Technology Acquisition & Transfer

By

Dr. Vijay Kr. Khurana

What is Technology Transfer ? • Technology Transfer is the process by which

. technology is disseminated• It involves communication of relevant

. knowledge by the Transferor to the Recipient• It is in the form of technology transfer

transaction which way or may not be a legally .binding contract

What is Technology Acquisition ?

Two terms technology transfer and technology arenormally . used interchangeably “ ” The verb Acquire means

• ; ’ To come into possesion of get as one s own• ’ To gain for oneself through one s actions or

effortsTechnology Acquisition is the process of acquiring a

new technology, new product, process or service ; by efforts of an individual or an enterprise or any other macro entity. This process can be conducted either internally or externally to the enterprise.

Types of Technology Transfer • , Scientific Knowledge Transfer Direct

, - Technology Transfer Spin off TechnologyTransfer

• Informal Technology Transfer & Formal Technology Transfer

• Internal Technology Transfer & External Technology Transfer

Internal Technology Transfer Internal Technology Transfer refer to such

/ technology transfers investments where control on the ownership & usage of technology .resides with the transferor

It is a complex process involving following:decisions

• : / Timing When to introduce new technology ? products in the market

• : / Location Where to transfer new technologyproducts?

• Multi- -- functional teams Which staff members ? should be involved in transfer process

• – Communication methods & procedures What type of Communication methods & procedures

? be adopted to facilitate transfer

Barriers to Internal Technology Transfer

• R & D goals are not known to Production.Department

• Difficulties in stopping current production to test / new products processes

• R&D Department does not understand needs & .capability of Production Department

• , In general Production Department is resistant to .innovation and is bound by routine

• - / Non linkage of new technologies to marketing .customer needs

Overcoming Barriers to Internal Technology Transfer

• Top management support and participation in the transfer process

• Providing supportive organizational culture• Use of multi- functional teams in the transfer

process• Ensuring e ffective communication in the

organization• .Bringing R&D closer to production• Rotation of few person between R&D and

production• Linking & participation of marketing elements in

.the transfer process

Steps in Internal Technology Acquisition by a firm

1. / / Planning new products services processes to – be offered planning must incorporate voice of the customer & user needs

2. , – Screening new products processes or services / only viable feasible items be offered as only one

4/5 .out of becomes a commercial success3. – Initiating development process must be

properly designed and carried out so that it . facilitates success Enterprises should

a. Consist of temporary system capable of adapting to dymanics of change

b. Organize the systems around problem solving

Steps in Internal Technology Acquisition by a firm

c. Have flexible management system & replace rigid management system

d. Use multi- .functional teamse. Proper int , egration between R&D Production &

-Marketing sub systemsf. Ensure effective communication4. Carrying out trial production on small scale and

test marketing5. Improving design & production processes based

/ on experiences feedback6. . . Commercialization i e mass production & sales

External Technology Transfer • In these transfers, control on the ownership &

usage of technology usually does not remain with transferor and it passes on to the recipient, like joint venture with local control, licensing agreement etc.

External Technology Transfer Successful external technology transfer depends

:upon following factors• Type of the technology being transferred• Complexity of the technology being transferred• Transfer mechanism selected• – Relationships between the parties building of

mutual trust• Core competencies of the parties & compatibilty

thereof• Organizational culture of the parties & mutual

understanding thereof

Methods of External Technology Transfer

• - / Co operative & collaborative ventures strategic alliances

• Licensing agreements• Contracting agreements• .Enterprise acquisition

Why External Technology Transfer • Technology already developed saves time & efforts• Sometimes Growth objectives or competitive goals

cannot be reached through internal development• Lack of risk taking ability for innovations• ( ) Lack of internal resources physical & human for

innovation• Firm does not have core competencies to deal with

.complex technological developments• Need to keep up with competitors• Need to cope up with acceleration of technological change• ’ --- As a part of firm strategy let other firms take

big risks & it will purchase technology .developed by them

Barriers to External Technology Transfer

• – Associated costs usually high prices are required , to be paid in the form of royalities technical &

knowhow fees etc over medium to long term period• . . Appropriatesness of technology i e its suitability to

core competencies and market needs is always a point of discussion and investigation

• - Heavy reliances on foreign technology may make / transferee recipient technologically dependent on

/ external technology providers transferors even for small issues

• Lack of mutual trust between two parties may hinder full & timely transfer

Barriers to External Technology Transfer

• There is risk of loss of control over technology and / the transferee recipient may use technology in an

arbitrary manner• Transfer may render existing technology & its

/ / related products services processes obsolete• .Transferee may turn a potential competitor in future• Mismatch in core competencies of the transferor &

transferee may create difficulties in transfer• Different organisation cultures may create difficulties

in transfer• Lack of effective communication between the parties

may also create difficulties in transfer

Overcoming Barriers to External Technology Transfer

• Proper & well defined technology transfer agreement should be signed

• / Proper assessment evaluation of appropriateness oftechnology

• / Proper assessment evaluation of compatability of core competencies of the parties

• - Building pre agreement relationships so as to develop mutual trust and so as to understand culture of

opposite parties• Seeking cross cultural training• Ensuring effective communication• Anticipating problems and adopting measures for

facilitating transfer

Steps in External Technology Acquisition by a firm –

1. Identification of Need2. Developing list of suitable technology providers 3. Short listing / selecting suitable technology

providers on the basis …. Cultural compatibility, compatibility of core competences, appropriateness of technology, technical feasibility etc

4. Negotiation5. Agreement6. Payments as per agreement7. Transfer of specifications, blueprints, designs,

documents, CDs to purchaser8. Training of technical personnel of purchaser

Modes of Payment for Technology Transfer

• Lumpsum payment or periodical instalments• % Royalities as a age of sales over next few years• - Cross licensing agreements• Contracted supply of output• Issue of equity shares in lieu of technology

transferred

Acquisition of Technology By Nation

• What factors influence acquisition decision?• What are national strategies for technology

acquisition?• Methods of technology acquisition by a nation

Methods of Technology Acquisition By Nation

• / Attracting TNCs MNCs– . Through direct measures viz making a posi tive

list of industries open to FDI– - Through indirect measures viz by offering

incentives & subsidies• / Attracting TNCs MNCs into natural resource

processing & inducing greater value additions• / / Using TNCs MNCs to attract encourage their

overseas suppliers to invest into country• Improving skills & training of local technologists

/ by involving TNCs MNCs

Methods of Technology Acquisition By Nation

• / Developing industrial parks technology parks to attract high technology investors

• Offering incentives to existing investors to move to more complex technologies and to increase or

upgrade technological R& D base• Changing competitive environment and existing

incentive structure to encourage world class technology & management

• Improving technological access for local firms for / outsourcing technology transfer

• , Collecting organising & disseminating information about technology development

Regulation of Technology Transfer By Nation

• The regulation is undertaken in two directions:– Regulation of import of technology / technology inflows– Regulation of export of technology / technology

outflows & ( ) Setting up of Joint Ventures JV and Wholly ( ) Owned Subsidiaries WOS Abroad

• Why regulation of import of technology? – What are advantages & disadvantages of import of technology?

• What are – Guidelines on import of Foreign Technology into India?

• Why regulation of export of technology? –What are advantages & disadvantages of export of technology?

• What are – Guidelines on Export of Technology & Setting up Joint Venture & Wholly Owned subsidiary abroad?

Technology Acquisition & Transfer

By

Dr. Vijay Kr. Khurana