Technological Factors affecting MNCs

Technological Factors Affecting MNCsPresented ByShamal Firake(37)Jemy Romany(36)Pooja Pawar(23)Dipti Mourya()Prashant Mane (12)Sanjeev Jha(34)Harsh Daxini(17)

AgendaIntroductionHistoryMotive & PurposeFactorsAppropriability TheoryKey gains from India perspectiveConclusion

IntroductionA Technological Process is a means to make and improve products and services. For example, the traditional manner of 'printing' magazines involved a mechanical printing press. Now, a new technological process has been developed to digitize the magazine to be transmitted and stored electronically.

Technology is a much more broader concept than many people today think it is. It is the application of knowledge to the world that allows people to affect their environment by controlling or changing it.

Technological change is improvement in the 'art' of making products or developing processes.IntroductionMultinational corporations have long been recognized as both major creators of technology and as conduits of technology transfer. Technology transfer can happen directly, when the affiliate licenses the technology from the parent, or indirectly, when the affiliate imports intermediate goods with embodied technology.The United States is a major seller of technology, accounting for around 50% of world royalties and license fee receipts (World Development Indicators), and trade in intermediate inputs in the U.S. accounts for half of total trade in goods (Miroudot et al. 2009). U.S. Multinational Corporations (MNC) are important conduits of technology transfer, with around two-thirds of royalties and license receipts coming from intra-.rm transactions and approximately 60% of total trade within U.S. multinationals being trade in intermediate inputs (The U.S. Bureau of Economic Analysis).HistoryThe multinational corporations have their beginnings in the Industrial Revolution.

The traditions and ways of working MNC are called through "administrative Legacy". IT has given power to operate in ways never before thought possible.

Utilization of IT has been key element in making possible the development of entirely new International business strategies. The new options that have become available and Technology have started to change the complexion of international competition include the following:

HistoryGlobal Inventory Management ---- Manufacturing firms on worldwide basis are finding IT systems useful for managing inventory at the global level even though this management requires tight timing and logistic capabilities. Helps to improve customer satisfaction. New era of cloud computing taking data and infrastructure management to next level.Worldwide sourcing of components and raw materialsDecentralized R&D collaboration and design ---- Electronics firms, petrochemical firms, pharmaceuticals, and others are finding e-mail, teleconferencing, and high speed networks are vital for global coordination of their R&D efforts.

History

Motive & PurposeIn order to meet the host country consumers demand, simultaneously causes the research development information channel internationalization, can quickly make the response for the global customers demand.

Quickly keep track of host countrys advanced technology development, make its company technical level to maintain the advanced level.

Hire the higher level scientists and technicians in host country, cooperation with their research and development laboratory.

Motive & PurposeOne suspect that the main profit generator in international business lies increasingly in an efficient and accurate international information system which has the capacity to ascertain almost instantaneously and on a 24-hour-a-day basis.

Technology has changed nature of data processing and information control in MNCs. Earlier super computer power now available on laptop, and telecommunications with extremely high bandwidth through technologies such as Synchronous Optical Network(SONET) made information available in many different forms everywhere. FactorsCreation of technology is a complicated task. However, inculcation of new technology is crucial for the economic development of a nation. It is the multinational corporations which considered knowledge as a powerful ingredient for growth and modernization.

Generation of new technology is not an easy task for the developing countries. On the other hand, Multinational Corporations (MNCs) qualifies technology as a private property and have the ability to produce innovative technologies. Thus, developing countries rely on multinational corporations. Generating technology doesnt mean selling technology but producing and selling products and services which help the firms in updating and improving their own technology.

FactorsPatents allow companies to put their inventions on lockdown for up to two decades, reaping rewards for significant R&D investments. And theres another incentive: allowing businesses to stock up their intellectual property war chests and fortify their legal defenses.

MNCNo of Patents registered in 2014Country of OriginIBM7534USASamsung4952KoreaCanon4055JapanSony3224JapanMicrosoft 2829USAFactorsThe Global Innovation 1000, a list of public companies that spend the most on innovation, last year invested a record $647 billion, an increase of $9 billion over the previous year.

MNC - Country R&D Spending $ Billion% of RevenueVolkswagen - Germany13.55.2Samsung - Korea13.46.4Intel USA10.620.1Microsoft - USA10.413.4Roche - Switzerland1019Appropriability TheoryThe environmental factors that govern an innovator's ability to capture profits generated by an innovationThe appropriability theory proposes the involvement of multinational corporations in producing sophisticated technologies. These corporations do not engage themselves in producing simple products and simple technologies which are essential for the developing countries. The main reason behind it is that complicated ideas are difficult to imitate whereas simple ideas are easy to imitate. Thus, there is high possibility of appropriability problem in case of simple ideas. Moreover, returns are also higher for complicated technologies.

Appropriability TheoryAppropriability is "high," and innovators can protect their profits more easily for sophisticated technologies and on breakthroughs that can be transmitted worldwide through the innovator's own subsidiaries.

Appropriability is "low," and multinationals find it less profitable to create simple technologies and ideas that require market transfer.

This theory explains the limited role multinationals have played in the development of simple products and simple production technologies, both of which are important to the developing countries. Appropriability TheoryThe appropriability theory of the multinational corporation emphasizes the conflict between innovators and emulators of new technologies.The term appropriability refers to the environmental forces that support private originators ability to grab profits generated by an innovation. This term also signifies the returns from foreign direct investment by creating new information. The procedure of safeguarding the gains from innovation has been examined by the multinational corporate behavior in the appropriability theory. This theory assesses the probability of having loss of the returns of new technology to rivals or emulators.Key gains from India perspectiveOutsourcing Centers for key processes setup by various MNCs

R&D Outsourcing Pharmaceuticals, Engineering, IT, Telecom

Product development centers (Telecom, IT)

Key gains from India perspective

Key gains from India perspectiveIn modern industrial world, firms investment in R&D is an important source of technological progress. Investment in R&D is required not only for introducing innovations, but also for adapting and absorbing technology from outside sources

ConclusionReducing Business CostsBusiness owners can use technology to reduce business costs. Technology helps automate back office functions, such as record keeping, accounting and payroll. Business owners can also use technology to create secure environments for maintaining sensitive business or consumer information.Improving CommunicationTechnology can help businesses improve their communication processes. Using several types of information technology communication methods allow companies to saturate the economic market with their message.

ConclusionPotential Increase in BusinessTo reach new economic markets. Rather than just selling consumer goods or services in the local market, small businesses can reach regional, national and international markets. SustainabilityTechnology can also help businesses to meet the issues of sustainability. Sustainability is now a high priority and businesses are keen to reduce waste and be more energy-efficient. Using more efficient IT systems can help reduce waste, recycle more or cut carbon emissions. For example Logica has created innovative software for Ford which monitors vehicle emissions. If drivers behave in an environmentally efficient way, they may benefit from fuel discounts.Referenceswww.ccsenet.org/journal/index.php/ijbm/article/viewFile/576/555https://books.google.com/books?isbn=0024026905www.freit.org/WorkingPapers/Papers/ForeignInvestment/FREIT541.pdfwww.ripublication.com/gjfm-spl/gjfmv6n7_06.pdfhttp://www.ibef.org/industry/research-development-india.aspxhttp://www.researchgate.net/publication/240695805_The_Appropriability_Theory_of_the_Multinational_Corporation