantage

Differences between Technology Acquisition and Technology

AbsorptionDifferences contd:

• 3. Technology Acquisition - Requires substanical costs for acquistion of technology; Technology

Absorption - Inovolves some costs for putting the technology to use and leads to increase in

, .revenues improvement in efficiences etc• 4. Technology Acquisition - Precedes technology

absorption ; Technology Absorption - Succeeds technology acquisition

Mana gement of Technology Absorption by Organizations

• , / Generally enterprises organizations plan for / technology absorption within reasonable time

planned time as it provides following advantages – like early use of acquired technology and

, reaping benefits therefrom gaining technological .competitive edge etc

• Sometimes there could be delays in technology absorption due to variety of reasons.

• Delays in technology absorption could be harmful to the organization.

• Therefore technology absorption needs to properly managed by the organization.

Mana gement of Technology Absorption by Organizations

Organizations take following steps to manage technology absorption:

• Developing good understanding and mutual trust between technology transferor and technology recipient organizations

• , - Proper clearcut and well defined agreement between technology transferor and technology recipient

organizations• - - Developing time bound and target oriented schedule

for technology absorption• Top management support to the technology absportion• .

Mana gement of Technology Absorption by Organizations

Steps contd …• Use of multifunctional teams by the technology

acquiring organization• Regular review of the absorption progress by the

.highest level• Installation of effective communication system by

.the technology acquiring organization• ’ , Seeking workers particicpation involving one and

; all in the absorption process overcoming the resistance to change through education and .motivation through rewards etc

Mana gement of Technology Absorption by Organizations

Steps contd …• ; Hiring of requisite skilled workforce if same is not

, available seeking early training of own current / employees by technologists technicians from

.the transferor enterprise• By actively complying with various government

directives and requirements on technology .upgradation and technology absorption

Government Guidelines on Technology Absorption by

Organizations Due to variety of benefits of technology absorption,

national governments seek quick absorption of technology.

While seeking approval to Foreign Technology Transfer Agreements under the approval route

, from Government of India the technology / acquiring organizations enterprises are required

to indicate and commit timebound schedule for . technology absorption This puts pressure on

organizations to plan systematic and timebound .technology absorption

Government Guidelines on Technology Absorption by

Organizations Govt compliance contd … • , 217(1) In addition under Section of the Companies

, 1956, Act every company is required to attach a’ / ’ Board s Report Directors Report to every

Balance Sheet which is laid before a company in .general meeting

• ( ) According to subclause e of the above section217(1), , ’ amongst other things the Board s Report

shall deal with the steps taken for technology . absorption by the company

TECHNOLOGY DIFFUSION

TECHNOLOGY DIFFUSION• Diffusion is the process by which a new idea or new

product is accepted by the market. • Technology Diffusion means the spread of

applications / usage of a new technology and its related products, services or processes from one nation to another; from one entity to another; from one industry to another; from the owner entity to user or supplier; and from current user to the prospective user.

•  Technology Diffusion means the study of how, why, and at what rate new ideas and technology spread across the economy.

•  

TECHNOLOGY DIFFUSION• Technology diffusion carries wide meaning (as

also discussed in characteristics / features below).

• In a narrow sense, sometimes, Technology Diffusion is also known as Diffusion of Innovation as technology gets mainly diffused through its new usages or applications in the form of new products, services or processes.

Pattern of Technology Diffusion• According to Everett M Rogers’ theory, the diffusion takes

the shape of bell curve in terms of number of adopters over the passage of time and takes the shape of S-curve or Logistic curve in terms of cumulative number of adopters over the passage of time.

• Various studies show that with the passage of time, technology and innovations get diffused from innovators to followers; and lastly to laggards. the trend of the percentage of organizations that adopt a new technology and innovations over a period of time - in cumulative terms – takes the shape of S– Curve; also called Logistic Curve. It is shown in the figure asfollows:

•  

Pattern of Technology Diffusion•  

Pattern of Technology Diffusion• . . , During the intial stage i e innovation stage

technology and innovation gets diffused within the . innovative organizations Such organizations usually

.follow technology leadership strategy• . . , During next stage i e consolidation stage diffusion

takes place amongst major competitors.• , . . , During the last stage i e mature technology stage

. , diffusion spreads to laggards These laggards are, - usually risk averse and small organizations or small .market players

• / The rate of learnings spread amongst various entities is influenced by profitability and investment

. required

Product DiffusionProduct diffusion is a case of innovation diffusion.

