MGT 563
OPERATIONS STRATEGIES
Dr. Aneel SALMAN
Department of Management Sciences
COMSATS Institute of Information Technology,
Islamabad
Recap Lecture 21
• Why are strategy and organizational learning
important and linked?
• What is organizational design and how is it linked
to strategy?
• How does technology influence organizational
design?
• How does the environment influence
organizational design?
Technology Strategy & Development
What is technology strategy ?
•
•
According to Oxford English Dictionary --- the word
‘Strategy’ means:
• A plan designed to achieve a long-term aim
• The planning and directing of military activity in a war
or battle.
According to Mintzberg and Quinn, a strategy is the pattern
or plan that integrates a nation’s or organization’s major
goals, policies and action sequences into a chosen whole.
What is technology strategy ?
•
A strategy serves to allocate a nation’s or organization’s
resources into a unique and viable posture which is based
on its strengths and weaknesses, and anticipated changes
in the environment.
•
Technology Strategy is the way or plan of attaining
technological goals and technological changes.
Technology strategies are formulated at the national level
and at the enterprise level.
•
Technology Strategy at National level
•
At national level, two types of strategy options are usually
explored i.e internalisation oriented strategy & externalisation
oriented startegy. A nation may adopt any of the two
technology strategy or suitable combination of both.
Internalization Oriented Strategy
•
This strategy aims at seeking technological development with an
objective to become internally self reliant.
•
This strategy aims at seeking technology transfer by TNCs /
MNCs via Foreign Direct Investment (FDI).
•
The strategy seeks proactive role in attracting TNCs / MNCs and
focusses on ensuring a stable macro-economic environment &
good supportive infrastructure.
Technology Strategy at National level
Externalization Oriented Strategy
•
This strategy aims at seeking technological development with an
objective to tap external market.
•
Under this strategy, there is restricted role for FDI. This strategy
seeks to foster / encourage indigenous technology development
i.e developing domestic technology capabilities in general or in
selected strategic industries.
•
Some examples of this type of strategy are : Minority joint
ventures (with minor share to foreign collaborator), Technolgical
assitance to domestic firms, Encouraging import of capital
Goods
Technology Strategy at Enterprise level
•
According to Bentz, Martino & Mintzberg Technological
Strategy at enterprise level means --- “A formal set of
enterprise intentions that allocates available resources and
sets priorties based on clearly stated technological and
enterprise objectives and a perceived environment in
which the process is to be embedded.
Technology Strategy at Enterprise level
According to Porter- following three factors influence
enterprise’s Technology Strategy :
•
Sustainability of technological lead : Technological
leadership can be sustained only if competitors cannot
copy it.
•
First mover advantages : Enterprise gets many advantages
like increased reputation, pre-empting competition, early
profits, new sales etc,
Technology Strategy at Enterprise level
•
First mover disadvantages – Certain disadvantages and
risks can adversly affect the first mover like cost of
regulatory approvals, cost of educating buyers, demand
uncertainity, low cost imitation by competitors, risk of
technological discontinuities of existing technology /
products / processes
Technology Strategy at Enterprise level
Based on factor analysis, an enterprise may adopt any of
following technology strategies.
•
Technology Leadership Strategy – Under this strategy, a
firm seeks to be the first to introduce technological
changes / innovations.
•
Technology Followership Strategy – A conscious & active
strategy, by which a firm chooses not to be first on
innovations.
What is Technology Development / Generation ?
•
•
•
•
Generation of technology is the process by which
technology is generated / developed by various entities.
In communist or socialist countries, the technology is
mainly generated by government owned research
institutions, universities and other bodies with a very
lesser contribution coming from private sector.
In capitalist countries, the technology is mainly developed
by private sector and there is some contribution from
government agencies as well.
In countries with mixed economic system, both
government and private setor play a significant role in
technology generation .
Technology Development / Generation
Technology Development / Generation
•
•
The government technology policy framework directly
influences technology generation in a nation.
Thereafter, technology genaration depends upon the
technology strategy of the organization / enterprise i.e.
whether it wants to become technology leader or
technology follower?
Technology Generation
•
The technology strategy of the organization sets the
direction for technology development in the organization
and to some extent also influences technological
strataegies of competitors as well.
•
At organizational / enterprise level, generation of
technology is both an individual & group activity, but its
management is solely an organizational responsibilty and
activity
Technology develops through a process of Creativity,
Invention and Innovation.
•
What is S Curve of Technology Evolution
•
•
•
•
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Although the initial development of new technology often
appears to be a random process, once a technology comes
into existence, its evolution over time displays a reasonable
stable pattern.
Technology Evolution refers to changes in the performance
characteristics of specific technology over time
It is generally perceived that technology evolution follows
an S shape curve.
S-curve of technological evolution” is widely cited to
determine at what point managers should shift investments
from a mature technology to a new one.
[ Exceptions: A study done by Sood and Tellis suggests that
many technological evolutions do not follow S shape curve.]
What is S Curve of Technology Evolution
S curve of technological evolution summarizes four major stages
in the evolution of performance characteristics:
•
1. Emergence : when the new technology comes into
existence, but shows little improvement in its performance
characteristics
•
2. Rapid Improvement : When performance characteristics
improve at an accelerating pace
•
3. Declining Improvement: When the pace of improvement
declines
•
4. Maturity: When further improvements become very
difficult to achieve
Performance Characteristics
What is S Curve of Technology Evolution?
Stage 1
Stage 2
Stage 3
Time
Stage 4
What is S Curve of Technology Evolution
S curve shape of technological evolution occurs due to following
reasons / effects:
•
Learning processes – which, in the first stage, generates more or
less stable design & process and in the second stage generates
rapid improvements
•
Technology Limits – Once a technology reaches full potential,
technology limits come into play during later stages. These
technology limits are also known a technology frontiers –as
called by Dosi. In later stages, radical breakthrough occurs, as a
result new technology emerges which replaces existing
technology, This is known as Technology Progression
•
The performance of the newer technology initially is lower than
that of the older technology, but because of their relative
positions on their respective S-curves, the performance of the
newer technology soon surpasses that of the older.
Performance Characteristics
What is S Curve of Technology Evolution?
Technology Progression
Physical limits of technology
Technology
Regime 1 >
Time
<Technology
Regime 2
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