Ch. 2 Technological Environment

Level of Environment 3 Level Task Environment Industry/competitive Environment General or Macroenvironment

Industry/ Competitive environment Macro environment Task environment Industry/ Competitive environment FIRM Firm

1. Task Environment Refer to the set of customers, suppliers, competitors, and other environmental agencies (such as trade associations) directly related to the firms. Example: negotiate a new source of capital with potential investors, enter into a component co-development agreement with its supplier, or attend to upgrading its service to a particular group of customers.

2. Competitive or Industrial Environment That is comprised of a firm and its competitors functioning in the same industry. At this level, environmental factors directly affect all competitors in the same industry. New entrants, substitute products, suppliers of raw materials or compnents, customers, and rivalsry among competitors influence what happens in an industry.

3. Macro environment Macro environment affects almost all industries. There are four major segments in the macro environment: social, economic, political, and technological.

Macro environment Nation State 1 Nation State 2 Sosial Technological Politik Economic Politik Macro environment

Technological Environment The technological environment is thus a major segment of the macro environment. It constitutes the primary environmental segment influencing the MANAGEMENT OF TEHCNOLOGY

Technological Environment Technological environment is the most visible and pervasive macro environmental segment in a society for three reason: It brings new product, processes, and materials. It directly impacts every aspect of the society around us—for example, transportation modes, energy, communications, entertainment, health care, food, agriculture, and industry. It alters the rules of global trade and competition.

CREATION OF NEW KNOWLEDGE AND APPLICATION OF THAT KNOWLEDGE What make up the technological environment? It is composed of institutions that participate in the creation of new knowledge and the application of that knowledge to develop new product, processes, and materials. Technology development consist of two set of activities: creation of new knowledge and application of that knowledge.

CREATION OF NEW KNOWLEDGE The knowledge base of technology usually drives from basic research, defined as original investigation of advancement of scientific knowledge that do not have specific objectives or bind this knowledge to practical problems.

APPLICATION OF KNOWLEDGE This consists of investigations that are intended to solve practical problems. Scientific knowledge is put into practice in order to design an innovation that will solve a perceived need or problem. Researchers involved in application are the main consumers of basic research.

ACTOR IN THE TECHNOLOGICAL ENVIRONMENT We distinguish between four types of organizations in the technological environment along two major dimensions: 1) private versus public; 2) developers versus facilitators. DEVELOPER FACILITATORS PUBLIC Government Laboratory University Laboratory Agency for the Assessment and Application of Technology (BPPT) Incubator State Agencies PRIVATE Firm R&D R&D Consortia Technological Alliances Partnerships Venture Capitalists Technology Evaluators

The Role of Corporation in the core of TM As technology developers, they are drivers of change in the technology environment. They are the beneficiaries of technology change initiated by others. By adopting more efficient technologies into their product and processes, corporations can improve their performance and thus create value. They may facilitate technology development by others external to the firm through investments in their research project. Corporations may also be the victims of technology change created by other.

Aplication of Knowledge Creation of New Knowledge Aplication of Knowledge Development Applied Research Engineering Commercialization Government Institutions (e.g. Federal Labs, NASA) Government Agencies (e.g., NASA) Scientific Research Labs (e.g., AT&T) Universities Corporation (e.g., GE, R&D Labs) Entrepreneurs R&D Consortia Corporation Private Firm New Venture Development Groups TECHNOLOGY DEVELOPMENT: ACTIVITIES AND INSTITUTION

INNOVATION NETWORK In the technological environment, inter linkages develop between numerous organization. Thus, organizations with widely differing missions, such as universities, private firms, or government agencies (e.g. BATAN)—all part of the technological environment—become connected through networks that facilitate the flow of information, resources, personnel, and other inputs necessary for technology development and diffusion.

Interconnections among TECHNOLOGY DEVELOPER Increasingly, linkages are forming among the technology developers, both among private organization and between private and public organization. For example, many pharmaceutical firms rely on universities for conducting some basic research necessary for producing commercially viable drugs or therapeutic techniques.

Interconnections among TECHNOLOGY DEVELOPER and FACILITATORS Technology facilitator, such as LIPI stimulate technological development by other organization, creating inter-organizational linkages between technology developers and facilitators. The facilitating organizations, be they private or public, function in three major capacities: Resource providers. Policy analysts Linking organizations.

Change in Technological Environment Change in the technological environment often come about in two interrelated ways: Induced Changes Autonomous Changes

1. Induced Change Induced changes represent the technological consequences created by social, political, or economic forces. For example: demographics and lifestyles, especially through their impact on the political and economic areas, often influence the nature and direction of technology development.

2. Autonomous Change This changes are initiated by technology developers but are largely independent of the forces in other macro environmental segment. This changes are less predictable than induced changes, but they can be tracked on an ongoing basis through personal sources of information

2. Autonomous Change Autonomous changes in technology are drivers of fundamental social and economic change: Social Change. First stage corresponds to agriculture. Second stage corresponds to machine production. Third stage refers to the information revolution triggered by advances in computer technology. Long-Wave Theory of Economic Change. Arguing that technological innovation lies at the heart of major periods of economic expansion. Process work as follow: First, discoveries in science trigger technological innovation, leading to new product and market. Second, new industries are formed around these markets, and continued innovations in these newly formed industries expand the markets. Third, as technology matures, many competitors enter internationally, eventually creating excess capacity that in turn decreases profitability. Finally, business failure, unemployment, and attendant economic turmoil in financial markets may lead to depressions.

Both type of change in the technological environment—induced and autonomous—create opportunities and threats for firms operating in various industries.

Major Current Developments In The Technological Environment

Major Current Developments in The Technological Environment Although a large number of specific developments are taking place in different technological sectors and industries, three general trends deserve special mention: Globalization Time Compression Technology Integration

Globalization-Time Compression-Technology Integration Resource allocated to technology development Changing location of manufacturing facilities Rise of multinationals Comparative advantage of nations Time Compression Shortened product life cycles Shortened development times Decreasing payback periods Technology Integration Combining technologies to develop new products Combining technologies to commercialize product

The Impact of Trends on Institutions Globalization Time Compression Technology Integration The scope of environment is global Increased interdependence of institutions Need for simultaneous imitation and innovation The Impact of Trends on Institutions

Managerial Implication Technological environment is dynamic and need to be tracked on an ongoing basis. From an open-system perspective, management of organizations, including technology, should be predicated on the environment facing organization. Tracking technological changes in the environment requires managers to penetrate the organization and networks that conduct and facilitate technology development. Globalization, time compression, and technology integration—require managers to adopt a global perspective, enhance organizational speed of response, and work with other oranizations to adapt to technological changes as well as to fully exploit the potential of new technology.

ありがとう Arigatō 謝謝 Xièxiè شكرا Syukran