According to Everett M. Rogers, for any given product category, there are five categories of product adopters:

• Innovators – venturesome, educated, use multiple information sources, possess greater propensity to take risk (2.5%),

• Early adopters – social leaders, popular, educated (13.5%),.

• Early majority – deliberate, many informal social contacts (34%),.

• Late majority – sceptical, traditional, lower socio-economic status (34%)

• Laggards – neighbours and friends are main information sources, fear of debt (16%).

Product DiffusionProduct diffusion takes the shape of bell curve in

terms of number of adopters over the passage of time and takes the shape of S-curve in terms of cumulative number of adopters over the passage of time. This is shown in the figure as follows.

Product Diffusion:

Characteristics of Technology Diffusion

• - . Diffusion is not one way traffic The innovator can .also learn from imitator

• - - . Diffusion is not once for all occurance It is .cyclical in nature

• :Diffusion can take place in varying degrees IntraFirm - diffusion of lowest degree ; - InterFirm

diffusion of medium degree; - Economy wide .diffusion of highest degree

• Diffusion can take place in variety of forms … viz , product service or a process: use & production;

stock of technological knowledge

Characteristics of Technology Diffusion

• . . - The pattern of diffusion i e shape of S curve isI nfluenced by profitability and i nvestment

, required

What is Optimization?

What is Optimization?

• According to Merriam – Webster Dictionary – Optimization means – to make as perfect, effective or functional as possible

What is Optimization?• In mathematics , computational science, or

management science, mathematical optimization etc refers to the selection of a best element / alternative from some set of available alternatives.

• In the simplest case, an optimization problem consists of maximizing or minimizing a real function by systematically choosing input values from within an allowed set and computing the value of the function.

• More generally, optimization includes finding "best available" values of some objective function given a defined domain, including a variety of different types of objective functions and different types of domains.

• Optimization in technology development & usage implies maximizing the benefits & minimizing the

costs

What is Upgradation?

What is Upgradation?• The term upgrade refers to the replacement of a

product / object with a newer version of the same product / object .

• Example … Oracle 8i to 9i • It is most often used in computing and electronics,

generally meaning a replacement of existing hardware, software or firmware with a newer or better version, in order to bring the system up to date or to improve its characteristics.

• Audiophiles use the word upgrade to describe the replacement of a product with a better-quality product with the aim of bringing enhancements to sound quality.

• Technological up gradation means developing & using better & upto date applications of

technology

What are Global Trends in Technology Management

What are Global Trends in Technology Management

Prior to 1990, rate of technological change has been slow due to cold war between USA & USSR, restriction on MNCs, existence of high trade barriers across countries. 1990Since s rate of technological change has become faster.

This increased rate of technological change is noticeable in following areas:

• Most of nations have adopted formal technology development policy and aim at gaining / .technological progress advancement

• ( Innovations new product / process ) developments are no more confined to

. developed world They can take place, .anywhere anytime

What are Global Trends in Technology Management

Contd …• Globalisation of technology is taking place at a

faster pace due to variety of factors• Technological development is becoming highly

- . customer oriented As the customer needs & tastes , are increasing and changing technological changes are increasing.

• Decreasing payback period – to derive benefits of technology development

• Time compression – decrease in time available in various activities / phases of technology development

• There is faster movement of products and services from Research & Development center to markets

( ).reduction in lead times

What are Global Trends in Technology Management

Contd …• There is increasing focus on simplification of

products viz journey from earlier big computers to ; -modern portable computers emerging nano

.technology• ( There is more focus on ergonomics human

) convenience to use• Technology life cycle is getting shorter due to fast

technological changes or technological.discontinuties

• Product life cycles are decreasing due to fast , changes in consumer needs increasing awareness

.about new or improved technologies• Technological change may occur not only due to

/ / development of improved hybrid new technology but it can occur even due to some development in

.unrelated technology